Final Exam Answers

Course Exit Test: Creative Real Estate Investing Practitioner Test Answers

Question 1: What is the primary benefit for a buyer in a "subject to" transaction? (Answer: b) Obtain the property without qualifying for a new loan)

Question 2: What type of entity is typically created by the buyer in a "subject to" transaction to hold the property? (Answer: b) LLC (Limited Liability Company)

Question 3: Who is responsible for conducting due diligence on the property in a "subject to" transaction? (Answer: a) The buyer)

Question 4: What happens to the seller's mortgage in a "subject to" transaction? (Answer: b) It remains in the seller's name)

Question 5: What is the formula used for determining the purchase price in the all cash discount purchase strategy when the ARV (After Repair Value) is over $300k? (Answer: a) ARV - 10% - Repairs - Your Fee)

Question 6: In the wholetaling strategy, what is the focus when making improvements to the property? (Answer: b) Minimal cosmetic improvements to enhance the property's appeal)

Question 7: What is the purpose of conducting inspections and title searches during due diligence in a "subject to" transaction? (Answer: b) To identify hidden issues or problems with the property)

Question 8: True or False: The "subject to" strategy is suitable for homeowners who want to walk away from their mortgage payments immediately. (Answer: b) False)

Question 9: What is the primary goal of a lease purchase transaction? (Answer: c) Future purchase option for the buyer)

Question 10: In the installment for deed strategy, what happens to the remaining purchase price of the home? (Answer: c) It is financed through installment payments to the seller)

Question 11: Which strategy involves the buyer acting as a middleman to assign the purchase contract to another buyer for a fee? (Answer: a) Wholetaling)

Question 12: What is the purpose of a 1031 exchange in real estate investing? (Answer: b) To defer capital gains taxes when reinvesting in like-kind properties)

Question 13: True or False: In a lease option agreement, the buyer has an obligation to purchase the property at the end of the lease term. (Answer: b) False)

Question 14: What is the primary focus of the fix and flip strategy? (Answer: c) Renovating and selling the property for a profit)

Question 15: What is the purpose of conducting a property assessment in the fix and flip strategy? (Answer: b) To estimate the repair costs)

Question 16: What is the main objective of the buy and hold strategy? (Answer: b) Generating rental income and building equity)

Question 17: What is the purpose of creating an entity (such as an LLC) to hold the property in the subject to strategy? (Answer: b) To protect the buyer's personal assets)

Question 18: What is the primary risk associated with the all cash discount purchase strategy? (Answer: a) Potential lack of financing options for future investments)

Question 19: Which strategy involves converting a single-family residence into an assisted living facility or senior housing? (Answer: d) Assisted Living Conversion or Sober Living)

Question 20: True or False: The lease purchase strategy allows the buyer to occupy the property immediately while building equity towards future ownership. (Answer: a) True)

Question 21: What is the primary objective of the wholetaling strategy? (Answer: c) Purchasing distressed properties and assigning the purchase contract)

Question 22: What is the purpose of a home equity line of credit (HELOC) in real estate investing? (Answer: d) To borrow against the property's equity for further investments)

Question 23: Which strategy involves renting out properties on a short-term basis to tourists or travelers? (Answer: a) Short-Term Rental or Vacation Rental)

Question 24: What is the primary advantage of participating in government-subsidized rental programs, such as Section 8? (Answer: b) Guaranteed rental payments from reliable government sources)

Question 25: In the buy and hold strategy, what is the main source of income for the investor? (Answer: b) Monthly rental income from tenants)