Question

1. Answer true or false. Justify your answer briefly (30 points, 2.5 points each) The offering memorandum is a deposit that shows the purchasing a property let that a buyet is een (2) The break rent per sq. ft. ratio does not ay by the current occupancy level levert 3. In a gross multifamily residential lease the landlord pays all operating expenses. True only in net does tenany pay. Also this happers mostly in commercial! 14. Rent burden, a common measure of housinfattordability calculates whether an individual can purchase a median value home in het metropolitan wrea under a year mange 5. If a mortgage is 'interest only, the interstate equals the debt constart True 6. The band of investment method to calculate cap rates equates the caprate to a composite of debt and equity funds. 7. Equity assets get a 'senior' or 'preferred' claim to obtain cash from the asset. 8. Higher economic obsolescence leads to a higher capitalization rate and lower project value. 9. In a leveraged proforma and absent capital expenditures, the free and clear retum equals the cash-on-cash return

Answer 1

Note: As per answering guidelines, only the first question can be answered.

Solution:-

The offering memorandum is a document that is prepared by sellers of real estate projects to attract buyers and prospective investors in the projects. The document includes all details of properties, terms of the offering, financial details of the investment, the expected cash flow analysis, attractiveness of the investment opportunity, with many other details that could help buyers understand the dynamics of the potential deal.

The stage at which offering memorandum is given to the buyer involves no deposits from the end of buyer and it is more like a document to solicitate investors in real estate projects.

Therefore, the statement given in the question that offering memorandums are deposits that show sellers that buyers are serious about buying properties is incorrect and hence, the correct option is False.