Unit 3 Flashcards
Apartment Complex
groups of apartments or apartment buildings
Condo
Residents own individual unit without maintenance demands. Usually have common areas which owners share and pay monthly assessments
*Cooperative (Coop)
Similar to condo but owner owns shares of stock in corporation that holds title to the building
Highrise Developments (MUDS)
Mixed use buildings - usually 1 building; built up
Planned Unit Developments (PUDS)
Diverse land uses – Developments with a combination of different land uses. Owners don’t own the common areas
Retirement Community
Individuals over certain age and usually structured under PUD zoning ordinances; shopping, recreational sites within community; built out
Converted Use Property
Structures that were once non-residential converted to residential use; old warehouse
Manufactured Housing
Completed on site; mobile homes
Time Shares
Multiple purchasers buy a single piece of real estate
Modular Homes
Majority of home assembled at factory
PITI
Costs associated with mortgage
- Principal
- Interest
- Taxes
- Insurance
Housing Ratio/Front End Ratio
Traditional loan can’t be more than 28% of income
FHA as high as 36%
Back End Ratio
Debts/payments (revolving and installment) can’t be more than 36% of gross income for traditional loan
No more than 41% for FHA
Tax Benefits
Capital gains exclusions (principal residences); Write Offs (Tax Deductions see below)
Exchanges
Investors can defer taxation on capital gains by making exchanges (1031 tax exchange); equal value
Boot
Any additional capital or personal property included in the transaction to even out the value of the exchange
**Tax Deductions
Real estate taxes Mortgage interest Certain loan origination fees Loan discount points Loan prepayment penalties
Homeowners Insurance
Lenders usually require when a debt is secured by the property
Types of Homeowners Insurance Policies
**Basic form - most common fire and lightning, glass breakage, windstorm and hail, explosion, riot and civil commotion, damage by aircraft, damage from vehicles, damage from smoke, vandalism and malicious mischief, theft, and loss of property removed from the premises when it is endangered by fire or other perils.
**Broad form
falling objects;
damage due to the weight of ice, snow, or sleet;
collapse of all or part of the building;
bursting, cracking, burning, or bulging of a steam or hot water heating system or of appliances used to heat water;
accidental discharge, leakage, or overflow of water or steam from within a plumbing, heating, or air-conditioning system;
freezing of plumbing, heating, and air-conditioning systems and domestic appliances; and
injury to electrical appliances, devices, fixtures, and wiring from short circuits or other accidentally generated currents.
Subrogation
3rd Party acquires right to collect any legal damages
Coinsurance Clause
Owner must maintain insurance quire to a specific percentage (usually 80%) of the replacement cost
Comprehensive Loss Underwriting Exchange (CLUE)
database of consumer claim history
Flood Insurance
Required by lender if in a flood zone; Federal emergency flood assistance even if you don’t have flood insurance
