Ch. 28 - Types of Investment Properties

Question 1

______ is the use of borrowed funds to increase the potential return of an investment.

Answer 1

Leverage

Question 2

List three other risk factors an investor must consider besides financial risk.

Answer 2

Business risk
Inflation risk
Management risk

Question 3

_____ is term that refers to an asset’s ability to be easily converted through an act of buying or selling without causing a significant movement in the price and with minimum loss of value.

Answer 3

Liquidity

Question 4

What is probably the riskiest of all property investments?

Answer 4

Investment in unimproved or undeveloped property

Question 5

Typically, how many floors will you find in low-, mid- and high-rise office buildings?

Answer 5

Low-rise - Usually 1 to 3 floors
Mid-rise - 4 to 15 stories
High-rise - Normally over 15 stories tall

Question 6

The following are good reasons to invest in a ______ .

There is usually a large selection of properties available from which to choose.
Management can be easier than with other types of income properties.
The investment is more liquid than other kinds of property

Answer 6

single-family home

Question 7

What is the most important consideration when deciding to purchase a fixer-upper as an investment?

Answer 7

What the demand for the property will be when it’s ready for resale.

Question 8

The practice of allowing more than one type of use in a building or set of buildings, is referred to as ______ .

Answer 8

mixed-use development

Question 9

What is the difference between a warehouse property and a manufacturing property?

Answer 9

A warehouse property focuses on storage and distribution of goods.

Manufacturing buildings are large facilities designed to accommodate the equipment for various manufacturing processes.