Analysing
Here's the review of your real estate investing IQ based on your answers:
Question 1:
In which stage of a real estate cycle can you make money as an investor?
Your Answer:
Growth
Right Answer
All
There are strategies for making money under virtually all market conditions.
Question 1:
In which stage of a real estate cycle can you make money as an investor?
Your Answer:
Stagnation
Right Answer
All
There are strategies for making money under virtually all market conditions.
Question 1:
In which stage of a real estate cycle can you make money as an investor?
Your Answer:
Decline
Right Answer
All
There are strategies for making money under virtually all market conditions.
Question 1:
In which stage of a real estate cycle can you make money as an investor?
Your Answer:
All
Right Answer
All
There are strategies for making money under virtually all market conditions.
Question 2:
Real estate investing is all about adding value for capital gains.
Your Answer:
True
Right Answer
False
While that is a tried and tested approach to real estate investing there are many other great strategies that are well worth your consideration. It is best to find a strategy that suits your goals, your skill set, your personal situation and the current market conditions.
Question 2:
Real estate investing is all about adding value for capital gains.
Your Answer:
False
Right Answer
False
While that is a tried and tested approach to real estate investing there are many other great strategies that are well worth your consideration. It is best to find a strategy that suits your goals, your skill set, your personal situation and the current market conditions.
Question 3:
The best way to add value to a property is a quick renovation.
Your Answer:
True
Right Answer
False
Once again, that has been a very successful strategy for many, many investors however there are numerous other ways to add value and many of them require less labor and can generate a more passive income.
Question 3:
The best way to add value to a property is a quick renovation.
Your Answer:
False
Right Answer
False
Once again, that has been a very successful strategy for many, many investors however there are numerous other ways to add value and many of them require less labor and can generate a more passive income.
Question 4:
Since you make money when you buy, a professional investor only deals with motivated sellers and never with a broker or agent.
Your Answer:
True
Right Answer
False
It is true that motivated sellers can be a great source of discounted properties and buying below fair market value is a great way to create instant equity for yourself. However, there are numerous strategies that will allow you to make a handsome profit buying at or even slightly above fair market value. So if you choose such a strategy your sources for locating deals can expand greatly beyond motivated sellers only.
Question 4:
Since you make money when you buy, a professional investor only deals with motivated sellers and never with a broker or agent.
Your Answer:
False
Right Answer
False
It is true that motivated sellers can be a great source of discounted properties and buying below fair market value is a great way to create instant equity for yourself. However, there are numerous strategies that will allow you to make a handsome profit buying at or even slightly above fair market value. So if you choose such a strategy your sources for locating deals can expand greatly beyond motivated sellers only.
Question 5:
Which of the following allows you to control a property without owning it?
Your Answer:
Mortgage
Right Answer
Both (b) and (c)
An option contract obviously allows you take some control of a property during the option period and the option fee is typically around 1% of the purchase price.
A property can also be secured by a financial partner and then your interest can be tied up with relevant contracts with that investor.
Question 5:
Which of the following allows you to control a property without owning it?
Your Answer:
Option contract
Right Answer
Both (b) and (c)
An option contract obviously allows you take some control of a property during the option period and the option fee is typically around 1% of the purchase price.
A property can also be secured by a financial partner and then your interest can be tied up with relevant contracts with that investor.
Question 5:
Which of the following allows you to control a property without owning it?
Your Answer:
Investor
Right Answer
Both (b) and (c)
An option contract obviously allows you take some control of a property during the option period and the option fee is typically around 1% of the purchase price.
A property can also be secured by a financial partner and then your interest can be tied up with relevant contracts with that investor.
Question 5:
Which of the following allows you to control a property without owning it?
Your Answer:
Both (b) and (c)
Right Answer
Both (b) and (c)
An option contract obviously allows you take some control of a property during the option period and the option fee is typically around 1% of the purchase price.
A property can also be secured by a financial partner and then your interest can be tied up with relevant contracts with that investor.
Question 6:
A deal can be very attractive when the vendor has little or no equity.
