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Pearson Vue Exam Questions and Answers | Latest Version | 2025/2026 | Correct & Verified
What is the main goal of real estate investing?✔✔ To generate profit through rental income, property appreciation, or both.
Why is location important in real estate?✔✔ It affects property value, demand, and future growth potential.
What does ROI stand for in real estate?✔✔ Return on Investment.
How can an investor earn passive income through real estate?✔✔ By renting out properties to tenants.
Why would someone invest in commercial real estate?✔✔ It offers higher rental income and longer lease terms compared to residential.
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What is equity in real estate?✔✔ The difference between the property’s market value and the amount owed on it.
What is house flipping?✔✔ Buying a property, renovating it, and reselling it for a profit.
What is the purpose of a real estate appraisal?✔✔ To determine the fair market value of a property.
What is a down payment?✔✔ An upfront portion of the total property price paid by the buyer.
Why is diversification important in investment portfolios?✔✔ It reduces risk by spreading investments across different assets.
What is a real estate investment trust (REIT)?✔✔ A company that owns or finances income-producing properties and pays dividends to investors. 2 / 4
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What does cash flow mean in rental property?✔✔ The money left after all expenses and mortgage payments are paid.
What happens when a property appreciates?✔✔ Its value increases over time.
Why do investors use leverage in real estate?✔✔ To control larger assets with borrowed money and potentially increase returns.
What is a lease agreement?✔✔ A legal contract between a landlord and tenant outlining rental terms.
What is meant by property depreciation in tax terms?✔✔ A method to deduct the loss of value of a building over time from taxable income.
What is a real estate agent's main role?✔✔ To help clients buy, sell, or rent properties. 3 / 4
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What does "under contract" mean in real estate?✔✔ A buyer and seller have agreed to terms but the sale hasn’t closed yet.
Why is property management important for real estate investors?✔✔ It ensures maintenance, rent collection, and tenant issues are handled professionally.
What is a mortgage?✔✔ A loan used to buy real estate, with the property as collateral.
What is an investment property?✔✔ A property bought to generate income, not for personal use.
Why is a title search important in property transactions?✔✔ It ensures the seller legally owns the property and there are no claims or liens.
What is zoning in real estate?✔✔ Government rules that define how property can be used (e.g., residential, commercial).
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