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REAL3000 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Property

A

Anything privately owned as recognized by the govt

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2
Q

Real property

A

Immovable property (ex. cabinets, walls, chandelier)

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3
Q

Personal property

A

Movable property (ex. Couch, bed, jewelry)

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4
Q

Manufactured home: real or personal property?

A

Built in parts, assembled to foundation on site. It’s PERSONAL as it’s being moved, REAL once it’s assembled.

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5
Q

Mobile home: real or personal property?

A

Can always be moved. It’s PERSONAL property. Ownership transferred through title certificate.

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6
Q

Motor home: real or personal property?

A

PERSONAL

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7
Q

Tangible property

A

Physical property such as land and buildings

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8
Q

Intangible property

A

Non-physical such as financial interests (stocks, bonds), intellectual property (copyrights, patents, trademarks), contractual rights (purchase contracts), and the BUNDLE OF RIGHTS associated with tangible prop.

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9
Q

Improvements to the land, on the land, and then land itself are affect real estate as a(n) (tangible/intangible) property.

A

Tangible

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10
Q

How big is an acre?

A

43,560 sq. ft. Roughly the size of a football field without end-zones.

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11
Q

Changes to the bundle of rights affect real estate as a(n) (tangible/intangible) property?

A

Intangible

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12
Q

Real Estate comprises of __% of US GDP

A

25% of US GDP

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13
Q

How many jobs does the Real Estate industry employ?

A

9 Million

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14
Q

Real Estate accounts for __% of local government revenue

A

70% of local gov. revenue

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15
Q

Real Estate value driven from the intersection of three markets. Name the markets and their functions.

A
  1. User Market: Supply/demand for physical space –> resulting rental rates & housing values
  2. Capital Market: Supply/demand for $ and resulting required returns.
  3. Property Market: Cash flows from user mkt. and req. returns from capital markets –> investment property value
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16
Q

User Market

A

Producers (builders/developers - sale, investor/landlord - rent) and consumers (owner occupant, tenant) competing for the occupancy/use of physical space in a particular location.

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17
Q

Is the user market supply/demand equilibrium highly responsive?

A

NO! There is a delayed reaction between supply/demand shifts and price changes. Costs (incl. capital) can be volatile –> inefficiencies.

18
Q

Is RE heterogeneous or homogeneous, and why?

A

Heterogeneous. No two building is the same. RE differs depending on location & building type among other factors.
Ex. Same 4000 sq. ft. house in Nebraska vs. California

19
Q

Is RE an integrated or segmented market?

A

HIGHLY segmented, even within an apartment (ex. 715 Marine bottom units vs. penthouse)

20
Q

Ingress

A

Getting in to property. Ex. Shopping center in Arizona, want to be on the side of the freeway EXIT.

21
Q

Egress

A

Getting out. Ex. Farmhouse at busy intersection in Grealy. Ingress & Egress not accounted for in master plan.

22
Q

Figurative access to a property

A

Things we want/need in relation to our use/enjoyment of the property. Ex. Access to customers, employees, suppliers, services, amenities, transportation.

23
Q

Why buy a more expensive house in Boulder compared to Grealy (in terms of access)?

A

Figurative access: Near highly skilled workforce, people with more disposable income, closer to Denver, better bus system.
Literal access: ONLY ABOUT SPECIFIC PROPERTY, depends on house/land. VIEWS!

24
Q

Legal remedy of specific performance (and how is this unique to RE)?

A

The right to sue for a specific property rather than money damages, $ can’t make buyer whole. Unique bc each property is unique. Contrast w/ suing for $ damages to a car.

25
Q

Where does capital come from?

A

Both private and public sources in the form of equity (return = cash flow from sale/rent) and debt (return = loan payments by borrower)

26
Q

Which is riskier - equity or debt?

A

Equity! Debt always gets paid first, equity gets residual cash flows.

27
Q

Is proximity to Denver an example of literal or figurative access?

A

Figurative!

28
Q

Is two driveway entrances an example of figurative or literal access?

A

Literal! Ingress/egress

29
Q

Public sources of capital

A

Capital invested in a publicly traded entity. Small, HIGHLY liquid, efficient. Ex. REIT (equity or debt), mortgage-backed securities (debt)

30
Q

Private sources of capital

A

Capital invested in private entities (syndication/joint venture). Large, illiquid investments w/ high transaction costs (inefficient). Ex. Private firms buying into prop (equity), investment banks offering loans (debt)

31
Q

Examples of institutional investors for RE

A

Insurance companies, pension funds, etc. They make SAFE investments, taking debt not equity.

32
Q

Property Market

A

Integration of user and capital market

33
Q

Supply/demand in user markets drives…

A

Cash flows aka RENT

34
Q

Real Estate licenses are issued by which level of government?

A

State

35
Q

Which level of government has the most influence on Real Estate?

A

Local level (land use, infrastructure, regulation, etc.)

36
Q

What does the Federal gov. determine?

A

Taxation, finance regulation, and environmental regulation are determined

37
Q

What are some examples of the bundle of rights? Hint: PODPEC

A 
Possess: it's mine not yours!
Occupy
Dispose (sell, lease, gift)
Pledge (as collateral)
Extract
Control (by gov. regulation & private covenants)
38
Q

How does government play a role in Real Estate?

A
  1. Granting (acknowledging)/enforcing property rights
  2. Regulating many aspects of real estate
  3. Providing essential infrastructure/services
39
Q

In the mall at 28th and Arapahoe (Safeway, Bottles, Chase, etc.) who pays the least rent?

A

Safeway! They’re an ANCHOR to bring people into the mall. The stores closest to Safeway pay a premium.

40
Q

The (buyer/seller) is obligated to legal remedy of specific performance

A

Buyer! Buyer can sue and force a sale, but seller can’t sue to force a buyer to buy.

41
Q

What’s a public source of equity?

A

REIT

42
Q

What’s a public source of debt?

A

REIT & mortgage backed security

REAL3000 (12 decks)

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