Real Estate Finance & Investment Final Summer 2026 Question Paper

Q1. a) What is Condominium? What are the differences between Condo and Apartment. b) What are the key differences between Hard Cost and Soft Cost in Construction c) A real estate investor wanted to invest 20 Crore. He has two alternative options as follows: | Cost Statement | Land Project | Condo Project | | :------------------- | :----------- | :------------ | | Hard Cost | 60% | 50% | | Soft Cost | 40% | 50% | | Profit on Total Cost | 25% | 22% | | Debt & Equity | 60% | 70% | | Cost of Debt | 15% | 12% | Which project is suitable for investment? 2+2+4 = 8 Marks CLO:2 Level:2 Q2. a) Briefly discuss the role of housing finance institutions in Bangladesh. b) Compare the differences between public and private housing finance institutions in Bangladesh? 4+4 = 8 Marks CLO:2 Level:5 Q3. a) What factors must be considered when deciding whether to refinance a loan after interest rates have declined? b) What is a buydown loan? What parties are usually involved in this kind of loan? c) A potential homeowner has $60,000 to invest in a $280,000 home. He can obtain either a $220,000 loan at 9.5 percent for 20 years or a $180,000 loan at 9 percent for 20 years and a second mortgage of $40,000 at 13 percent for 20 years. I. Which alternative should the borrower choose, assuming he will be in the house for the full loan term? II. Would your answer change if the borrower plans to be in the home only five years? 2+2+4 = 8 Marks CLO:3 Level:6 Q4. a) What is a capitalization rate? What are the different ways of arriving at this rate to use for an appraisal? b) What is the relationship between a discount rate and a capitalization rate? c) Star Investment Company is considering the purchase of land that could be developed into a class a office project. At the present time, Ajax believes that the site could support a 300,000 rentable square foot project with average rents of $20 per square foot and operating expenses equal to 40 percent of that amount. It also expects rents to grow at 3 percent indefinitely and believes that Ajax should earn a 12 percent return (r) on investment. The building would cost $100 per square foot to build: I. What would the estimated property value and land value be under the above assumptions? II. If rents are suddenly expected to grow at 4 percent indefinitely, what would the property value and land value be now? What percentage change in land value would this be relative to the land value in (a)? 2+2+4 = 8 Marks CLO:4 Level:5 Q5 a) What is Cost Approach of property valuation? b) A real estate investor is considering the purchase of a small office building. The following data on recent sales of small office buildings similar to and competitive with the subject have been obtained. | Comparable Number | Sale Price | Effective Gross Income | Average Vacant Space/Year | Operating Expenses | Office (Room) | Net Rentable Sq. Ft. | | :---------------- | :---------- | :--------------------- | :------------------------ | :----------------- | :------------ | :------------------- | | 1 | $ 360,000 | $ 65,070 | 520 Sq. Ft. | $ 20,770 | 36 | 8,650 | | 2 | $ 345,000 | $ 62,400 | 500 Sq. Ft. | $ 20,000 | 35 | 8,300 | | 3 | $ 382,000 | $ 69,400 | 550 Sq. Ft. | $ 22,600 | 38 | 9,225 | | 4 | $ 373,500 | $ 67,560 | 535 Sq. Ft. | $ 22,000 | 38 | 8,980 | 2+6=8 Marks CLO:4 Level:5 The subject property contains 45 rooms (offices) and 9500 square feet of net rentable area. The estimated effective gross income is $80,000 with an operating expense ratio of 30% Using this data, estimate the value by: i. The Gross Income Multiplier Technique ii. Price Per Room Comparison iii. Price Per Square Foot Comparison iv. Overall Capitalization using the market extracted overall rate