Your Answer:
True
Right Answer
True
This is really a matter of what strategy you are utilizing. With some strategies it is critical that the vendor have significant equity so you can pick up the property at a discount but with other strategies this is not important and then other factors will come into play.
Question 6:
A deal can be very attractive when the vendor has little or no equity.
Your Answer:
False
Right Answer
True
This is really a matter of what strategy you are utilizing. With some strategies it is critical that the vendor have significant equity so you can pick up the property at a discount but with other strategies this is not important and then other factors will come into play.
Question 7:
If you want to buy discounted property from motivated sellers it's best if they have substantial equity.
Your Answer:
True
Right Answer
True
If a vendor has no equity in a property they really need to get a higher price for it so they can pay out their loan.
Question 7:
If you want to buy discounted property from motivated sellers it's best if they have substantial equity.
Your Answer:
False
Right Answer
True
If a vendor has no equity in a property they really need to get a higher price for it so they can pay out their loan.
Question 8:
You need money to make money. That's the real secret of professional investors.
Your Answer:
True
Right Answer
False
While it certainly helps to have funds behind you we would suggest that the real trick is in getting the knowledge to put together creative deals that will attract investment funds. And then staying focussed on your plan.
Question 8:
You need money to make money. That's the real secret of professional investors.
Your Answer:
False
Right Answer
False
While it certainly helps to have funds behind you we would suggest that the real trick is in getting the knowledge to put together creative deals that will attract investment funds. And then staying focussed on your plan.
Question 9:
The most important factor for a good deal is:
Your Answer:
Price
Right Answer
It depends on your strategy
Some strategies rely upon getting a great price to work while others require a deal that requires very little money down or great terms. Get your strategy clear and then you know what you are looking for.
Question 9:
The most important factor for a good deal is:
Your Answer:
Interest rates
Right Answer
It depends on your strategy
Some strategies rely upon getting a great price to work while others require a deal that requires very little money down or great terms. Get your strategy clear and then you know what you are looking for.
Question 9:
The most important factor for a good deal is:
Your Answer:
Down payment
Right Answer
It depends on your strategy
Some strategies rely upon getting a great price to work while others require a deal that requires very little money down or great terms. Get your strategy clear and then you know what you are looking for.
Question 9:
The most important factor for a good deal is:
Your Answer:
It depends on your strategy
Right Answer
It depends on your strategy
Some strategies rely upon getting a great price to work while others require a deal that requires very little money down or great terms. Get your strategy clear and then you know what you are looking for.
Question 10:
Which of the following should not be used as a quick cash strategy?
Your Answer:
Flipping
Right Answer
Wraps
Wraps or wrap-around-mortgages are very much a cash flow strategy.
Question 10:
Which of the following should not be used as a quick cash strategy?
Your Answer:
Twists
Right Answer
Wraps
Wraps or wrap-around-mortgages are very much a cash flow strategy.
Question 10:
Which of the following should not be used as a quick cash strategy?
Your Answer:
Wraps
Right Answer
Wraps
Wraps or wrap-around-mortgages are very much a cash flow strategy.
Question 10:
Which of the following should not be used as a quick cash strategy?
Your Answer:
Foreclosures
Right Answer
Wraps
Wraps or wrap-around-mortgages are very much a cash flow strategy.
Question 11:
Which of the following should not be used as a cash flow strategy?
Your Answer:
Wraps
Right Answer
Development application
To have a development application approved opens up the opportunity to sell that proposal to a builder which is a great way to inject some cash into your bank account on a single occasion.
Question 11:
Which of the following should not be used as a cash flow strategy?
Your Answer:
Development application approval
Right Answer
Development application
To have a development application approved opens up the opportunity to sell that proposal to a builder which is a great way to inject some cash into your bank account on a single occasion.
Question 11:
Which of the following should not be used as a cash flow strategy?
Your Answer:
Lease option purchase
Right Answer
Development application
To have a development application approved opens up the opportunity to sell that proposal to a builder which is a great way to inject some cash into your bank account on a single occasion.
Question 11:
Which of the following should not be used as a cash flow strategy?
Your Answer:
Second mortgage
Right Answer
Development application
To have a development application approved opens up the opportunity to sell that proposal to a builder which is a great way to inject some cash into your bank account on a single occasion.
