Analyzing Your Real Estate Knowledge

71 Replies

I don't know if anyone else is having trouble but the quiz was kinda flaky for me then kicked me out at question 7. Not having trouble with anything else on the web today.

Very good quiz, although I am confused about the answer to the Cap Rate definition. It stated that the financing does not come into play for the Cap Rate number. The financing expense would most certainly figure into the expenses for the property, thus changing the Net, or am I missing something here?

Also, not clear on the 300% rule for prospective tenants. What is that, in a nutshell? 

@Dallas Trufyn

Cap rate actually does not include debt service. Operating expenses are not part of debt service (mortgage) typically when figuring cap rate.

The idea is to be able to compare it to other properties in a vanilla manner with no financing involved..

Hope this helps,

Chris

Question about #2..

So for a 75% LTV loan the principal is only $112,500 right? I plugged that into a mortgage calculator with 6% interest (30 years) and got a monthly payment of $674.49 and an annual loan payment of $8093.93. Did I do something wrong? I'm not seeing that as an answer and I'm not sure why the right answer is $6750.00

Originally posted by @Omar M. :

Question about #2..

So for a 75% LTV loan the principal is only $112,500 right? I plugged that into a mortgage calculator with 6% interest (30 years) and got a monthly payment of $674.49 and an annual loan payment of $8093.93. Did I do something wrong? I'm not seeing that as an answer and I'm not sure why the right answer is $6750.00

 Loan is simple interest only.  6% x 112,500 = 6750

I love the quiz idea, I got the cap rate definition wrong and the one about what not to worry about finding on the property(a: copper pipes), does that mean if the property doesn't have copper pipes it's not the end of the world and everything else listed is more important/necessity? 75% though, keep the quiz's coming!!!

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