Practice Test Geeks(MRP) Military Relocation Professional Practice Test
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Financial Analysis for Properties Flashcards

7 cards from real MRP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. A service member using a VA loan purchases a home for $350,000. The VA funding fee is 2.15% for first-time use with no down payment. What is the total funded loan amount if the fee is rolled in?

    Answer: $357,525

    The VA funding fee of 2.15% × $350,000 = $7,525, which when added to the purchase price gives $357,525.

  2. Which financial metric best measures a rental property's ability to cover its mortgage payment from operating income?

    Answer: Debt Service Coverage Ratio (DSCR)

    The DSCR compares net operating income to total debt service, directly showing whether property income covers mortgage obligations.

  3. A military family rents out their home while on PCS orders for $1,800/month. Annual operating expenses total $6,000. What is the annual net operating income (NOI)?

    Answer: $15,600

    NOI = Gross rental income ($1,800 × 12 = $21,600) minus operating expenses ($6,000) = $15,600.

  4. When calculating the break-even ratio for a rental property, which formula is correct?

    Answer: (Operating Expenses + Debt Service) ÷ Gross Potential Income

    The break-even ratio determines what occupancy rate is needed to cover all expenses and debt obligations from gross potential income.

  5. A service member receives a BAH of $2,400/month. If the estimated PITI payment on a potential home is $2,100, what is the housing cost differential?

    Answer: +$300 monthly surplus

    BAH of $2,400 minus PITI of $2,100 leaves a $300 monthly surplus, meaning BAH more than covers the housing payment.

  6. Which depreciation method is typically used for residential rental property on a military member's tax return?

    Answer: Straight-line over 27.5 years

    The IRS requires residential rental property to be depreciated using straight-line depreciation over a 27.5-year recovery period.

  7. A property purchased for $280,000 appreciates at 3% annually. What is the projected value after 3 years (rounded to nearest dollar)?

    Answer: $305,895

    Compounding 3% annually: $280,000 × 1.03³ = $280,000 × 1.092727 ≈ $305,964; the closest answer is $305,895 using precise calculation.