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Fina 210 > official class powerpoint session 1: Intro to RE > Flashcards

official class powerpoint session 1: Intro to RE Flashcards

1
Q

what is a property?

A

what can be owned or possessed?

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2
Q

what is a tangible property?

which types of property does it include?

A

physical

includes personal property and real property

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3
Q

intangible property

A

non-physical

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4
Q

personal property

A

moveable and NOT permanently affixed to land

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5
Q

real property

A

real estate and other property fixed to land that can’t be moved

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6
Q

what are the largest basic forms of real estate?

A

raw land

improvements to land

improvements on the land

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7
Q

what is land banking

A

Waiting for someone to offer me a lot of money for my empty land

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8
Q

what do improvements to land include

A

utilities, sewers, roads, etc

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9
Q

why do banks prefer land with improvements to it

A

this land is ready to be developed so it is better for bank and it is more secure

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10
Q

what are improvements on land?

A

structures and shit

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11
Q

what are the two main types of real estate?

A

residential

commercial

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12
Q

what are the types of residential real estate?

A

single family housing

multi family housing

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13
Q

what are the types of commercial real estate?

A

office

retail

industrial

hotel

mixed use

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14
Q

mixed use real estate

A

A property that could have many uses such as offices and apartments

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15
Q

what are the types of multi family housing (basically types of buildings regarding height)?

A

Low rise: < 4 floors

Mid-rise: 10> floors >=4

High-rise: <= 10 floors

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16
Q

what are the types of offices?

A

single tenant

multi tenant

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17
Q

what are the types of ratings that offices can get?

A

class A

Class B

class C

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18
Q

what does the office rating depend on

A

location

quality

if its new and gyu or not

the benefits next to it

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19
Q

why would real estate investors purposely plan to build a class B or C building? (definitely does not happen all the time)

A

It costs a lot less money to build a less luxurious building

Sometimes, considering rent, it can turn out to be profitable

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20
Q

what are the types of retail real estate?

A

shopping centers

power centers

lifestyle centers

street retail

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21
Q

which of the following are super regional?

shopping centers

power centers

lifestyle centers

street retail

A

shopping centers

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22
Q

which of the following are regional?

shopping centers

power centers

lifestyle centers

street retail

A

power centers

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23
Q

which of the following are lifestyle centers?

shopping centers

power centers

lifestyle centers

street retail

A

lifestyle centers

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24
Q

which of the following are street retail?

shopping centers

power centers

lifestyle centers

street retail

A

street retail

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25
Q

what are the types of industrial real estate buildings

A

warehouses

distribution centers

manufacturing

specialty

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26
Q

types of real estate ownership

A

direct ownership

indirect ownership

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27
Q

direct RE ownership

A

nothing between owner and property, no legal structure needed

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28
Q

indirect RE ownership

A

there is some form of legal structure between owners and property

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29
Q

types of direct RE ownership

A

single owner

co-owner

30
Q

types of indirect RE ownership

A

partnership

corporation

REIT

31
Q

what are important factors upon determining the ownership structure

A

taxation and liability

32
Q

what type of taxes do you pay if you own direct real estate?

A

if you earn constant cash with rent, you have to include it in your normal income taxes

33
Q

what type of taxes do you pay if you own indirect real estate?

A

corporate tax

34
Q

whats the liability for indirect real estate?

A

partnerships have unlimited liability

corporations have limited liability

35
Q

whats the liability for direct real estate?

A

your property is your collateral

36
Q

what are the real estate functions regarding building and operating?

A

development

construction

property management

leasing

37
Q

development

A

identifying an appropriate site

conceptualizing and designing the project

securing zoning and permits

the management of the project

38
Q

what does the developer usually do upon developing the project?

A

.The developer usually hires the construction company

39
Q

construction

A

the actual building of the structure and any ancillary infrastructure

This could include roadwork to access the site, underground parking and landscaping

40
Q

property management

A

Day to day operations of a revenue generating property.

This could include security, billing and the collection of rents, maintenance, accounting, etc

41
Q

leasing

A

Leasing agents identify perspective tenants and negotiate the lease terms

42
Q

who can hire leasing agents?

A

can be hired by the owners or property managers

43
Q

can Lessing agents represent more than one landlord?

