Virginia Real Estate Salesperson Exam Lesson 4

This is the 4th of five sample lessons that we will be sharing with you which will help you prepare for the Virginia real estate salesperson exam.

These Virginia real estate salesperson exam lessons are meant to be a supplement and not a substitute for classroom learning or other requirements of the Virginia real estate department for licensure.

Lesson 4: Real Estate Salesperson Exam Lesson on Real Estate Investing

The capitalization rate is the rate of interest that you can consider a reasonable return on investment. The formula is this: cap rate = Net Operating Income/purchase price.

Benefits of Real Estate Investing

Cash flow from the property

Long-term appreciation from the property

Providing a hedge against inflation

Gaining tax benefits (mortgage interest, wages for repairs, maintenance)

Property can be used as leverage for other investments.

Drawbacks of Real Estate Investing

Your assets are not liquid.

There can be a great deal of upkeep.

Housing markets can fluctuate.

High cap rate = high risk

Low cap rate = low risk

Time Value of Money = Money in hand is more valuable than money that might be made in the future.

Rates of Depreciation

Residential properties depreciate over 27.5 years.

Commercial properties depreciate over 39 years.

If you are looking for other Real Estate audio Lessons we have them for:

California

Georgia

Florida

Texas

Washington

 

 

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