Real Estate Investing Real Estate Investing Investment Property Analysis Questions and Answers 2

Question 1

A rental property generates $2,400 monthly gross income and has monthly operating expenses of $900. What is the Net Operating Income (NOI)?

Accepted Answer

$18,000 per year

Answer

$15,600 per year

Answer

$28,800 per year

Answer

$10,800 per year

Question 2

Which metric measures the total return on a property by comparing NOI to the purchase price, without considering financing?

Accepted Answer

Cap rate

Answer

Cash-on-cash return

Answer

Internal rate of return

Answer

Debt service coverage ratio

Question 3

An investor puts $50,000 down on a property and receives $6,000 in annual cash flow after all expenses and debt service. What is the cash-on-cash return?

Accepted Answer

12%

Answer

10%

Answer

8%

Answer

15%

Question 4

What does a Debt Service Coverage Ratio (DSCR) of 0.85 indicate about an investment property?

Accepted Answer

The property's NOI is insufficient to cover its debt payments

Answer

The property generates 85% profit margin

Answer

The loan-to-value ratio is 85%

Answer

The property has appreciated by 85%

Question 5

When performing a comparative market analysis for an investment property, which adjustment is MOST critical?

Accepted Answer

Price per square foot differences between comparable sales

Answer

The color of the exterior paint

Answer

The month the listing photos were taken

Answer

The real estate agent's commission rate

Question 6

A property is purchased for $300,000 with a 75% loan-to-value mortgage. After five years, the property is worth $360,000 and the loan balance is $210,000. What is the investor's equity?

Accepted Answer

$150,000

Answer

$75,000

Answer

$135,000

Answer

$360,000