Question 12:
Which of the following should not be used as a capital growth strategy?
Your Answer:
Tax liens
Right Answer
Tax liens
While it can happen, on the rare occasion, that you end up taking the property for pennies on the dollar via tax lien investing, it should never be entered into with this as your goal. The goal should be to earn the 16-50% returns and if you end up with a property instead it could just be a bonus.
Question 12:
Which of the following should not be used as a capital growth strategy?
Your Answer:
International markets
Right Answer
Tax liens
While it can happen, on the rare occasion, that you end up taking the property for pennies on the dollar via tax lien investing, it should never be entered into with this as your goal. The goal should be to earn the 16-50% returns and if you end up with a property instead it could just be a bonus.
Question 12:
Which of the following should not be used as a capital growth strategy?
Your Answer:
Growth criteria
Right Answer
Tax liens
While it can happen, on the rare occasion, that you end up taking the property for pennies on the dollar via tax lien investing, it should never be entered into with this as your goal. The goal should be to earn the 16-50% returns and if you end up with a property instead it could just be a bonus.
Question 12:
Which of the following should not be used as a capital growth strategy?
Your Answer:
Lease option purchase
Right Answer
Tax liens
While it can happen, on the rare occasion, that you end up taking the property for pennies on the dollar via tax lien investing, it should never be entered into with this as your goal. The goal should be to earn the 16-50% returns and if you end up with a property instead it could just be a bonus.
Question 13:
Real estate investing risk is best managed with:
Your Answer:
Education
Right Answer
Both (a) and (b)
Obviously legal contracts and entities are an integral part of risk mitigation but one of the best ways that professionals manage risk is through knowing what they are doing. Knowledge allows you to make decisions that will keep you out of trouble.
Question 13:
Real estate investing risk is best managed with:
Your Answer:
Legal entities and contracts
Right Answer
Both (a) and (b)
Obviously legal contracts and entities are an integral part of risk mitigation but one of the best ways that professionals manage risk is through knowing what they are doing. Knowledge allows you to make decisions that will keep you out of trouble.
Question 13:
Real estate investing risk is best managed with:
Your Answer:
Large sums of money
Right Answer
Both (a) and (b)
Obviously legal contracts and entities are an integral part of risk mitigation but one of the best ways that professionals manage risk is through knowing what they are doing. Knowledge allows you to make decisions that will keep you out of trouble.
Question 13:
Real estate investing risk is best managed with:
Your Answer:
Both (a) and (b)
Right Answer
Both (a) and (b)
Obviously legal contracts and entities are an integral part of risk mitigation but one of the best ways that professionals manage risk is through knowing what they are doing. Knowledge allows you to make decisions that will keep you out of trouble.
Question 14:
Professional investors earn higher returns because they take greater risks. (ie. risk = return)
Your Answer:
True
Right Answer
False
Risk = Returns need not be true if you are a creative investor. You can and should keep risks close to zero in business through the things we mentioned above and through adequate contingency planning.
High returns are made through smart (creative) investing. ie. putting together win-win deals that attract money.
Question 14:
Professional investors earn higher returns because they take greater risks. (ie. risk = return)
Your Answer:
False
Right Answer
False
Risk = Returns need not be true if you are a creative investor. You can and should keep risks close to zero in business through the things we mentioned above and through adequate contingency planning.
High returns are made through smart (creative) investing. ie. putting together win-win deals that attract money.
Question 15:
General criteria when buying investment properties might include:
Your Answer:
the best house in the worst street
Right Answer
Both (b) and (c)
These essentially mean the same thing and while this concept may not be critical to the success of all strategies it is generally a good way to buy well; especially for capital growth.
Question 15:
General criteria when buying investment properties might include:
Your Answer:
the worst house in the best street
Right Answer
Both (b) and (c)
These essentially mean the same thing and while this concept may not be critical to the success of all strategies it is generally a good way to buy well; especially for capital growth.
Question 15:
General criteria when buying investment properties might include:
Your Answer:
area first; property second
Right Answer
Both (b) and (c)
These essentially mean the same thing and while this concept may not be critical to the success of all strategies it is generally a good way to buy well; especially for capital growth.
