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Fina 210 > BOOk Chapter 1 > Flashcards

BOOk Chapter 1 Flashcards

1
Q

what is a residential property?

A

single family houses

multi family apartments

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2
Q

types of multi-family homes

A

low-rise (less than 4 floors)+

mid-rise (4 to 10 floors)

high-rise (more than 10 floors)

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3
Q

true or false

condo owners are granted rice interest in their Real Estate

A

yeee

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4
Q

what are the types of commercial properties

A

office

retail

industrial

hotel

other

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5
Q

what are key factors when determining the value of an office

A

tenancy

location

quality level

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6
Q

what are the level of quality for an office

A

guest are graded A

wackiest are graded C

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7
Q

what does it mean for an office to be single-tenant?

A

there is only a single company in the office

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8
Q

what does it mean for an office to be multi-tenant?

A

there are different companies in the office

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9
Q

how are retail properties differentiated

A

by their format and size

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10
Q

what are the retail formats

A

malls

shopping centers

power centers

lifestyle centers

street retail

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11
Q

what are the size formats for retail

A

neighborhood

community

regional

super regional

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12
Q

what type of retail stores would Best Buy, Walmart, and Target be considered?

A

power centers

category killers

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13
Q

why are Best Buy, Walmart, and Target considered category killers?

A

their selection of merchandise

their agressive pricing

they kill competition

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14
Q

give examples of industrial commercial retail things

A

warehouses

manufacturing

assembly spaces

etc

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15
Q

how are hotels classified

A

location

intended use

level of service

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16
Q

how can a hotel brand be crucial?

A

it can strongly influence wether a customer stays or not

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17
Q

true or false

interests in real property are critical in determining value?

A

true

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18
Q

what is real property

A

land

structures affixed to that land

cannot be moved

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19
Q

types of interest in real property

A

fee interest

leasehold

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20
Q

fee interest**

not complete

A

subject only to the powers of big G

define don enclosed shape of the surface in which the owner can do what he pleases

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21
Q

leasehold

A

right to use a property for a discrete period of time

more limited than fee interested

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22
Q

why is the leasehold more limited than fee interest

A

at the end of the leasehold, the property reverts to original owner

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23
Q

types of restrictions put by the government

A

zoning

entitlements

eminent domain

easements

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24
Q

zoning

A

detailed map designating restrictions planned on the use of each piece of property under government’s jurisdiction

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25
Q

entitlements

A

right to improve your land as long as you respect the zoning and other government restrictions

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26
Q

eminent domain

A

government can buy your property for fair market price as long as they us the land for the overall good of society

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27
Q

easements

A

granting another party the right to access or transit its property in certain limited circumstances

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28
Q

what are the types of property ownership

A

direct ownership`

indirect ownership

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29
Q

direct ownership

A

investor owns the property (asset)

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30
Q

types of direct ownership

A

single proprietor

tenants in common

joint tenants with rights of survivorship

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31
Q

which form of ownership is the simplest form of property ownership

A

single proprietor

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32
Q

what are the key characteristics of a single proprietor

A

single individual is the direct owner of real property

makes all decisions for asset

controls finances and disposition

accepts all legal liability from ownership

when dead, property becomes estate and goes to heir

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33
Q

what are the key characteristics of tenants In common

A

ownership is held by a number of different individuals

each owner holds a percentage of interest in the property (including economic benefits and liabilities)

 it can be used as individual owners' collateral for debt

owners reach agreement on decisions regarding operation, financing, and disposition

when dead, property becomes estate and goes to heir

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34
Q

what are the key characteristics of joint tenants with rights of survivorship

A

all tenants own 100% of the property, not just portions

when one dies, the other is considered the full owner

when both die, it becomes estate of the last tenant who died

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35
Q

what are key features in the indirect ownership that differentiate from the direct ownership

A

legal entities has intentions to own one or more properties

they own it directly but are not the ultimate owner

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36
Q

what are the types of legal entities

A

partnership

corporation

limited liability company

real Estate Investment Trust (REIT)

Real Estate Mortgage Investment Corporations

special purpose entities

special investment vehicles

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37
Q

why are partnerships created

A

to facilitate ownership of property by group of individuals

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38
Q

what are the key characteristics of a partnership

A

they have a partnership agreement

limited life entities dissolved after a specified period of time

liabilities and collateral extend beyond investments

interests are transferable personal property

tax pass through entities

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39
Q

can partnerships include limited partners?

