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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
what are the types of industrial real estate buildings
warehouses distribution centers manufacturing specialty
26
types of real estate ownership
direct ownership indirect ownership
27
direct RE ownership
nothing between owner and property, no legal structure needed
28
indirect RE ownership
there is some form of legal structure between owners and property
29
types of direct RE ownership
single owner co-owner
30
types of indirect RE ownership
partnership corporation REIT
31
what are important factors upon determining the ownership structure
taxation and liability
32
what type of taxes do you pay if you own direct real estate?
if you earn constant cash with rent, you have to include it in your normal income taxes
33
what type of taxes do you pay if you own indirect real estate?
corporate tax
34
whats the liability for indirect real estate?
partnerships have unlimited liability corporations have limited liability
35
whats the liability for direct real estate?
your property is your collateral
36
what are the real estate functions regarding building and operating?
development construction property management leasing
37
development
identifying an appropriate site conceptualizing and designing the project securing zoning and permits the management of the project
38
what does the developer usually do upon developing the project?
.The developer usually hires the construction company
39
construction
the actual building of the structure and any ancillary infrastructure This could include roadwork to access the site, underground parking and landscaping
40
property management
Day to day operations of a revenue generating property. This could include security, billing and the collection of rents, maintenance, accounting, etc
41
leasing
Leasing agents identify perspective tenants and negotiate the lease terms
42
who can hire leasing agents?
can be hired by the owners or property managers
43
can Lessing agents represent more than one landlord?
yeee
44
real estate brokerage
involves the sale or purchase of properties by matching buyers and sellers
45
what do brokers usually do to ensure sale or purchase of a property?
The broker usually creates the marketing material including the property data
46
what are the types of real estate investment management functions?
brokerage asset management portfolio management
47
asset management
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
portfolio management
involves multiple properties buying and selling RE assets to form a portfolio that meets the return to risk relationship targeted by the investors
49
who are the other important real estate players
Bankers and lenders Lawyers and notaries Accountants and tax professionals Appraisers Insurance brokers and companies Architects Engineers Surveyors Municipalities and governments
50
what do appraisers do?
estimate the fair market value of a property by looking comparing other properties in the market
51
what are the steps to the real estate investment process?
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
1. Determining your objectives and constraints
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
2. Analyzing the investment & market environment
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
3. Developing a financial analysis
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
4. Applying decision-making criteria
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
5. Making an investment decision
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
does the fundamental principal of supply and demand also apply to real estate? give the example with commercial real estate
yeee boy In commercial real estate tenants demand space for offices, stores, manufacturing, etc. and landlords create space to satisfy these demands
58
occupancy rate
The percentage of the space that is in use
59
vacancy rate
the percentage of space not in use
60
what happens to rent when occupancy rate increases?
it puts an upward pressure on rents
61
what happens when there is an upward pressure on rents?
motivates landlords to build or acquire new space to rent out
62
what are the economic factors that can influence demand?
Global and national economy (GDP, inflation) Consumer confidence Employment levels Population growth and density Age trends Changes in technology or manufacturing processes (productivity)
63
which are the local and competitive factors to consider?
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
what does a complex legal system in RE do?
regulates real estate investment and the relationships between its participants
65
why is it important to analyze the legal environment?
it will play an important role in the both the acquisition decision and the investment process
66
why is it important to analyzing the financing environment?
to see what is the availability of financing and its cost
67
what are the types of financing?
Construction loan Mortgage loan Corporate loan
68
what are the types of costs in the financing environment?
Interest Fees Legal fees Appraisals Environmental studies or updates
69
why is it important to analyze the tax environment?
will have an important impact on the profitability of a real estate investment
70
which are the levels of tax rules?
Federal Provincial/state City Municipality Cross-border issues

Fina 210 (28 decks)

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