2. Considering a common/typical rental property scenario, choose the actions an investor can implement to increase the ARV on a rental property.(Required)

Forced Appreciation

Increasing rental income

Refinancing

Paying down the mortgage balance

A & B

A & C

A & D

3. What is the minimum down payment amount allowed on a $1,296,000 purchase of a non-owner occupied triplex for a buyer with good credit.(Required)

$324,000

$64,800

$259,200

$129,600

4. Monoline lenders often offer advantages over many banks. Pick the most correct answer. Monoline lenders:(Required)

Offer discounted mortgage rates, alternative investment options and better exit penalties on fixed mortgages than banks.

Offer discounted mortgage rates, provide loans to high-risk borrowers and ensure their mortgages with insurance from one of Canada’s three mortgage insurers.

Offer lower rates, provide loans to higher risk borrowers and better exit penalties on fixed rate mortgages than banks.

Offer discounted mortgage rates, better exit penalties on fixed rate mortgages than banks and ensure their mortgages with insurance from one of Canada’s three mortgage insurers.

5. Calculate the total amount of capital available for an investor to ‘pull out’ of the following non-owner-occupied triplex example using a 75% LTV new mortgage. Current mortgage balance: $ 768,520 Appraised value: $1,105,500(Required)

$829,125

$60,605

$276,375

$492,145

6. What mortgage rate would be used in a variable mortgage considering the prevailing 2.45% prime rate if the rate offered was P-55%.(Required)

7. Calculate the GDSR with the following triplex rental property purchase example above.(Required)

30.31%

29.26%

27.05%

33.21%

Student loan: $240.62/mo.
Credit card: $413.85/mo.
Car lease: $675.73/mo.
Car Loan: $645.05/mo.
LOC: $332.95/mo.
Rental Income: $4,125/mo.

8. Calculate the TDSR on same triplex. Utilize the elements above and include a 50% addback to income component in your calculation:(Required)

35.40%

36.21%

40.91%

40.00%

9. Calculate the TDSR on the same triplex using 50% rental offset.(Required)

31.04%

27.01%

32.09%

27.92%

10. When a client is in the mortgage qualification underwriting process for purchasing a rental property and a principal residence is factored in to the TDSR calculation, which factors are commonly excluded from the rental property when calculating the TDSR?(Required)

Insurance and taxes

Heat and taxes

Insurance and condo fees

Condo fees and credit card debt

11. Identify the 4 key macro-economic factors discussed which are important to a real estate investor.(Required)

Demographics, sales data, supply & demand, population growth

Market trend, infrastructure, vacancy rate, population growth

Unemployment rate, market trend, vacancy rate, population growth

Market trend, unemployment rate, supply & demand, population growth

12. What is the most common minimum credit score needed to get approved for a mortgage with most ‘A’ lenders in Canada?(Required)

680

720

640

620

13. What are the set of parameters required by a real estate agent to understand each investor’s investment goals, timelines and capacity to purchase?(Required)

Market trends

Demographics

Investor criteria

Market data

14. Of the 8 factors discussed regarding potentially paying higher premiums for insurance on a rental property, which one is missing from the following list:(Required)

Single pane windows, unlocked doors or windows, water supply valve left on, knob & tube wiring, baseboard heating, wood burning fireplace, wood burning stove.

17. What is the amount of principal paid after year 1?(Required)

$26,275.38

$59,472.91

$33,197.52

$1,086,802.48

18. What is the ROI after year 1?(Required)

12.91%

8.67%

14.91%

11.67%

USING THE SAME EXAMPLE:
4 Unit Property Example:
Use the following factors in your calculations.
Upfront Costs
Market Price: $1,500,000
Purchase Price: $1,400,000
20% Downpayment: $ 280,000
Initial Mortgage Balance: $1,120,000
5 year Fixed – Interest Rate: 2.39%
Amortization: 25 year
Inspection: $ 1,100
Land/Prop. Transfer Tax: $ 24,475
Legal/Conveyancing: $ 1,650
Renovation: $ 25,000
Expenses:
Insurance: $ 3,342 annual
Property Mgt: $ 644/mo.
Property Taxes: $ 5,466 annual
Utilities: $ 3,414 annual
Maintenance: $ 412.50/mo.
Vacancy: $ 412.50/mo.
Monthly Gross Income: $ 8,250/mo.

