Accredited Wealth Management Advisor Practice Exam

What is the primary concern for an investor in improved land?

1. Reselling the property within three years.

2. Cash flow expected to be generated by the property.

3. Commissions paid to purchase the property.

4. Net income of the investment.

The correct answer is: Cash flow expected to be generated by the property.

The primary concern for an investor in improved land typically revolves around the cash flow expected to be generated by the property. Cash flow is crucial for assessing the profitability and sustainability of the investment. Investors generally seek to understand how much income the property will generate through rentals, leases, or other income-generating activities that can impact their returns. By focusing on cash flow, investors can evaluate their ability to cover expenses, including taxes, maintenance, and any debt service on the property. This understanding is instrumental in determining whether holding the investment aligns with their financial goals. Other options, while relevant to property investment considerations, do not hold the same level of direct significance. For instance, the potential for reselling the property within a short period could introduce more speculative elements and risks than an emphasis on consistent cash flow. Commissions are a cost associated with acquiring the property but do not directly relate to its operational performance. Similarly, while net income is an important figure, it is often influenced by cash flow measurements and does not reflect the real-time financial performance as comprehensively as cash flow projections do.