A

ye bruv

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40
Q

what is specified in a partnership agreement

A

the rights and responsibilities of each partner

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41
Q

are the liabilities the same for one’s limited partners?

A

nah

limited partners’ liability is limited by own investment

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42
Q

can limited partners make as many decisions as an original partner?

A

nah boy

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43
Q

what does it mean for partnerships to be tax pass through entities?

A

no taxes are paid at entity level

profits, losses and capital gains are directly attributed to owner

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44
Q

what is a corporation?

A

legal entity granted unique rights and responsibilities by the state

in return, corporations have to pay corporate taxes

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45
Q

who owns corporations?

A

shareholders with no legal liabilities

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46
Q

how do corporations acquire money ?

A

by selling their services or products

borrowing

reinvesting profits

selling addition shares

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47
Q

what type of taxation are corporations subject to?

which taxes do they pay?

A

double taxation

net taxable income

taxes on capital gains

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48
Q

what is a limited liability company?

A

it shares the attributes of corporations and partnerships

owners are not personally liable for the company’s debts or liabilities

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49
Q

how are the owners of a limited liability company called?

A

members

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50
Q

what do members of a limited liability company do?

A

choose wether they are a proprietorship, partnership, or corporation for tax purposes

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51
Q

what are Real Estate Investment Trusts (REIT)?

A

publicly traded company that owns, operates or finances income-producing properties

organized as corporations

limited in their investments programs to real estate or mortgages

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52
Q

who controls Real Estate Investment Trusts (REIT)?

A

shareholders

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53
Q

what are necessary requirements for Real Estate Investment Trusts (REIT)?

A

must have at least 100 shareholders

no 5 shareholders can have at least 50% equity

must distribute 90% of taxable earnings and profits

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54
Q

are Real Estate Investment Trusts (REIT) public or private?

A

they can be either public or private

55
Q

what are key characteristics of Real Estate Investment Trusts (REIT)?

A

unlimited-life

limited liability

shares are non assessable

56
Q

non assessable shares

A

class of shares that do not allow the issuer to demand additional payment for the shares from stockholders

The majority of shares are currently non-assessable

57
Q

Real Estate Mortgage Investment Corporation

A

entity that facilitates investments in mortgages and mortgage-backed securities

58
Q

special-purpose entities

A

generally established to hold single properties and isolate them from claims involving the owner’s other assets

59
Q

why are special-purpose entities often called bankruptcy remote entities?

A

makes various investors isolate each one of their legal entities

60
Q

special investment vehicles?

A

created to hold portfolios of mortgages backed securities

61
Q

what is the goal of people using special investment vehicles?

A

own high-yield, long term assets

62
Q

how do special investment vehicles achieve their clients’ goals?

A

funding them with lower cost, short term paper

63
Q

what are the functions of Real Estate

A
  1. development
  2. construction

3 . property management

  1. leasing
  2. property brokerage
  3. asset management
  4. portfolio management
64
Q

why is Real Estate development a multiyear process?

A

you have to choose the site

identify and conceptualize purpose of the property

see how the property will serve its purpose

gotta secure government approvals

65
Q

does why is Real Estate development need project management services?

A

yes for planning and construction

66
Q

what are the steps in the construction of Real Restate?

A

starts when the site is ready to accommodate the building

you build the accompanying stuff like parkings

finishes when the government gives certificate of occupancy

67
Q

what si property management?

