WorksheetsAdvanced Financial Literacy Unit #5 Test Review Activity
Total questions: 25
Worksheet time: 1hrs 15mins
Check ALL that apply towards the disadvantages to renting your home.___.
No building of equity.
No tax breaks
Control over housing costs.
No upfront costs.
Check ALL that are advantages to renting your home..
Rent is tax deductible.
Repairs and maintenance costs are the landlord’s responsibility.
Utilities may be included.
Easier credit requirements.
Check ALL the disadvantages to owning your home.
Potential for financial loss.
Ongoing costs of repairs and maintenance.
Creative freedom to décor.
Homes are usually unfurnished.
Check all the advantages to owning your home.
Creative freedom to décor.
sense of belonging and community.
volatility of the housing market.
mortgage interest and property taxes are tax deductible.
Income that takes little or no effort is _____________________________.
passive
active
earned
deferred
The common disadvantage of buying a home is
fewer financial benefits
limited mobility
restrictions on decorating and having pets
conditions in the lease
Check ALL that apply towards income streams of investment properties.
Rent
Laundry and vending machines
Parking fees
Interest
Capital appreciation from an investment property is __________
gains in its equity.
increase in expenses.
decrease in depreciation cost.
loss in value.
Check all the ways an investment property earns capital appreciation.
Increase in rents
Paying down the mortgage
Area or neighborhood properties have increased in value.
Increase in property taxes.
Check all the tax advantages of investment properties.
Costs of owning, operating, and managing a property are deductible.
Depreciation
Taxes on capital appreciation can be deferred
Non-rental income is tax-free.
Using debt to acquire investment assets is ____________.
leverage
depreciation
recapture
depletion
Check all the risks associated with owning investment property.
Increased liability for accidents
Buying the wrong property at the wrong time
Being underleveraged
Takes time and is hard work.
Investment properties are a(n) ______________ asset that takes time to sell.
illiquid
liquid
fluid
depreciating
Modeled after mutual funds, ____________________ pool investors capital who earn dividends from real estate investments.
Real Estate Investment Trusts (REITs)
General Partnerships
Limited Partnerships
Tenant-in-common
________ are investment property ownership arrangements where all parties are equally responsible for day-to-day management.
Real Estate Investment Trusts (REITs)
General Partnerships
Limited Partnerships
Tenant-in-common
________ are investment property ownership arrangements which investors who are not as involved but may profit.
Real Estate Investment Trusts (REITs)
General Partnerships
Limited Partnerships
Tenant-in-common
________ are investment property arrangements which investors owners directly own the investment property.
Real Estate Investment Trusts (REITs)
General Partnerships
Limited Partnerships
Tenant-in-common
Online tool used to find real estate listings for sale by Realtors® and other realty professionals.
Multiple Listing Service (MLS)
Multiple Property Listings (MPL)
Redfin
Zillo
Check ALL the information found on an investment property’s MLS listing.
list price
operating costs
rents
local crime rates
Which would NOT be an example of an investment property's operating cost?
Repairs and maintenance
Electricity
Water
Depreciation
Rachel has found a great apartment that costs $800 per month. To move in, her new landlord requires the first month's rent in advance plus a damage deposit equal to a month's rent. If she signs a year's lease and does no damage to the apartment, which of the following will be true?
She must pay $800 before moving in and will get back $1,000 when she moves out.
She must pay $1,600 before moving in and gets back $800 when she moves out.
She must pay $1,000 before moving in and will get it back when she moves out.
She must pay $800 before moving in and will get it back when she moves out.
Net operating income (NOI) is ____________.
gross annual revenue minus total operating expenses.
total revenue divided by market price.
rental income plus other income.
gross annual revenue plus total operating expenses.
An investment property’s CAP rate is calculated by
total revenue minus expenses.
net operating income divided by market price.
total revenue divided by market price.
net operating income multiplied by market price.
Check ALL that apply towards CAP rates.
Investment property's rate of return
Used to compare investment properties with other investments
Used to compare different investment properties
The lowest possible CAP rate is desirable
One huge advantage of buying an Real Estate Investment Trust (REIT) versus other investment property ownerships is
REITs are publicly traded and thus more liquid.
REITs have greater tax advantages.
REITs have more streams of income
REIT investors have greater control over the property.
