Real Estate Investing Investment Property Analysis 2

Question 1

A duplex generates $3,200/month gross rent with $1,400/month in operating expenses. What is the annual Net Operating Income (NOI)?

Accepted Answer

$21,600

Answer

$38,400

Answer

$16,800

Answer

$25,600

Question 2

Which metric best compares the income-generating efficiency of properties with different purchase prices?

Accepted Answer

Cap rate

Answer

Gross rent multiplier

Answer

Cash-on-cash return

Answer

Debt service coverage ratio

Question 3

An investor purchases a rental property for $400,000 with $80,000 down. Annual cash flow after debt service is $6,400. What is the cash-on-cash return?

Accepted Answer

8%

Answer

1.6%

Answer

12%

Answer

6%

Question 4

What does a Gross Rent Multiplier (GRM) of 10 indicate?

Accepted Answer

It takes 10 years of gross rents to equal the purchase price

Answer

The property has a 10% cap rate

Answer

Operating expenses are 10% of gross income

Answer

The property cash flows 10% annually

Question 5

When analyzing a commercial property, a DSCR of 1.0 means:

Accepted Answer

NOI exactly covers annual debt service with no surplus

Answer

The property generates no income

Answer

Loan payments are double the NOI

Answer

The investor breaks even after taxes

Question 6

A property has a 7.5% cap rate and an NOI of $30,000. What is the estimated market value?

Accepted Answer

$400,000

Answer

$225,000

Answer

$300,000

Answer

$450,000

Question 7

Which expense is typically EXCLUDED from the calculation of Net Operating Income?

Accepted Answer

Mortgage principal and interest payments

Answer

Property taxes

Answer

Insurance premiums

Answer

Property management fees