Wednesday, March 7, 2012

Chapter 8 Entrepreneurial Activity

by: Mario Jauregui

True or False
Real estate investors are the entrepreneurs of the real estate business. They build value by producing space, they spark the entire real estate system to life when they find some human need for space.

FALSE: Developers are the entrepreneurs of the real estate business.

Multiple Choice
When developers evaluate risk and return they usually have an operative attitude that consists of …
(A) Conserve capital, don’t spend your own money until you absolutely have to
(B) Invest as much as you can in the beginning to get a quick start
(C) Mitigate risk, avoid exposure to hazards by passing them along to others
(D) None of the above
(E) Both A and C


True or False
When developers are looking at going into a new development project they are looking for different ways to kill the deal. They will abandon the deal if they either have to spend too much of their own money or they are taking on too much risk.


True or False
In stage 1 of the of the real estate development process developers are looking for a target market area. They do this by conducting a productivity analysis.


Multiple Choice
When a developer is looking to take control of a property without buying the property they purchase a(n)…
(A) Optional lease
(B) Certificate of occupancy
(C) Exclusive option
(D) Future purchase contract


Multiple Choice
Which one of these choices represents the correct process of real estate development?
(A) Design the project, Refine the concept, Examine project feasibility, Conceive
a project
(B) Refine the concept, Examine project feasibility, Design the project, Conceive
a project
(C) Conceive a project, Refine the concept, Examine project feasibility, Design the project
(D) Conceive a project, Examine project feasibility, Refine the concept, Design
the project


True or False
Once the developer has moved on towards securing investor capital, if they have deemed that the project could be a failure they can still drop the project without any serious repercussions.

FALSE: If a developer has moved past the first 3 stages they will need to commit fully to the project that they are doing or they run the risk of losing large amounts of their own investment and possibly

True or False
The construction stage is when the developer is exposed to the most risk and it is when time is the most crucial.

TRUE: The developer needs to race against time to be able to start leasing out space so that they can start paying back the lenders.

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