Check Your Understanding-Answers
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What are the three important considerations for a good property investment?
The property must meet the investor's objectives.
The investor must have the financial ability to handle the costs involved.
The investor must examine the economic soundness of the investment.
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What are some tax benefits associated with investing?
Tax shelters, deferral of capital gains through a 1031 exchange, installment sale.
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How could refinancing be an investment benefit?
Refinancing one property can free up funds to purchase another income property. The proceeds from the refinancing would be tax free and the interest on the new loan for the second property will be fully tax deductible.
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How is property management seen as a risk to investing?
Most investors are not property managers. They don't have the time, skill or even the desire to manage the property on their own. If they don't hire a professional property manager, there could be real problems keeping the investment profitable.
