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20 Cards in this Set

  • Front
  • Back
What is the purpose of R.E.I?
-It’s to buy land and all the physical properties attached to it. Such as houses, trees & fences
When does the R.E.I cycle experiences excess?
-When the supply of properties is high
What should you understand, when the supply of properties
Is high?
-Indicates a good time to buy but not to sell
-This result in a decrease of property value
Name some (9)factors that can affect real estate?
-Interest Rate
-Legal Restrictions
-Local or provincial economy
-Populations Mobility
-Property Location
-Public Opinion of property
Name 6 advantages of R.E.I
-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
Name 4 disadvantages of R.E.I
-You need Knowledge to reduce investment risk.
-Cash not available immediately.
-R.E.I is a long-term investment
-Advice from expert is necessary.
Name the 4 majors participants in real estate investment
-Mortgage lenders
-Equity Investor
Define Equity Investor
-It is the person or entity that acquires the real estate investment
What are the most common forms of equity investor?
-Real Estate Investment Trust
What is the mortgage lender?
-It is the entity that lends the money to the equity investor that needs to start a real estate investment.
What are the common mortgage lenders?
-Another Individual
-Insurance Companies
-Real Estate
Tenants can use the property for what?
-Special Purpose
Government participation in R.E.I takes palace at 3 different levels?
In the relationship between the equity investor and government, most taxes are on what?
-On income (money made on rent) and capital gain (money made when you sell a property)
What is the R.E.I process?
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.
Name 4 types of environment you have to learn about in order to analyze investment climate and market conditions.
-Market Environment
-Legal Environment
-Financing Environment
-Tax Environment
Financial Analysis deals with what?
It deals with financial calculations that will allow you to anticipate the cash flow of the R.E.I
At the end of the Financial Analysis you should be able to answer?
-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.
Names 3 Criteria’s you can use to decide how much you are able or willing to pay for a property.
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
Other participant in R.E.I
Financial planner
Mortgage Broker
Building Inspector.
Insurance Broker.