(Property) Flashcards
7 cards from real Investment practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 (Property) flashcards as text
What is the loan-to-value (LTV) ratio?
Answer: The loan amount divided by the property's appraised value
LTV compares the loan size to the property value, indicating lender risk.
Why is real estate often considered a hedge against inflation?
Answer: Property values and rents tend to rise with inflation
As prices rise, property values and rental income typically increase, preserving purchasing power.
What is depreciation in the context of investment property taxes?
Answer: A deduction reflecting the building's wear over time
Depreciation lets investors deduct the cost of the building over its useful life, lowering taxable income.
What does 'house hacking' typically involve?
Answer: Living in one unit while renting out others to offset costs
House hacking means occupying part of a multi-unit property while renting the rest to cover the mortgage.
Which factor most directly affects a property's rental demand?
Answer: Location and proximity to jobs and amenities
Location, jobs, schools, and amenities drive tenant demand more than cosmetic factors.
What is a 'fix-and-flip' strategy?
Answer: Buying, renovating, and quickly reselling for profit
Fix-and-flip involves purchasing a property, improving it, and selling it quickly for a gain.
What does PMI (private mortgage insurance) protect?
Answer: The lender if the borrower defaults
PMI protects the lender, usually required when the down payment is below 20%.