FREE RES Investment Questions and Answers
Which of the following is the primary goal of a real estate investor?
The primary goal of a real estate investor is to achieve the highest possible ROI, which involves balancing income, expenses, and appreciation.
Which of the following describes "leverage" in real estate investment?
Leverage in real estate involves using borrowed funds to purchase a property, with the aim of increasing the potential return on investment.
What is the "cash-on-cash return" in real estate investing?
Cash-on-cash return measures the annual return the investor makes on the actual cash invested, typically calculated by dividing the annual pre-tax cash flow by the total cash invested.
What is the capitalization rate (cap rate) used for in real estate investment?
The cap rate is used to measure the annual return on an investment property by dividing the net operating income by the property’s purchase price.
Which of the following is considered a benefit of investing in real estate?
One of the key benefits of real estate investment is the potential for property appreciation, where the value of the property increases over time, contributing to long-term gains.