44
Q

real estate brokerage

A

involves the sale or purchase of properties by matching buyers and sellers

45
Q

what do brokers usually do to ensure sale or purchase of a property?

A

The broker usually creates the marketing material including the property data

46
Q

what are the types of real estate investment management functions?

A

brokerage

asset management

portfolio management

47
Q

asset management

A

developing and implementing the strategic plan to maximize the value of a property

This includes the development and timing of exit strategies

involves one ONE property

48
Q

portfolio management

A

involves multiple properties

buying and selling RE assets to form a portfolio that meets the return to risk relationship targeted by the investors

49
Q

who are the other important real estate players

A

Bankers and lenders

Lawyers and notaries

Accountants and tax professionals

Appraisers

Insurance brokers and companies

Architects

Engineers

Surveyors

Municipalities and governments

50
Q

what do appraisers do?

A

estimate the fair market value of a property by looking comparing other properties in the market

51
Q

what are the steps to the real estate investment process?

A
  1. Determine your objectives and constraints
  2. Analyze the investment & market environment
  3. Develop a financial analysis
  4. Apply decision-making criteria
  5. Make an investment decision
52
Q
  1. Determining your objectives and constraints
A

it is important to know your investment goals

Are your willing to risk losing your investment for the possibility of a high return?

Do you prefer more modest returns but a safer investment?

Are you willing to put in “sweat equity” (just cash and let someone else handle it?) or do you want a turn-key (do you want to be property manager as well?) investment?

What is the duration of your investment? (Long-term vs short-term)

Are you looking for a steady cash flow or is the growth of the value of your investment more important?

53
Q
  1. Analyzing the investment & market environment
A

analysis of the investment environment is required for any investment decisions, including real estate

analysis of the market environment

analysis of the legal environment

analysis of T¡the financing environment

analysis of the tax environment

54
Q
  1. Developing a financial analysis
A

determining the expected cash flows of your real estate investment

How much will I and should I invest?

How much cash will be generated annually considering rents sand expenses?

How much are the mortgage payments?

How much is the profit when I sell considering selling expenses?

55
Q
  1. Applying decision-making criteria
A

Determine the required rate of return given the risks and rewards as analyzed in the previous steps.

Calculate the Net Present Value (NPV) and Internal Rate of Return (IRR) of the real estate investment

compare them to these hurdle rates

56
Q
  1. Making an investment decision
A

The previous steps give you the necessary information to make your investment decision

The analysis process is repeated for various REIs in order to find one that meets the investors’ goals and constraints

57
Q

does the fundamental principal of supply and demand also apply to real estate? give the example with commercial real estate

A

yeee boy

In commercial real estate tenants demand space for offices, stores, manufacturing, etc. and landlords create space to satisfy these demands

58
Q

occupancy rate

A

The percentage of the space that is in use

59
Q

vacancy rate

A

the percentage of space not in use

60
Q

what happens to rent when occupancy rate increases?

A

it puts an upward pressure on rents

61
Q

what happens when there is an upward pressure on rents?

A

motivates landlords to build or acquire new space to rent out

62
Q

what are the economic factors that can influence demand?

A

Global and national economy (GDP, inflation)

Consumer confidence

Employment levels

Population growth and density

Age trends

Changes in technology or manufacturing processes (productivity)

63
Q

which are the local and competitive factors to consider?

A

Local supply and competing space

Competing projects currently under development

Education level and skills of local workforce

Local population growth and density

Income levels

Infrastructure (roads, services, etc.)

Transportation

Age trends

64
Q

what does a complex legal system in RE do?

A

regulates real estate investment and the relationships between its participants

65
Q

why is it important to analyze the legal environment?

A

it will play an important role in the both the acquisition decision and the investment process

66
Q

why is it important to analyzing the financing environment?

A

to see what is the availability of financing and its cost

67
Q

what are the types of financing?

A

Construction loan

Mortgage loan

Corporate loan

68
Q

what are the types of costs in the financing environment?

A

Interest

Fees

Legal fees

Appraisals

Environmental studies or updates

69
Q

why is it important to analyze the tax environment?

A

will have an important impact on the profitability of a real estate investment

70
Q

which are the levels of tax rules?

A

Federal

Provincial/state

City

Municipality

Cross-border issues

Fina 210 (28 decks)

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