Real Estate Investing FREE Real Estate Investing Investment Property Valuation Questions and Answers 2

Question 1

A rental property generates $48,000 in annual gross rent with a 10% vacancy rate and $18,000 in operating expenses. What is the Net Operating Income (NOI)?

Accepted Answer

$25,200

Answer

$30,000

Answer

$25,800

Answer

$24,200

Question 2

Which valuation approach estimates property value by comparing recent sales of similar properties with adjustments for differences?

Accepted Answer

Sales comparison approach

Answer

Income capitalization approach

Answer

Cost approach

Answer

Gross rent multiplier method

Question 3

An investor purchases a property for $300,000 with a $60,000 down payment. If the property appreciates to $330,000, what is the return on equity from appreciation alone?

Accepted Answer

50%

Answer

10%

Answer

30%

Answer

20%

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 mortgage payments

Answer

The property generates 85% more income than needed for debt payments

Answer

The property has an 85% occupancy rate

Answer

The property's value has decreased by 15%

Question 5

In the cost approach to property valuation, which type of depreciation is caused by factors external to the property such as a new highway built nearby?

Accepted Answer

Economic obsolescence

Answer

Functional obsolescence

Answer

Physical deterioration

Answer

Deferred maintenance

Question 6

A property has a purchase price of $500,000, annual NOI of $40,000, and annual mortgage payments of $30,000. What is the cash-on-cash return if the investor put $125,000 down?

Accepted Answer

8%

Answer

32%

Answer

10%

Answer

24%

A rental property generates $48,000 in annual gross rent with a 10% vacancy rate and $18,000 in operating expenses.What is the Net Operating Income (NOI)?

A rental property generates $48,000 in annual gross rent with a 10% vacancy rate and $18,000 in operating expenses.
What is the Net Operating Income (NOI)?