Chapter One

Question 1

Back of Envelope Analysis

Answer 1

Question 2

Advantages of Real Estate investments

Answer 2

• Immobility • Longevity (or durability) • Indivisibility • Tax benefits

Question 3

ATTRIBUTES OF REAL ESTATE INVESTMENTS: ADVANTAGES

Answer 3

• High returns • Financial leverage • Tax sheltering • Inflation hedge

Question 4

ATTRIBUTES OF REAL ESTATE INVESTMENTS: DISADVANTAGES

Answer 4

• Financial risk • Interest rate risk • Illiquidity • Management

Question 5

Steps in the Investment Analysis Process

Answer 5

1. Identify Investor’s Decision Framework 2. Collect Market Information 3. Perform Financial Analysis 4. Apply Selection Criteria 5. Make Investment

Question 6

DCR Debt Coverage Ratio

Answer 6

DCR = NOI /ANNUAL PAYMENTS