CRECI Commercial Property Financials 2

Question 1

A commercial property generates $480,000 in gross potential rent annually. If vacancy and credit loss are estimated at 8%, what is the effective gross income (EGI)?

Accepted Answer

$441,600

Answer

$480,000

Answer

$518,400

Answer

$460,800

Question 2

Which metric measures the total return on a commercial property including both income and appreciation relative to the initial equity investment?

Accepted Answer

Equity multiple

Answer

Cap rate

Answer

Cash-on-cash return

Answer

Internal rate of return

Question 3

A retail property has NOI of $600,000 and the investor requires a 6.5% cap rate. What is the estimated value of the property?

Accepted Answer

$9,230,769

Answer

$3,900,000

Answer

$8,500,000

Answer

$10,000,000

Question 4

In commercial real estate underwriting, what does 'stabilized occupancy' typically refer to?

Accepted Answer

The occupancy level a property achieves under normal market conditions after lease-up

Answer

100% physical occupancy

Answer

Occupancy locked by long-term leases

Answer

Government-mandated minimum occupancy

Question 5

A warehouse property has an asking price of $5,000,000 and generates NOI of $325,000. If market cap rates are 6.0%, by how much is the property overpriced?

Accepted Answer

$416,667

Answer

$583,333

Answer

$5,416,667

Answer

$325,000

Question 6

Which of the following expenses is typically classified as a capital expenditure (CapEx) rather than an operating expense on a commercial property?

Accepted Answer

Roof replacement

Answer

Property management fees

Answer

Janitorial services

Answer

Landscaping maintenance

Question 7

A commercial lender requires a minimum DSCR of 1.25. If annual debt service is $400,000, what is the minimum NOI required to qualify for the loan?

Accepted Answer

$500,000

Answer

$320,000

Answer

$400,000

Answer

$480,000