mistakes are part of success! ;)
Awesome quiz! 91%! Thanks for sharing.
Are there explanations for any of the answers? What was the calculation for the mortgage payment?
@Alex Boyce i made a 91% as well but the mortgage calculation was
Price ($150,000) x 75% LTV =($112,500) and multiply that by the 6% interest and that's how i got $6,750 as the annual payment. Of course divide by 12 to get $562.50 as monthly payment
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can someone please help me with question #3 about COC return that I'm currently on right now having a hard time figuring out how they got 18% if someone could please walk me through it.
NOI = 25000 + 1000 - 2500 -10000 =13500
Less your interest only loan payment (150000 * 75% LTV = 112500 loan * 6%) 6750
NOI - loan pmt = return
13500 - 6750 = 6750
Cash investment = (1-75%) * 150000 = 37500
COC return = return/your cash investment
I got a 100% on the quiz. The cap rate stuff scared me because I thought I was unsure of my knowledge but if you read each answer you can deduce the correct one. Great quiz.
9/12 first time, and that researched until 100%))
This is fun! I am on question 3, have to finish it at home! Thanks a lot! So far all correct.
91% - missed the cash-on-cash question at 75% LTV interest only. I gathered this info:
6,750 interest on int only loan @ 6%
13,500 NOI (26,000 rent/other income - 12,500 expenses)
6,750 income (NOI - 6750 annual interest payments)
112,500 - amount of loan @ 75% LTV
How do I need to combine those to get the answer?
"Cash investment = (1-75%) * 150000 = 37500"
Can you explain this line? Is this assuming some percentage of cash down on the 75% ATV loan?
Yes, so the problem assumes you get a loan @ 75% LTV.
Purchase Price * LTV% = loan amount
$150,000 * 75% = $112,500 = loan amount
Therefore your cash investment is as follows:
$150,000- $112,500 = $37,500 = your cash investment OR
(1-75%) * $150,000 = $37,500 = your cash investment
Bringing it full circle, your return/your cash investment = COC return
$6,750/$37,500 = 18%
There's a great book on this an many of the other calculations called "What Every Real Estate Investor Needs to Know About Cash Flow". I highly recommend it if you want to learn all these calculations.
@Garrett Haefele Thanks, Garrett!
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Pretty cool test a little opinionated though but good.
Q5 could have been a bit clearer
Nice little primer to help polish us new to BP and REI! I totally needed to look up some definitions but all seemed to fall in place with a little research for those weird answers! 91% Baby!
Being very green I'm actually pretty excited I made a 75% on that. I had on AH HA moment during one of the questions and everything finally clicked on how to figure out cap rates in real life and not on the BP calculators. Wonderful!
Hello i just took the test and got 90% Don't ask me how. I guess all that reading does pay off. Now I just got to go and find me a deal. Don't know what is holding me back . I got to have at least one deal this year . That's my goal ok thanks
91%. great test
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