Question

True or False questions:

1. A Persian rug would generally be considered a fixture.
2. In real estate, we value income from a real estate property as an annuity.
3. In Oakland, California, the price-to-rent for homes & apartments is 38.5. This indicates that it is a good idea to consider investing in a real estate property (buy a house, for example) now.
4. REITs must pay out all taxable income as dividends.
5. With a remainder the grantor conveys to a third party the reversionary interest.
6. Life estates are not inheritable.

7. A REIT’s net income is generally greater than funds from operations (FFOs).

8. REIT returns are highly correlated with the returns on direct investment in real estate.

9. An asset with a positive Sharpe ratio would be an acceptable investment.
10. The majority of REITs are equity REITs.
11. US REITs cannot own properties in Japan.
12. A lien is a historical summary of the publicly-recorded documents that affect the ownership of a property.
13. After a house is purchased, contractors cannot ask the new owner of the house to pay any bills that were outstanding before the house was sold.
14. The United States is the only country that allows REITs (or similar investments).
15. It is better to refinance when the current mortgage rate is higher than the original mortgage rate.

Answer 1

As per rules I am answering the first 4 subparts of the question

1: False

(Fixture is that which is permanently attached to a building)

2: True

There is expected to be regular rental income from a real estate and so it is considered an annuity which means a series of equal payments.

3: False

Since price to rent ratio is very high it means that the property has a very high price compared to its rental value. Hence it should be invested in.

4: True

REIT is Real estate Investment Trust. They have to pay out all their taxable income as dividends to shareholders who in turn pay taxes on that income.