6. What is crosslease land tenure? a. A form of fee simple with the right to occ

Question

6. What is crosslease land tenure?

a. A form of fee simple with the right to occupy land in perpetuity

b. The right to use land for a specific timeframe

c. A low cost and complex leasing arrangement

d. Freehold tenure with the highest level of ownership rights

e. Property held without any borrowings

7. The best way/s of valuing a near new property are:

a. Sales and investment approaches

b. Net rate only

c. Sales approach only

d. Cost and sales approaches

e. Income and cost approaches

8. Suppose a young couple have saved 30% deposit on a house in Auckland that delivers a $25,000 cashflow. Current market derived capitalization rate for this type of property is 3.3%. How much is their equity investment (to the nearest dollar)?

a. $75,000

b. $227,273

c. $234,900

d. $757,576

e. $220,000

Explanation / Answer

6. a. It is a fee simple with the right to occupy the land for a large period (about 999 years).

7. e. Income and cost approaches are two of the three approaches. The third one is comparable approach.

8. d. Cap rate = Net operating income / Current market value= 25000/0.033= 757576

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