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37 Cards in this Set

  • Front
  • Back
Property
Anything that can be owned or possessed
Real Estate
Land and its permanent improvements
Tangible Assets
Physical (house)
Intangible Assets
Non-Physical (rights)
Real Property
Real Estate
Capital Property
Trade, Financial securities
User Market
Competition among users for physical location
Raw Land
Larger area that does not include any improvements
(Riskiest Real Estate Venture)
Improvement to the land
Infrastructures (walkways, sewers, sidewalks... etc)
Improvement on the land
Includes fixed structures
Four Quadrants of Real Estate
Private Equity
Public Equity
Private Debt
Public Debt
Private Equity
Individuals, Firms, and Institutions
Public Equity
Investors in Publicly traded Real Estate
Private Debt
Banks, Insurance Companies, Private Lenders
Public Debt
Investors in Mortgage backed securities
Why is Real Estate Important?
Half of World's Wealth
28% of Worlds GDP
Creates jobs for nearly 9 million americans
%70 of local Government revenues
Capital Market
Allocate Financial Resources
Debt Interests
Equity Interests
Equity Interests
Owners of Real Estate (Receive Return)
Debt Interests
Lenders (Hold Claims to the interest)
How Real Estate Value is Determined?
User Market
Capital Market
Govt
Real Estate Market
Heterogenous products
immobile products
localized markets
segmented markets
Investment Decisions
Entails Significant costs now in return for benefits in the future
Normal Business Decisions
-Recruit Personal
-Choose ways to generate business
- Choose Market Strategies
Structure
Real Estate Decisions
-choose location
- rent or buy
- expand
- renovate
- hold or sell
- Finance
Monetary Cost
Initial Purchase Price
Non- Monetary Cost
Time
Monetary Benefit
Rents
Non-Monetary Benefits
Surrounding area access to school
Liquidity
(R.E. is illiquid)
Ability to sell for a fair market price
Cost Risk Evaluated By?
Engineers & Building Contracts
Cash Flow Risk Evaluated by?
Brokers, market, researchers, or appraisers
Investment Value
Value to a particular individual
Appraised Value
Valve to a "typical" investor, or probable selling price
Urban Growth Causes
(Vice Versa)
Real Estate Market Growth
High Market Risk
Hotels and Motels, Restaurants
The "Gravity" that draws economic Activity into clusters is
Demand for access or proximity
Base multiplier effect is greater
-more isolated
-more diversified
-larger
-base activity uses more local goods and services