Question 15:
General criteria when buying investment properties might include:
Your Answer:
Both (b) and (c)
Right Answer
Both (b) and (c)
These essentially mean the same thing and while this concept may not be critical to the success of all strategies it is generally a good way to buy well; especially for capital growth.
Question 16:
Which of the following is MOST true of property development?
Your Answer:
the required investment is prohibitive
Right Answer
It is best to start with smaller deals
It is probably wise to cut your teeth on something smaller like single family homes before getting into the world of property developing but if you do your homework and really want to jump straight in it would then be wise to start with small development projects.
The biggest reason for this is that you must EXPECT to make mistakes in the early days and you need to keep the deals small enough that you can recover and keep going.
Question 16:
Which of the following is MOST true of property development?
Your Answer:
it is far too risky
Right Answer
It is best to start with smaller deals
It is probably wise to cut your teeth on something smaller like single family homes before getting into the world of property developing but if you do your homework and really want to jump straight in it would then be wise to start with small development projects.
The biggest reason for this is that you must EXPECT to make mistakes in the early days and you need to keep the deals small enough that you can recover and keep going.
Question 16:
Which of the following is MOST true of property development?
Your Answer:
it is only for seasoned investors
Right Answer
It is best to start with smaller deals
It is probably wise to cut your teeth on something smaller like single family homes before getting into the world of property developing but if you do your homework and really want to jump straight in it would then be wise to start with small development projects.
The biggest reason for this is that you must EXPECT to make mistakes in the early days and you need to keep the deals small enough that you can recover and keep going.
Question 16:
Which of the following is MOST true of property development?
Your Answer:
it is best to start with smaller deals
Right Answer
It is best to start with smaller deals
It is probably wise to cut your teeth on something smaller like single family homes before getting into the world of property developing but if you do your homework and really want to jump straight in it would then be wise to start with small development projects.
The biggest reason for this is that you must EXPECT to make mistakes in the early days and you need to keep the deals small enough that you can recover and keep going.
Question 17:
Cash on cash return equals:
Your Answer:
rent / cash into deal
Right Answer
net cashflow / cash into deal
It's important to use good measures of your investments' performance and cash-on-cash return is a simple measure that gives you a quick idea of performance far better than yield.
Question 17:
Cash on cash return equals:
Your Answer:
rent / price
Right Answer
net cashflow / cash into deal
It's important to use good measures of your investments' performance and cash-on-cash return is a simple measure that gives you a quick idea of performance far better than yield.
Question 17:
Cash on cash return equals:
Your Answer:
net cashflow / cash into deal
Right Answer
net cashflow / cash into deal
It's important to use good measures of your investments' performance and cash-on-cash return is a simple measure that gives you a quick idea of performance far better than yield.
Question 17:
Cash on cash return equals:
Your Answer:
net cashflow / price
Right Answer
net cashflow / cash into deal
It's important to use good measures of your investments' performance and cash-on-cash return is a simple measure that gives you a quick idea of performance far better than yield.
Question 18:
Real estate investors should:
Your Answer:
manage their own properties to reduce costs
Right Answer
Both (b) and (c)
Unless you outsource your property management you will never be able to grow your business beyond maybe 20 properties and you will remain a slave to it until you start putting together a team to handle such tasks.
But in order to understand what to expect of your property management team it is a very good idea to manage a property or two at the start. This will give you a very good idea of what the main issues are and what to look for in a management company.
Question 18:
Real estate investors should:
Your Answer:
outsource their property management
Right Answer
Both (b) and (c)
Unless you outsource your property management you will never be able to grow your business beyond maybe 20 properties and you will remain a slave to it until you start putting together a team to handle such tasks.
But in order to understand what to expect of your property management team it is a very good idea to manage a property or two at the start. This will give you a very good idea of what the main issues are and what to look for in a management company.
Question 18:
Real estate investors should:
Your Answer:
manage properties when starting to gain experience
Right Answer
Both (b) and (c)
Unless you outsource your property management you will never be able to grow your business beyond maybe 20 properties and you will remain a slave to it until you start putting together a team to handle such tasks.
