Investment (Property) 3

Question 1

What is the loan-to-value (LTV) ratio?

Accepted Answer

The loan amount divided by the property's appraised value

Answer

The rent divided by the purchase price

Answer

The down payment divided by income

Answer

The interest divided by principal

Question 2

Why is real estate often considered a hedge against inflation?

Accepted Answer

Property values and rents tend to rise with inflation

Answer

Property taxes never increase

Answer

Mortgages get cheaper over time

Answer

Rents are fixed by law

Question 3

What is depreciation in the context of investment property taxes?

Accepted Answer

A deduction reflecting the building's wear over time

Answer

A penalty for selling early

Answer

The loss of rental tenants

Answer

A decline in neighborhood quality

Question 4

What does 'house hacking' typically involve?

Accepted Answer

Living in one unit while renting out others to offset costs

Answer

Flipping homes within 30 days

Answer

Investing only in foreclosures

Answer

Buying property in cash overseas

Question 5

Which factor most directly affects a property's rental demand?

Accepted Answer

Location and proximity to jobs and amenities

Answer

The color of the front door

Answer

The seller's personal history

Answer

The property's listing photographer

Question 6

What is a 'fix-and-flip' strategy?

Accepted Answer

Buying, renovating, and quickly reselling for profit

Answer

Holding rentals for decades

Answer

Buying land and leaving it vacant

Answer

Refinancing repeatedly without selling

Question 7

What does PMI (private mortgage insurance) protect?

Accepted Answer

The lender if the borrower defaults

Answer

The tenant's deposit

Answer

The property against fire

Answer

The buyer's credit score