Real Estate is the Business to Get into for 2010 - Get Ahead!

Real estate is a simple subject to understand. All you need to know are a few things that put it all together. By taking five minutes out of your day you can learn some quick facts about real estate. Many people are trying to get into this market because soon enough, what goes down, must come back up again, and that is the real estate market. Although it is at a downfall at this point it's time for it to renew its cycle.

THE DISCIPLINE OF REAL ESTATE

A. Classical Land Economics

B. The Neoclassical tradition is still follower today

C. Ideas about property rights and contracts

D. Financial economics

E. The institutions

REAL ESTATE IN THE WORLD ECONOMY

A. The relative wealth of real estate

B. Who owns America?

REAL ESTATE DEFINED

- Real estate may be an investment

- Real estate may be a product, or service

- Real estate may be a business, or profession

- Real estate may be the urban and rural space market

- Real estae may be the rights associated with owning real property

REAL ESTATES PERSPECTIVES: AN OVERVIEW OF THE TEXTBOOK

A. Can be viewed from five perspectives

Multiple Choice Questions

VALUE: THE CENTRAL IDEA

Market Value

Investment Value

Mortgage Value

A. What is real estate valuation?

a. Magnitude

b. Timing

c. Riskiness

B. The trade-off between return and risk- expected future cash flow

a. Risk

b. Risk averse

c. Risk neutral

d. Risk seeking

THE VALUE OF MONEY

A. Time value of money

- time line

B. Equations, Tables and calculators

C. Six time-value-of-money operation

1. Future value of a single lump sum payment

2. Future value of annuity

3. Sinking fund

4. Present value of a single lump sum payment

5. Present value of an annuity

C. Loan amortization

Interest charged in month 1 on the $100,000 loan at 10% scheduled is (.10/12)x100,000=$833.33

Difference between the interest charge and the debt service is applied to the principle to reduce the outstanding balance.

(monthly amortization schedule)

D. Investment Analysis

Present Value Measures:

1. Present Value - the value of a property is determined by converting the expected cash flows from the property into a present value estimate.

2. Net Present Value - the difference between the present value of the cash inflows and the present value of the cash outflows.

Yield Measures:

Internal rate of return (IRR): NPV=0; or pv of cash inflows equals present value of cash outflows. IRR is also known as yield to maturity, effective yield, or the effective cost, only when referring to mortgage yields.

Works Cited
Real Estate Investing for Dummies (Paperback) by Eric Tyson (Author), Robert S. Griswold