A

day-to-day operation of a property

making sure rents legit and that the house remains gyu in general

68
Q

what do leasing professionals do?

A

identify prospect tenants and help them find a property to rent

69
Q

what do leasing brokers do?

A

they help landlords identify tenants

70
Q

captive brokers

A

represent multiple properties held by a single landlord

they direct tenants to one of the landlord’s multiple properties

71
Q

independent brokerage firms

A

represent a variety of properties held by many landlords

they wish to have commissions in exchange

72
Q

what is property brokerage’

A

involves the sale of properties

73
Q

what do brokers do?

A

create liquidity in the market matching sellers and buyers

74
Q

how do brokers create liquidity

A

identify optimal buyers

can tell the target price

can estimate in how much tome the property will be sold

75
Q

why is the term “buyer’s broker” becoming increasingly common?

A

usually brokers represent sellers, but now the opposite becoming even more common

76
Q

what do asset managers do?

A

develop and implement plans to maximize the value of a property

77
Q

what exactly do the asset managers do to maximize property value?

A

evaluate asset against tenants demand

determining if the property meets market needs

sometimes gotta do reposition plan

analysis of ongoing property maintenance and expenditures

review asset against market to see when to sell it

78
Q

when would asset managers need to do a reposition plan?

A

if the asset needs to be altered to meet the market’s needs and demands

79
Q

what do portfolio managers do?

A

buy and sell assets that match the requirements of investor

80
Q

do Real Estate portfolio managers work on a single property or multiple properties

A

they can do either one of them

they would choose the latter if they wish to create a diversified portfolio

81
Q

what are the types of Real Estate companies?

A

operating companies

service companies

construction companies

82
Q

what is the most common form of Real Estate company and which part of the larger bracket of companies is it a part of?

A

the Developer/Owner/Manager companies

part of the operating companies

83
Q

which companies are part of the Real Estate service companies

A

Real Estate Brokerage firms

leasing firms

property management firms

Diversified Real Estate service companies

84
Q

what do Developer/Owner/Manager companies do?

A

create or acquire Real Estate to own it and manage it

85
Q

what do Real Estate Brokerage firms do?

A

employ brokers who work with both buyers and sellers of assets

86
Q

what do leasing firms do?

A

they employ brokers who work with landlords

they wish to identify potential tenants

they can also work for tenants

87
Q

what do property management firms do?

A

provide outsourced management and administrative services to Real Estate owners

88
Q

what do Diversified Real Estate service companies do ?

A

provide multiple Real estate services under one organization which proves beneficial to landlords

89
Q

how are property managers paid?

A

on a monthly basis with a percentage of the property revenues

90
Q

how do small landlords with Diversified Real Estate service companies?

A

scale and outsourcing of a large Diversified firm

91
Q

how do small landlords with Diversified Real Estate service companies?

A

scale and outsourcing of a large Diversified service firm

92
Q

what do large landlords tend to do regarding Diversified Real Estate service companies?

A

they tend to create their won service organizations

93
Q

what do construction companies do?

A

employ various contractors with different specialities to plan and implement the construction of property

94
Q

what are the types of ownership of Real Estate companies

A

private owners

syndications

public shareholders

95
Q

private owners

A

entities that could source enough capital to construct major projects

were dominant up until the 20th century

96
Q

how did syndications own real estate companies?

A

raised quite through groups of unrelated investors (syndicates)

97
Q

what are syndicates?

A

limited partnerships with a syndicator (sponsor)

98
Q

what do syndicates do?

A

serve as partner providing real estate services to their partnership for fee income

99
Q

what do syndications wish to do regarding taxes?

A

creation of tax-sheltered income

100
Q

are syndication still gyu?

A

nah, out of favor since 1986

101
Q

what companies form part of the Public Real Estate companies?

A

Real Estate Investment Trusts (REITs)

Real Estate operating companies

102
Q

what companies form part of the Public Real Estate companies?

A

Real Estate Investment Trusts (REITs)

Real Estate operating companies

103
Q

Public Real Estate companies?

