Investment (Property) 4

Question 1

What is the 'BRRRR' real estate strategy?

Accepted Answer

Buy, Rehab, Rent, Refinance, Repeat

Answer

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat, a method to recycle capital into new deals.

Question 2

What is the debt service coverage ratio (DSCR)?

Accepted Answer

Net operating income divided by total debt payments

Answer

DSCR measures whether income covers debt obligations; above 1.0 means income exceeds payments.

Question 3

What is 'appreciation' in real estate investing?

Accepted Answer

An increase in a property's market value over time

Answer

Appreciation is the rise in property value over time, building investor equity.

Question 4

Why might an investor prefer a multifamily property over a single-family rental?

Accepted Answer

Multiple units spread vacancy risk across tenants

Answer

With several units, one vacancy has less impact since other tenants still generate income.

Question 5

What is an escrow account commonly used for in property ownership?

Accepted Answer

Holding funds for property taxes and insurance

Answer

Lenders often use escrow to collect and pay property taxes and insurance on the owner's behalf.

Investment Practice Test