3.2 Macroeconomic Risk
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Questions and Answers

What is macroeconomic risk in the context of investing in property?

  • Market movements and property-specific risks
  • Fluctuations in property prices due to investor behavior
  • Market movements and macroeconomic shocks that impact property returns (correct)
  • Global economic trends and property location-specific risks

    • What do investors consider when evaluating macroeconomic risk?

  • Asset type and current market trends
  • Leverage ratio and property management
  • Market conditions and potential for recession (correct)
  • Property location and historical returns

    • How do investors compensate for the risk of entering a recessive market?

  • By seeking higher returns for the investment (correct)
  • By diversifying their property portfolio
  • By reducing leverage and increasing property value
  • By focusing on short-term investment deals

    • What happens to the value of a property if the exit cap rate increases?

    <p>The value of the property decreases</p> Signup and view all the answers

    How does a recession impact the likelihood of getting paid rent for a property?

    <p>The likelihood decreases due to economic downturn</p> Signup and view all the answers

    What impact does a market downturn have on the availability of capital to refinance loans?

    <p>The availability decreases as investors are more cautious</p> Signup and view all the answers

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