But in order to understand what to expect of your property management team it is a very good idea to manage a property or two at the start. This will give you a very good idea of what the main issues are and what to look for in a management company.
Question 18:
Real estate investors should:
Your Answer:
Both (b) and (c)
Right Answer
Both (b) and (c)
Unless you outsource your property management you will never be able to grow your business beyond maybe 20 properties and you will remain a slave to it until you start putting together a team to handle such tasks.
But in order to understand what to expect of your property management team it is a very good idea to manage a property or two at the start. This will give you a very good idea of what the main issues are and what to look for in a management company.
Question 19:
Commercial property is a good investment:
Your Answer:
for risk-taking professional investors
Right Answer
after you have gained experience with single family homes
Commercial property is generally a more professional market with smarter players to compete against and less room for error. It may be something you want to pursue after first learning some basics in single family homes.
Question 19:
Commercial property is a good investment:
Your Answer:
after you have gained experience with single family homes
Right Answer
after you have gained experience with single family homes
Commercial property is generally a more professional market with smarter players to compete against and less room for error. It may be something you want to pursue after first learning some basics in single family homes.
Question 19:
Commercial property is a good investment:
Your Answer:
never; it's far too volatile
Right Answer
after you have gained experience with single family homes
Commercial property is generally a more professional market with smarter players to compete against and less room for error. It may be something you want to pursue after first learning some basics in single family homes.
Question 20:
Good sources of funding include:
Your Answer:
Seller
Right Answer
All
There are many possible sources of funding and that includes your vendor, your buyer, and all kinds of different investors; not to mention traditional lending institutions and more. Get creative!
Question 20:
Good sources of funding include:
Your Answer:
Buyer
Right Answer
All
There are many possible sources of funding and that includes your vendor, your buyer, and all kinds of different investors; not to mention traditional lending institutions and more. Get creative!
Question 20:
Good sources of funding include:
Your Answer:
Equity money partner
Right Answer
All
There are many possible sources of funding and that includes your vendor, your buyer, and all kinds of different investors; not to mention traditional lending institutions and more. Get creative!
Question 20:
Good sources of funding include:
Your Answer:
All
Right Answer
All
There are many possible sources of funding and that includes your vendor, your buyer, and all kinds of different investors; not to mention traditional lending institutions and more. Get creative!
Question 21:
Which of the following tax related issues can make real estate a more attractive investment?
Your Answer:
Depreciation
Right Answer
Both (a) and (c)
Depreciation offers the opportunity to reduce your taxable income from a property despite the value of the property actually increasing.
A 1031 exchange allows you to defer any capital gains tax as long as you reinvest your earnings into another property via a 1031 exchange accommodator.
Question 21:
Which of the following tax related issues can make real estate a more attractive investment?
Your Answer:
Capital gains
Right Answer
Both (a) and (c)
Depreciation offers the opportunity to reduce your taxable income from a property despite the value of the property actually increasing.
A 1031 exchange allows you to defer any capital gains tax as long as you reinvest your earnings into another property via a 1031 exchange accommodator.
Question 21:
Which of the following tax related issues can make real estate a more attractive investment?
Your Answer:
1031 exchange
Right Answer
Both (a) and (c)
Depreciation offers the opportunity to reduce your taxable income from a property despite the value of the property actually increasing.
A 1031 exchange allows you to defer any capital gains tax as long as you reinvest your earnings into another property via a 1031 exchange accommodator.
Question 21:
Which of the following tax related issues can make real estate a more attractive investment?
Your Answer:
Both (a) and (c)
Right Answer
Both (a) and (c)
Depreciation offers the opportunity to reduce your taxable income from a property despite the value of the property actually increasing.
A 1031 exchange allows you to defer any capital gains tax as long as you reinvest your earnings into another property via a 1031 exchange accommodator.
It's important to know where you stand with your current level of investing know-how and get an adequate foundation in the theory but it's equally important to avoid getting bogged down in the mountains of information available and actually START investing. To learn how to tackle this issue, check out our special report at www.investing-secrets.com/must-read/
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