Steve McKnight's
Property Apprenticeship

Assessment Questions - Module 2

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ChrisA
Assessment Questions - Module 2

Hi everyone

I realise this post is very early in the module 2 journey, however I have been looking through the assessment questions for module 2 and I am really excited with the research assignments and personal application questions are bringing this course together!

Look forward to everyone's posts.

Cheers,

jennifer

Absolutely agree with ChrisA .This is where the imminent attribute will form to become confident in starting your investing whilst using all that we are learning.
Bit nervous but exciting. 
 

ch2011

Hi Chris

I am excited about the research assignments but get rather nervous.. Would you care to have some form of discussion ? My email is catherinehii@gmail.com

We can start from getting to know each other better... 

Cheers

Catherine
   

     

ChrisA

Hi everyone

I have had a mental block on q38 of module 2 assignment:
What investment strategy ought to have the highest return: renovating, subdividing or development? Give reasons for your answer.

I feel that developments would give the highest return (along with the highest risk!) but can not put into words the reasons.....

I thought i would throw this question open to everyone before I seek advice from PI HQ.

Many thanks in advance,

bethp

You are not alone, I too, got a block at this one. after pondering it for a bit, I decided to just put my reasons and thoughts into words and send it in and if it isn't a strong enough reason, they will give me that feedback and I can work on it some more then.

bethp

I think if you just bang down your thoughts without being too critical, some words will come, and you will realise it is better than you thought! Writer's block can be that we expect and want what we are thinking and saying to be really great straight away, but if you just spill out any thoughts, you can then revise and edit, and then you are over your block. That's what I find anyway.

ChrisA

Hi Beth

Thanks for your words of support here. I did start writing and worked out how developments bring the greatest return (my response sounds logical to me but as you say, I will see what the proeprty investing guys think of my answer)

Cheers,

bethp

For this one, I did not know how to redraw the graphs on the computer, is it some simple thing, does everyone else know how to do this? Or do I have to send it in by snail mail?

ChrisA

Hi Beth

If you use the Paint application under the start menu (Start - applications - paint), you can copy the original diagram into the paint program, use the curved line tool to draw what you need to onto the picture, then paste it back into your assignment.

Bruce from Brisy
Bruce from Brisy's picture

Hi Beth - Yes Chris is correct - I used same methodology. Worked out fine.

bethp

Thanks, I will give it a go.

coutts
Q15. Samantha is interested in purchasing an investment property for $200,000 and is weighing up whether or not to take out a loan for 80% of the purchase price, or to simply use her considerable savings to pay for it outright. Calculate the leveraged and unleveraged return (profit/loss ÷ cash contributed) based on the following scenarios: [include your calculations if completing by hand, or else you may use a well labelled spreadsheet and attach it to your assessment submission].
The property increases in value by 20%
Bought out right
$200,000 + 20% = $40,000 
So when she sells she will have a total amount of $240,000 
Bought using leverage 
$40,000 cash in $160,000 loan 
Sells for $240,000, pays out the loan of $160,000 
leaves $80,000 - $40,000 put in originally = $40,000 up 
So when she sells she will have a total amount of $240,000
 
The property decreases in value by 15%
Bought out right
$200,000 – 15%  = $30,000 
So when she sells she will have a total amount of $170,000
Bought using leverage
$40,000 cash in $160,000 loan
Sells for $170,000, pays out the loan of $160,000 
Leaves $10,000 - $40,000 put in originally = $30,000 down
So when she sells she will have a total amount of $170,000

Where have i gone wrong, i get the same weithere i put in the full amount or borrow? this doesnt prove there theroy.
keeping in mind it doesnt want me to take int account loan costs
 

 
janecav
janecav's picture

Hi Coutts,
This may help: the question wants you to find out how the profit compares to the amount of money put into the deal, not how much actual profit.
Use the formula "profit/loss ÷ cash contributed" and you should come out with the right answers.
Jane

coutts

i'm not really sure in this question what it is asking me. does it want a ruff dollar amout worked out? if so where do i get the figures or percentages i need to work out this answer? 

janecav
janecav's picture

Hi coutts,
I reckon your best bet is to give the office a call. I have spoken to Renee in the past about a couple of questions and she is really helpful. I'm sure they'd be happy to explain anything to you.