Making a Sound Investment Decision – IELTS Reading Answers

Haniya A

12 min read

Updated On Dec 04, 2023

Reading Passage
Making a Sound Investment Decision – IELTS Reading Answers with Location and Explanations
Tips for Answering the Question Types in the Making a Sound Investment Decision – IELTS Reading Answers

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Making a Sound Investment Decision – IELTS Reading Answers is from an academic reading passage that consists of 14 questions which have to be answered in 20 minutes. The Reading section of the IELTS exam can be your highest-scoring section, but only if you practise diligently. To get the best results, you need to understand how to approach and answer the different types of questions.

To prepare for the IELTS reading test, it is helpful to solve and review sample reading questions from past IELTS papers. This will help you become familiar with the different question formats and test your reading skills.

Let’s try to see how easy you find the academic passage “Making a Sound Investment Decision” and if you can complete it in 20 minutes. If not, you can try more IELTS reading practice tests from IELTSMaterial.com.

The question types found in Making a Sound Investment Decision – IELTS reading answers passage are as follows:

Short Answer Question (Q. 1 – 7)

Yes/ No/ Not Given (Q. 8 – 14)

Reading Passage

You should spend 20 minutes on Questions 1-14, which are based on the Reading Passage below.

Making a Sound Investment Decision

As investors tire of stock market instability, the idea of owning a piece of real estate is gaining in popularity. Now, not everyone has what it takes to become a landlord, but if you can make a go of it, it certainly has the potential to become a good money-earner. Here are some tips from successful real estate mogul, Janet Anderson, on how to start building up your property portfolio.

According to Janet, one of the best ways to identify a bargain is to hunt for foreclosures. Foreclosures are properties banks have repossessed because their owners were unable to meet the mortgage repayments. Banks want a quick sell on these places, Janet says. They want to cut their losses and get their money back as quickly as possible. Developing a network – making connections with city clerks and bank employees who know which properties are about to be sold – can be an excellent way to identify such bargains. And bargains they certainly can prove to be; in a recent firesale auction (‘firesale auction’ is the phrase that has been coined to describe auction-room events dedicated entirely to the disposal of repossessed assets) a house with a market value nearing $1,000,000, but with a low reserve price designed to encourage bidders and secure a quick sale, went for $450,000; that’s a whopping 55% discount.

It’s also important to be realistic though and not stretch yourself too far financially. Janet says the biggest mistake you can make is to borrow too much or over-borrow. For first-time investors, lenders usually demand bigger down payments because you haven’t got a proven track record. That’s more of your money on the table and, therefore, should anything go wrong, you’re in for a big financial hit.

Her business partner, James Nylles, is in complete agreement on this point. He also highlights the fact that mortgage payments and deposits are only part of the long-term cost of buying a rental property. There is also the cost of repairs, administration and maintenance, rental manager’s fees, insurance and so on, all of which require you to hold a significant amount of money in reserve. Failure to factor this in when calculating how much you can afford to part with in mortgage repayments can lead to disaster.

One of the biggest traps for first-time investors, according to Nylles, is the temptation to pay over the odds to get the property you desire. Buyers often get carried away, especially in the auction-room setting, which can get quite competitive and even descend into a racket of one-upmanship. They end up paying top-dollar and landing themselves in a financial situation they can ill afford to be in. Remember, you are in the property game to make money, so the more money you have to pay upfront for a property, the less likely you are to recoup your investment in the long run. The good news, however, is that the housing market is not very hot at the moment, which means the danger of overpaying is not so great. Always set emotions to one side and think from a purely business perspective. The question of your liking or disliking the property is irrelevant. As Nylles points out: “you will not be living there.” Business decisions are made in the cold hard light of day; your objective is to minimise your outlay and maximise your return. Whether you secure a huge home in pristine condition or a tiny flat with bare room to stretch in is irrelevant – if the tiny flat gets you a better return on your investment then the choice is a no-brainer.

And last of all, do your homework. You’ve got to get to know the location in which you are going to invest. Look out for areas which are earmarked for government investment. Urban renewal areas are often very attractive since house and rental prices in such places are low right now but can be expected to rise in the not too distant future. The range of local amenities, safety and the state of the local economy are all important factors to consider, too. As the old saying goes, ‘location, location, location’. Invest in a good location and you will maximise your rental income.

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Questions 1-7

Answer the questions below using NO MORE THAN THREE WORDS for each answer.

