Real Estate Investing Property Analysis 1

Question 1

The Gross Rent Multiplier (GRM) is calculated by:

Accepted Answer

Dividing the property's purchase price by annual gross rent

Answer

Dividing annual gross rent by the property's purchase price

Answer

Dividing NOI by the property's purchase price

Answer

Dividing annual gross rent by operating expenses

Question 2

The Debt Service Coverage Ratio (DSCR) is calculated by:

Accepted Answer

Dividing NOI by annual debt service (mortgage payments)

Answer

Dividing total debt by property value

Answer

Dividing annual mortgage payments by NOI

Answer

Dividing gross rent by total expenses

Question 3

A property's operating expense ratio (OER) is best described as:

Accepted Answer

Total expenses divided by gross potential income

Answer

NOI divided by total operating expenses

Answer

Purchase price divided by annual expenses

Answer

Net income divided by equity invested

Question 4

The break-even occupancy rate tells an investor:

Accepted Answer

The minimum occupancy needed to cover all operating expenses and debt service

Answer

The vacancy rate at which the property achieves maximum profit

Answer

The occupancy rate required to achieve a 10% cash-on-cash return

Answer

The average occupancy rate for comparable properties in the market

Question 5

When calculating After-Repair Value (ARV), an investor primarily relies on:

Accepted Answer

Comparable sales of similar properties in renovated condition

Answer

The property's current assessed tax value

Answer

The purchase price plus estimated repair costs

Answer

The capitalization rate applied to projected post-repair rent

Question 6

The price-to-rent ratio is used by investors to:

Accepted Answer

Compare the cost of buying versus renting in a given market

Answer

Determine how much rent to charge relative to operating costs

Answer

Calculate the annual return on equity

Answer

Measure how quickly a property appreciates in value