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Texas SAE: Real Estate Investment QUESTIONS AND ANSWERS RATED A+ 2024/2025
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Texas SAE: Real Estate Investment QUESTIONS AND ANSWERS RATED A+ 2024/2025
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Texas SAE: Real Estate InvestmentActive actual estate investing comes in three "flavors." - ANSFix and turn
Buy and keep
Wholesaling
Fix and flip - ANSRequirements consist of:
Working capital for the acquisition and upkeep
Priced low enough to cover fees of repairs, holding duration, marketing, final fees, and earnings
Remodeling capabilities
Eye for needed updates
Risks include:
Running out of cash to complete maintenance
Inability to sell because of terrible market timing
Buy and Hold Strategy - ANSRequirements consist of:
Capital for buy
Ability to cover debt with rental earnings throughout protecting period
Risks consist of: Vacancies
Cash float shortages
Property price decline
Tenant problems
Wholesaling - ANSRequirements consist of:
Ability to discover assets at a deep bargain
Thick skin due to seller response to low ball gives
Ability to behave fast, perhaps paying cash
Ability to resell quick
Risks include: Lack of availability
Getting caught with property (not able to show property around quick)
Paying an excessive amount of up the front, no earnings
Passive Investing - ANSReal Estate Investment Trusts (REITs)
Real property Limited Partnerships.
Mutual finances that promote mortgage-subsidized securities, and you may make investments
with online real property systems.
REITs - ANSPassive Investing groups that spend money on professionally managed
commercial properties such as workplace homes, apartments, warehouses, or fitness care
facilities. To invest in an REIT, you purchase publicly traded shares of the organization.
, Limited Partnership - ANSPassive Investing non-public real estate investments in commercial
belongings. The popular companion is an experienced property manager or real estate
improvement company. The traders are the constrained companions who offer financing for the
real estate project in change for a proportion of ownership.
Wholesaling
Sid is a wholesaler. He's not interested by shopping for a property, renovating it, and promoting
it at a profit, neither is he interested by shopping for and holding a assets as a rental.
Sid makes the low-ball bid due to the fact a wholesaling investor like himself must purchase low
and sell fast to make a earnings. - ANSSid already has a customer in thoughts while he makes
his embarrassingly low offer for a assets with stimulated dealers.
Real estate buyers range from traditional customers and dealers. They have different
motivations, one-of-a-kind mindsets, and pretty exclusive desires that you'll want to recognize
and paintings with which will build and preserve investor customers - ANSThree Investment
Goals
Investor clients are greater strategic and much less emotional. And, whilst now not anybody
who invests in actual property has the same purpose, most buyers are normally centered on
one of the following:
Earning a earnings
Generating capital upkeep
Creating a tax safe haven
one element that makes real property investment extraordinary from different investments—like
securities or bonds—is that there is the potential for incomes earnings distinctive approaches
from the equal investment. - ANSRental profits
Resale price
Resale fee: - ANSIn fashionable, real property will growth in value through the years. When the
investor sells the belongings, it's likely to be for a higher price than the price at which it become
at the start bought, ensuing in greater take advantage of the investment.
Rental profits: - ANSIt offers one form of income, assuming the profits is sufficient to cowl all of
the operating charges.
Capital upkeep - ANSReal property investment is considered a hedge against inflation due to
the fact belongings values commonly rise over time.
During the ownership length, fairness builds and the property value increases. In comparison, a
renter will in no way see the money paid to the landlord again. If the investor's intention is to
make a profit, the capital used to buy the property is preserved while it earns.
Tax Shelter - ANSThe price of buying, keeping, and running an profits assets can be deducted
from that income, effectively reducing the quantity of taxable profits. The lengthy-time period
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