Canadian Real Estate

Front 1

What is the purpose of R.E.I?

Back 1

-It’s to buy land and all the physical properties attached to it. Such as houses, trees & fences

Front 2

When does the R.E.I cycle experiences excess?

Back 2

-When the supply of properties is high

Front 3

What should you understand, when the supply of properties
Is high?

Back 3

-Indicates a good time to buy but not to sell
-This result in a decrease of property value

Front 4

Name some (9)factors that can affect real estate?

Back 4

-Interest Rate
-Taxes
-Legal Restrictions
-Local or provincial economy
-Populations Mobility
-Vacancy
-Property Location
-Public Opinion of property

Front 5

Name 6 advantages of R.E.I

Back 5

-Risk in R.E.I is low
-Appreciation of Real Estate increases annually
-Down payment is accessible
-Net return will most likely be high
-Tax rates are beneficial to R.E.I
-Tax Free to Tax savings on capital
-R.E.I builds up on equity

Front 6

Name 4 disadvantages of R.E.I

Back 6

-You need Knowledge to reduce investment risk.
-Cash not available immediately.
-R.E.I is a long-term investment
-Advice from expert is necessary.

Front 7

Name the 4 majors participants in real estate investment

Back 7

-Mortgage lenders
-Equity Investor
-Government
-Tenant

Front 8

Define Equity Investor

Back 8

-It is the person or entity that acquires the real estate investment

Front 9

What are the most common forms of equity investor?

Back 9

-Individual
-Corporation
-Partnership
-Real Estate Investment Trust

Front 10

What is the mortgage lender?

Back 10

-It is the entity that lends the money to the equity investor that needs to start a real estate investment.

Front 11

What are the common mortgage lenders?

Back 11

-Another Individual
-Insurance Companies
-Banks
-Real Estate

Front 12

Tenants can use the property for what?

Back 12

-Residential
-Commercial
-Industrial
-Special Purpose

Front 13

Government participation in R.E.I takes palace at 3 different levels?

Back 13

-Federal
-Provincial
-Municipal

Front 14

In the relationship between the equity investor and government, most taxes are on what?

Back 14

-On income (money made on rent) and capital gain (money made when you sell a property)

Front 15

What is the R.E.I process?

Back 15

1.Identify investors’ objectives goals and constraints.
2.Analyze Investment climate and market conditions.
3.Develop Financial Analysis.
4.Apply Decision-Making Criteria.
5.Investment Decision.

Front 16

Name 4 types of environment you have to learn about in order to analyze investment climate and market conditions.

Back 16

-Market Environment
-Legal Environment
-Financing Environment
-Tax Environment

Front 17

Financial Analysis deals with what?

Back 17

It deals with financial calculations that will allow you to anticipate the cash flow of the R.E.I

Front 18

At the end of the Financial Analysis you should be able to answer?

Back 18

-How much is profit per year.
-How much is the mortgage payment.
-How much is the capital gain when I sell.
-How much will taxes diminish my profit.
-How much taxes decrease my capital gain.
-What strategies should I use to reduce taxes on profits and capital gains.

Front 19

Names 3 Criteria’s you can use to decide how much you are able or willing to pay for a property.

Back 19

1.Rules of thumb techniques
Measure the payback period necessary to regain what was invested

2.Discounted Cash Flow
This Calculates the value today of the R.E.I future cash flow

3.Traditional Valuation techniques.
Estimate the value of the property that will be used in the R.E.I

Front 20

Other participant in R.E.I

Back 20

Realtor
Lawyer
Accountant
Financial planner
Mortgage Broker
Building Inspector.
Insurance Broker.