LOS a: Illustrate, for a particular type of real property investment: its main value determinants, investment characteristics, principal risks, and its most likely investor.

Q1. The risk associated with a non-constant rate of appreciation is most closely related to which of the following types of real estate investing?

A)   Warehouses.

B)   Raw land.

C)   Office buildings.

Q2. Which of the following types of real estate investments provides a total return that is relatively more heavily weighted toward periodic income?

A)   Warehouses.

B)   Residential rentals.

C)   Office buildings.

Q3. Which of the following real estate investments is most appropriate for a retiree?

A)   Warehouses.

B)   Residential rentals.

C)   Office buildings.

LOS a: Illustrate, for a particular type of real property investment: its main value determinants, investment characteristics, principal risks, and its most likely investor. fficeffice" />

Q1. The risk associated with a non-constant rate of appreciation is most closely related to which of the following types of real estate investing?

A)   Warehouses.

B)   Raw land.

C)   Office buildings.

Correct answer is B)

The rate of appreciation of raw land is not constant. This represents risk because a raw land investor may have to liquidate the investment before it has reached its expected appreciated value.

Q2. Which of the following types of real estate investments provides a total return that is relatively more heavily weighted toward periodic income?

A)   Warehouses.

B)   Residential rentals.

C)   Office buildings.

Correct answer is A)       

Warehouse investment returns tend to be mostly in the form of periodic income, with relatively little value appreciation. Office buildings and residential rental property each offer substantial returns in the form of both current income and value appreciation.

Q3. Which of the following real estate investments is most appropriate for a retiree?

A)   Warehouses.

B)   Residential rentals.

C)   Office buildings.

Correct answer is A)       

Warehouses do not usually require a lot of maintenance or management involvement, thus making them attractive investments to moderately passive investors, such as retirees

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