Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
15 Cards in this Set
- Front
- Back
|
The location of vacant land that is likely to give higher value increases is
|
|
|
|
Which is NOT one of the IRS "hobby tax" rules? |
The answer is the activity need not be currently and clearly pointed to making a profit. To the contrary, the activity must be currently and clearly pointed to making a profit. |
|
|
Which is the BEST example of factoring? |
The answer is the promoter of a land speculation project sells the receivable land contracts. This helps the developer offset a cash shortage by either selling or pledging as collateral. |
|
|
Which is a benefit of investing in vacant land? |
The answer is it offers the investor an opportunity to earn high profits. Land offers the investor the most creativity and an opportunity to make very high profits. |
|
|
One of the most effective ways to make profits from investments in vacant land is to |
The answer is find a parcel that has rezoning possibilities. A more intensive use will usually provide higher values. |
|
|
In order to protect buyers of small lots if the lender forecloses on the master lien, most legitimate promoters will secure which clause in the master mortgage? |
The answer is recognition. In this clause, the lender agrees in advance that if the promoter should default during the term of the agreement, the lender will respect the rights of subsequent lot owners and honor their contracts. |
|
|
Which is TRUE regarding the Interstate Land Sales Full Disclosure Act?
|
The answer is the developer must make available to each prospective lot purchaser or lessee all facts pertinent to the legitimate use of the land. The act applies to the sale or leasing of 25 or more lots. The disclosure must give information about nearby communities, and Florida has its own land sales practices act.
|
|
|
What is the value of a parcel of property that has income of $24,000 if the capitalization rate for improved property is 8% and the investor wants twice that rate? |
The answer is $150,000. Divide $24,000 by .16 (.08 × 2). |
|
|
Which is NOT a disadvantage of investing in vacant land? |
The answer is long-term capital gains tax rates are not available for the sale of vacant land. In fact, capital gains treatment is available for investors who hold the property for one year or more. |
|
|
The capitalization rate on vacant land should be |
The answer is twice that of improved property. This guideline is to account for the additional risks involved with vacant land. |
|
|
A land banker is a |
The answer is developer who improves raw land for construction purposes and maintains an inventory of lots. Every action of the developer creates value for the property, including zoning, installing infrastructure, subdividing the land into lots, and building houses. |
|
|
The most popular method for evaluating land value is the |
The answer is comparable sales approach. Similarly zoned parcels that have sold recently are said to establish the value. While this approach is popular, a more comprehensive approach is advisable. |
|
|
Which is NOT a term used for the principle that land is often worth more as a single parcel than it is as a number of individually owned parcels? |
The answer is assimilation. Agglomeration, plottage, and assemblage are all terms used to describe the increase in value from assembling several separate parcels into one. |
|
|
If a farming operation is determined to be a hobby, deductions are |
The answer is limited to the amount of gross income. The deductions may not be carried forward to future years. |
|
|
Probably the most important consideration for a vacant land investment is its |
The answer is location. As in most real estate investments, the three most important factors are location, location, and location. |
