Im allowed a double sided cheat sheet for my exam on wednesday i need help with the best answers for the questions i should put on it QUALITATIVE QUESTIONS CHAPTER 11 - Sources of funds for residential mortgages 1. What is the primary mortgage market? What are portfolio and non-portfolio lenders (mortgage bankers)? 2. What is the secondary mortgage market? Why does it make mortgages more liquid? 3. What is agency MBS? What is the difference between Fannie Mae/Freddie Mac vs Ginnie Mae? What are the types of mortgages (FHA, VA, conforming, non-conforming) underlying these MBS? Do investors in agency MBS need to be concerned about default risks? 4. What is non-agency/private label MBS? What are the types of mortgages underlying these MBS? How are default risks of non-agency MBS compared to agency MBS? CHAPTER 16 & 17 - Commercial mortgages and REITs 1. Why do investors use debt in real estate investing? 2. What is a permanent mortgage? 3. What is a ballon mortgage? Difference between the loan maturity and the amortization term? 4. What is a lock-out period? 5. What are the three types of prepayment penalties in commercial mortgages? Definition of each type how it works. 6. What are the 3 reasons commercial mortgages generally have higher default risk than residential mortgages? What is a "carve-out" or "bad-boy" clause? 7. What is a sale-leaseback? What are the benefits of this type of sale to the original owner/seller and the buyer/investor? 8. Difference between a second mortgage and a mezzanine loan? 9. What is a land acquisition loan used for? A land development loan? A construction loan? 10. What is a REIT? What is special about the tax treatment of REITs? 11. What are the 4 requirements that REITs must satisfy? 12. What is an equity REIT? Mortgage REIT? 13. What are the reasons to invest in REITs? 14. What is Net Asset Value (NAV)? What does it mean when a REIT is selling at a premium to its NAV? At a discount to its NAV? CHAPTER 18 - Ratio analysis 1. What are the pros and cons of simple ratio analysis in investment decisions? 2. Which ratios measure profitability? Financial risk? CHAPTER 19 - Discounted Cash Flow 1. What is the definition of IRR? What are the 2 disadvantages of IRR compared to NPV?2. What is discount rate? How does it affect the NPV of a project? (i.e. higher discount rate means higher or lower NPV?) CHAPTER 21 1. What is property management? Asset management? 2. What are the main functions of a property manager? Why do many states require property managers to have an agent/broker license? 3. What are the main functions of an asset manager? 4. Describe the agency problem in property/asset management. What are the potential issues with how they are paid (% of gross revenue, or % of asset under management)? CHAPTER 22 - Property Leases 1. What are the pros and cons of longer lease terms to landlords and tenants? 2. What is a flat rent? Escalated rent? Indexed rent? 3. What is a gross lease? Net? Net-net? Triple net? 4. What are lease options? 5. What are Class A office properties? Class B? Class C? 6. What is rentable area? Usable area? 7. What is an expense stop? 8. What is a neighborhood center? Community center? Power center? Regional center? Super-regional center? 9. What is percentage rent? QUANTITATIVE QUESTIONS CHAPTER 18 - Ratio analysis 1. Calculate 5 ratios CHAPTER 19 - Discounted Cash Flow 1. Calculate NPV and IRR to make investment decisions a. Calculate Before-tax cash flow (BTCF) b. Calculate Before-tax equity reversion c. Calculate discount rate CHAPTER 22 - Property Leases 1. Calculate effective rent 2. Calculate rentable area, usable area, and tenant's rent based on their share of the common area 3. Calculate tenant's share of operating expenses 4. Calculate percentage rent