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