(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 '1% rule' often used by rental investors?
Answer: Monthly rent should be at least 1% of the purchase price
The 1% rule is a screening guideline suggesting monthly rent be about 1% of the price.
What is 'forced appreciation' in real estate?
Answer: Increasing value through renovations or better management
Forced appreciation raises value through improvements or higher income, not just market trends.
Which document outlines the rights and obligations between a landlord and tenant?
Answer: The lease agreement
A lease agreement defines the terms, rent, and responsibilities of both landlord and tenant.
What is a key advantage of holding rental property long-term?
Answer: Mortgage paydown builds equity while rents may rise
Over time tenants help pay down the loan, building equity, while rents and value can grow.
What does 'vacancy rate' indicate for a rental investment?
Answer: The percentage of time units are unoccupied
Vacancy rate shows how often units sit empty, directly reducing income.
Why do many investors diversify across property types and locations?
Answer: To reduce risk from local market downturns
Diversification spreads risk so a downturn in one market or type doesn't sink the whole portfolio.
What is the main downside of real estate as an investment compared to stocks?
Answer: It is illiquid and slow to sell
Real estate is illiquid, often taking weeks or months to sell, unlike publicly traded stocks.