19. What is the total principal paid after 5 years?(Required)

$297,364.53

$174,163.46

$123,201.07

$36,507.17

20. What is the ROI after 5 years?(Required)

42.98%

51.55%

58.31%

55.34%

USING THE SAME EXAMPLE:
4 Unit Property Example:
Use the following factors in your calculations.
Upfront Costs
Market Price: $1,500,000
Purchase Price: $1,400,000
20% Downpayment: $ 280,000
Initial Mortgage Balance: $1,120,000
5 year Fixed – Interest Rate: 2.39%
Amortization: 25 year
Inspection: $ 1,100
Land/Prop. Transfer Tax: $ 24,475
Legal/Conveyancing: $ 1,650
Renovation: $ 25,000
Expenses:
Insurance: $ 3,342 annual
Property Mgt: $ 644/mo.
Property Taxes: $ 5,466 annual
Utilities: $ 3,414 annual
Maintenance: $ 412.50/mo.
Vacancy: $ 412.50/mo.
Monthly Gross Income: $ 8,250/mo.

21. Based on a 3% year over year appreciation increase to the initial market price, what is the projected property value at year 5? (no need for decimals)(Required)

$1,622,983

$1,680,947

$1,738,911

$1,728,411

22. What is the ‘Deluxe ROI’ after 5 years?(Required)

127.25%

157.35%

92.35%

122.45%

23. Based on the 5-year value in question 21, and based on a refinance at 75% LTV of that value, what is the maximum capital amount available to be ‘pulled out’ of the deal? (No need for decimals)(Required)

$358,346

$271,400

$314,873

$350,471

24. Based on your answer from question 23, how much money is still in the deal or in the investor’s pocket?(Required)

$60,825 left in the deal

$18,246 in the investor’s pocket

$26,121 in the investor’s pocket

$17,352 left in the deal

25. For a homeowner to refinance or get a HELOC, there are steps to determine whether the homeowner can qualify and whether the property has enough equity. Which of the following answers is the most correct?(Required)

Good Credit, GDSR, Appraisal, CMA

Debt to Income Ratio, Appraisal, Good Credit, Current Property Value

GDSR, Appraisal, Good Credit, Mortgage Balance

Good Credit, Debt to Income Ratio, Mortgages and Liens, Appraisal

Refinance Example

A homeowner/investor purchased their Principal Residence in Ontario 7 years ago at $425,000.

Downpayment Amount: 10%
CMHC Fee: $11,858

26. What is the Total Mortgage Amount (including CHMC)?(Required)

$370,642

$394,358

$382,500

none of the above

(Continuing with the example: the homeowner/investor received a fixed rate mortgage at 4.09% with a 5-year term and 25-year amortization.)

27. What was the mortgage balance at the end of the 5-year term? (Assume no pre-payments) (No decimal places required)(Required)

$343,840

$323,162

$333,501

$327,485

28. Continuing with the example: the homeowner/investor renewed the mortgage at the 5-year point with a different lender at a new rate of 3.19%, and 25-year amortization. (Assume no pre-payments) (Decimal places required) What is the new monthly mortgage payment?(Required)

$1,581.91

$1,610.97

$1,660.91

$1,561.03

29. What is the mortgage balance after 2 years? (No decimal places required)

$315,432

$309,742

$305,653

$325,211

(Continuing with the example: the homeowner/investor received a fixed rate mortgage at 4.09% with a 5-year term and 25-year amortization.)

30. Considering the current mortgage balance, what is the current LTV? (To 2 decimal places)

38.26%

35.96%

37.10%

36.44%

Continuing with the example: Considering the appraised value of $850,000 and the current mortgage balance as calculated in question 29

31. What is the total possible HELOC amount available (above the outstanding mortgage balance) assuming a total 80% maximum LTV?

$364,568

$370,258

$354,789

$374,347

Continuing with the example: the homeowner/investor is looking to purchase a 3-unit rental property in Ontario. The homeowner/investor is looking to use a HELOC on their principal residence for the upfront expenses, specifically down payment and renovation costs. HELOC borrowing rate = 2.75%. Conveyancing and inspection costs will be incurred from their own resources.

3 Unit Rental Property Purchase

Example
Use the following factors in your calculations.
Upfront Costs
List Price: $ 799,999
Purchase Price: $ 780,000
Downpayment: 20%
Mortgage rate: 2.04%
Amortization: 25 Years
Inspection: $ 1,100
Land/Prop. Transfer Tax: $ 24,150
Legal/Conveyancing: $ 1,650
Renovation: $ 14,000
Income & Expenses
Monthly Rental Income: $ 5,200/mo.
Annual Property Tax: $ 3,620
Insurance: $ 145/mo.
Utilities: $ 0.00 (incurred by tenants)
5% Maintenance Fund: $ ?
5% Vacancy Fund: $ ?