REIT

A

companies that could aggregate property on behalf of the shareholders

tax benefits are almost equivalent to those of a partnership

small investor can now invest in large commercial properties

104
Q

Public Real Estate companies

REIT

A

companies that could aggregate property on behalf of the shareholders

tax benefits are almost equivalent to those of a partnership

small investor can now invest in large commercial properties

105
Q

Public Real Estate companies

Real estate Operating companies

A

public companies that invest in real estate without using the REIT structure

tax efficient

zero REIT constraint

106
Q

who are OTHER important Real Estate industry participants?

A

banks

professional services

accounting services

appraisers

insurance brokers

architecture

surveyors

engineering

107
Q

why are banks one of the most important players?

A

because of the capital they provide in the industry

108
Q

what are the types of banks?

A

commercial banks

Investment banks

mortgage banks

109
Q

what do commercial banks do?

A

aggregate funds from depositors

provide transaction processing services to corporate and individual clients

110
Q

why are commercial banks an attractive place to deposit capital?

A

can deposit accounts insured by the Federal Deposit Insurance Company

111
Q

what do investment banks do?

A

link investors to public and private capital markets

link investors to mutual funds

give tips to investors on diversification and long-term goals

give tips to corporations to access capital markets and corporate financial strategy

very active in underwriting mortgages

112
Q

how do investment banks raise capital?

A

get capital from investors interested in higher¡er returns and greater risk

113
Q

what do mortgage banks do?

A

specialize in underwriting mortgages on major commercial properties

114
Q

how do mortgage banks fund the mortgages they underwrite?

A

by placing them with financial institutions

these include:

  • commercial and investment banks
  • insurance companies
  • pension funds
115
Q

what is included in real estate professional services?

A

legal services

116
Q

what are real estate legal services? who do it?

A

transactions structured in which real estate is acquired, developed, leased, and sold

also help structure entities that own assets and relationship between entities and investors

lawyers

117
Q

why is accounting important in real estate?

A

many transactions needed because of the many agreements

they turn into financial statements by a accountants

118
Q

what do appraisers do?

A

want to provide objective estimate of asset value

119
Q

who uses appraisers?

A

investors and capital providers

120
Q

what do insurance brokers do?

A

work with real estate owners to source and implement risk management solutions

they protect their property against economic losses

121
Q

what is property and liability insurance?

A

insures property owners against losses from property damage resulting from natural and manmade disasters

covers property owners from claims brought by those who are accidentally injured at or on the property

122
Q

what are the types of real estate insurances that insurance brokers in the real estate industry work at?

A

property and liability insurance

title insurance

personal lines insurers

123
Q

title insurance

A

protects property owners against claims by prior owners

allows for efficient title transfer

124
Q

personal line insurers

A

provide health, disability, and life insurance to workers in the real estate industry

125
Q

what do architects do?

A

design buildings for its purpose on the site chosen

126
Q

what do surveyors do?

A

identify land parcels from maps and their written description

create physical markers on property

127
Q

how do surveyors create physical markers on property?

A

by observing landmarks and measuring the land

128
Q

what are engineers?

A

applied scientists who use knowledge from different scientific disciplines to solve real-world problems

129
Q

types of engineers in real estate

A

civil engineers

environmental engineers

mechanical engineers

130
Q

civil engineers

A

focus on issues in the build environment

specialized civil engineers focus on the creation of public infrastructure such as utility systems and transportation systems

131
Q

environmental engineers

A

work tu assure built environment does not damage natural environment

work to Identify existing environmental damage

propose plans to extract or content contaminants to make land gyu for reuse

132
Q

mechanical engineers

A

produce technical plans for design and construction of buildings

133
Q

what are the types of mechanical engineers (specialized engineers) in the real estate industry

A

structural engineers

electrical system engineers

HVAC engineers (heating, ventilation, and AC)

vertical transportation engineers

Fina 210 (28 decks)

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