1 What are investors getting fed up with?

2 Janet Anderson is involved in the sale of the property. What is another phrase used in paragraph 1 to describe this type of business?

3 What is one of the best ways to identify a bargain in the property market?

4 Failure to meet your what, can cause your home to be repossessed?

5 What do banks want to get back quickly on foreclosed properties?

6 Developing networks is an excellent way to find what?

7 What is the biggest error of judgement first-time investors can make, according to Anderson?

Questions 8 – 14

Do the following statements agree with the information given in the Reading Passage?

In boxes 8 – 14 on your answer sheet, write

YES – if the statement agrees with the information

NO – if the statement contradicts the information

NOT GIVEN – if there is no information on this

8 Banks demand larger deposits from first-time property investors.

9 By making a larger deposit, investors can limit their personal financial risk.

10 There are a lot of long-term costs to take into consideration before purchasing a rental property.

11 Banks require you to hold a lot of money in the reserve to meet your long-term property maintenance costs.

12 Many investors are tempted to pay more than they should for their investment properties.

13 At the moment, house prices are extremely high in general.

14 There are a lot of urban renewal projects that have been earmarked by the government.

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Making a Sound Investment Decision – IELTS Reading Answers with Location and Explanations

1 Answer: stock market instability

Question type: Short Answer Questions

Answer location: Paragraph 1, line 1

Answer Explanation: The first line of Paragraph 1 states, “As investors tire of stock market instability, the idea of owning a piece of real estate is gaining in popularity.” These lines suggest the first paragraph highlighting investors’ fatigue with the present market instability within the stock market., so, the answer is stock market instability.

2 Answer: real estate

Question type: Short Answer Questions

Answer location: Paragraph 1, line 3

Answer explanation: The 3rd line of Paragraph 1 reveals, “Here are some tips from successful real estate mogul, Janet Anderson, on how to start building up your property portfolio.” As delineated in the passage, Janet Anderson is distinguished for her property transactions, also referred to as real estate. Hence, the response to this query is real estate.Therefore, the answer is real estate.

3 Answer: hunt for foreclosures

Question type: Short Answer Questions

Answer location: Paragraph 2, line 1

Answer explanation: The first line of the 2nd paragraph states, “According to Janet, one of the best ways to identify a bargain is to hunt for foreclosures.” These lines suggest that the most effective approach to securing a good deal in a real estate deal is to actively search for foreclosed properties. Consequently, the answer is “hunt for foreclosures.”

4 Answer: mortgage repayment

Question type: Short Answer Questions

Answer location: Paragraph 2, line 2

Answer explanation: According to the 2nd line of 2nd paragraph, “Foreclosures are properties banks have repossessed because their owners were unable to meet the mortgage repayments.” These lines indicate that Foreclosures refer to properties that have been taken back by banks because their owners were unable to fulfill their mortgage payments. Hence, the answer is mortgage repayment.

5 Answer: their money

Question type: Short Answer Questions

Answer location: Paragraph 2, line 3

Answer explanation: The 3rd line of paragraph 2 states, “They want to cut their losses and get their money back as quickly as possible.” As indicated in the passage, their objective (the bank’s) is to reduce their losses and swiftly recover their funds (money). Hence, the answer is their money.

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6 Answer: bargain(s) properties

Question type: Short Answer Questions

Answer location: Paragraph 2, line 6

Answer explanation: The 6th line of 2nd paragraph, “Developing a network – making connections with city clerks and bank employees who know which properties are about to be sold – can be an excellent way to identify such bargains.” These lines imply that Establishing relationships with city clerks and bank staff members is an effective strategy. They recognize that accessing information about properties about to be sold can be a valuable method for identifying potential opportunities. Thus, the answer is bargain(s) properties.

7 Answer: borrow too much/over-borrow

Question type: Short Answer Questions

Answer location: Paragraph 3, line 1

Answer explanation: The first line of paragraph 3 states, “It’s also important to be realistic though and not stretch yourself too far financially. Janet says the biggest mistake you can make is to borrow too much or over-borrow.” We can infer from these lines that maintaining a realistic perspective is essential, and it is crucial to avoid stretching oneself financially too far. Janet stresses that the most significant mistake one can make is assuming an excessive amount of debt or borrowing beyond one’s means.. Hence, the answer is borrow too much/over-borrow.

8 Answer: Yes