Real Estate Investing Market Analysis and Feasibility 4

Question 1

What is the main purpose of analyzing 'days on market' (DOM) data in a specific submarket?

Accepted Answer

To gauge how quickly properties are selling and assess market momentum

Answer

Days on market data reveals how fast properties are selling, with lower DOM indicating strong demand and higher DOM suggesting a slowing market.

Question 2

Which of the following best describes a 'tertiary market' in U.S. real estate investing?

Accepted Answer

A smaller city or rural area with limited institutional investment activity

Answer

Tertiary markets are smaller cities and rural areas with less institutional investor activity, offering potentially higher yields but greater liquidity risk.

Question 3

An investor conducts a highest and best use analysis. Which of the four tests must a use pass to qualify?

Accepted Answer

Legally permissible, physically possible, financially feasible, and maximally productive

Answer

Highest and best use requires a use to be legally permissible, physically possible, financially feasible, and maximally productive among competing uses.

Question 4

When analyzing supply pipeline in a market, which data point is most forward-looking?

Accepted Answer

Building permits issued

Answer

Building permits represent future construction activity and give investors the best indication of upcoming supply that will compete with existing properties.

Question 5

A market analysis reveals strong in-migration from expensive coastal cities. For a rental investor, this most likely signals:

Accepted Answer

Rising rental demand and potential rent growth

Answer

In-migration from higher-cost areas typically brings renters who can afford above-average rents and drives demand in the receiving market.

Real Estate Investing Practice Test

Real Estate Investing Practice Test

Real Estate Investing Market Analysis and Feasibility 4