Real Estate Investing Property Analysis 3

Question 1

The 50% rule estimates that operating expenses will be approximately:

Accepted Answer

50% of gross income

Answer

25% of gross income

Answer

75% of gross income

Answer

100% of gross income

Question 2

Debt Service Coverage Ratio (DSCR) is important because:

Accepted Answer

It shows whether NOI is sufficient to cover mortgage payments

Answer

It measures property appreciation

Answer

It calculates tax deductions

Answer

It determines insurance costs

Question 3

In real estate, 'leverage' refers to:

Accepted Answer

Using borrowed money to increase potential returns

Answer

Physical tools used in renovations

Answer

The legal process of eviction

Answer

Tax deduction strategies

Question 4

A comparative market analysis (CMA) is used to:

Accepted Answer

Estimate a property's fair market value using similar recent sales

Answer

Calculate mortgage rates

Answer

Determine insurance premiums

Answer

Calculate property taxes

Question 5

Internal Rate of Return (IRR) differs from cap rate because IRR:

Accepted Answer

Considers the time value of money over the entire hold period

Answer

Only looks at one year

Answer

Ignores cash flow

Answer

Only applies to commercial property

Question 6

Due diligence in property investment should include:

Accepted Answer

Physical inspection, title search, financial analysis, and market research

Answer

Only checking the price

Answer

Asking the seller if it's a good deal

Answer

Only reviewing the listing photos