32. Considering the homeowner/investor will require a 20% downpayment to acquire this property (to come from the HELOC), the Land Transfer tax (to come from the HELOC) and the renovation costs (to come from the HELOC), what is the total amount required to borrow from the homeowner’s HELOC?(Required)

$194,150

$195,800

$196,900

$201,980

33. Considering the borrowing amount required from the HELOC, coupled with the existing mortgage balance on the principal residence; what is the new LTV on the principal residence? (To 2 decimal places)(Required)

62.02%

61.42%

61.30%

61.10%

34. Regarding the 3-Unit rental property and the Income & Expenses noted above (including mortgage), what is the annual positive cash flow?(Required)

$57,040.00

$26,927.20

$25,187.20

$28,807.20

35. Considering the HELOC borrowing rate (noted above) and the amount needed for acquisition (also noted above), what is the annual interest portion required to pay on the HELOC? Note: Use a HELOC calculator for this (here’s one you can use: https://www.mortgageloan.com/home-equity-loans)(Required)

$5,384.52

$5,339.16

$5,414.76

$5,554.44

36. Assuming the homeowner/investor is paying the monthly interest on the HELOC out of the positive cash flow from the 3-unit rental property, what is the total annual cash flow the homeowner/investor is experiencing?(Required)

37. Calculate the NOI on the property example above:(Required)

$17,940

$20,786

$25,054

-$4,406

None of the above

38. What is the DCSR on this property? (To 2 decimal places)(Required)

0.60%

0.85%

1.17%

0.70%

39. Using your DSCR answer from question 38, what is the overall portfolio DCSR should the investor own properties with the following DCSRs: 1.94%, 1.62%, 0.91%, 2.25%. (To 2 decimal places)(Required)

1.68%

1.58%

1.48%

1.51%

40. In a GP/LP Business Structure, the General Partner is liable only to the extent of the investment they have made in the property.(Required)

True

False

41. What is one of the initial key factors when an investor is acquiring a property to utilize the BRRRR strategy?(Required)

Acquiring a property with little renovation required

Acquiring the property under market value

Acquiring a property found off the MLS

Acquiring a property with good bones

42. There are several factors necessary when searching for properties on behalf of an investor looking to implement the BRRRR strategy. Choose the most correct answer.

44. Example: You are representing an investor who does flips. What is the maximum price you can offer in the following situation? (use the example data above)(Required)

$761,880

$708,380

$660,880

$809,380

45. What are the 2 main components from a contractual standpoint in a Rent to Own property?(Required)

Option to Purchase Agreement and a Standard Residential Lease agreement

Standard Residential Lease Agreement and a Joint Venture Agreement

Standard Residential Lease Agreement and a Mortgage Application

Option to Purchase Agreement and a Purchase and Sale Contract

46. From a contractual aspect, what implications can occur if a Tenant/Buyer is late on a rental payment? Choose the most correct answer.

Forfeit their initial deposit

Forfeit their option consideration fee

Forfeit their right of first refusal to purchase the property

Are relegated to the status of a tenant

All of the above

47. What are the advantages to a Tenant/Buyer when participation in the Rent to Own process when compared to renting?(Required)

No maintenance issues

No landlord to deal with

Not chasing the market

No credit check

48. What type of property works best for a Rent to Own? Choose the most right answer.(Required)

Duplex

Townhome

Condo

Any house in good condition

49. Generally speaking, in a ‘working poor’ area, pick the strategy which an investor would have the most success.(Required)

Rent to Own

Fix and Flip

Rental

BRRRR

Property Example

An investor is looking for a multi-family property up to 30 units. You find a 9 unit (Building 1 for our example) and a 16-unit property (Building 2 for our example). Each building is in good shape and could be a deal for your investor. You need to understand which the best deal is based on the numbers. You have been provided the numbers on each property from the listing and prospectus. They are as follows:
Note: use 3% Vacancy & 2% Credit loss in your calculations.

52. What is the Cap Rate of Building 2? (To 2 decimal places)(Required)

4.35%

3.90%

1.32%

1.75%

53. What is the Cap Rate of Building 1? (To 2 decimal places)(Required)

3.38%

3.38%

3.44%

3.51%

54. The prospective purchaser is looking for a minimum cap rate of 4.15% on Building 1. What would this make the price of Building 1? (No decimals required)(Required)

$2,280,647

$2,325,012

$2,250,500

$2,240,915

55. Same question for Building 2, also using a 4.15% Cap Rate(Required)

$4,238,843

$4,713,060

$1,099,867

$4,187,950

56. What is a tenant responsible for in a triple net lease? (Choose the most correct answer)(Required)