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Preface | |
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Acknowledgments | |
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Value Analysis | |
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Introduction | |
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Real Estate and the Economy | |
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Real Property Characteristics | |
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Topics Covered in This Book | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Investment Environment | |
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The Decision-Making Cycle | |
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Market Participants | |
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Determinants of Real Estate Investment Spending | |
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Micro Demand for Real Estate | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Basic Valuation Concepts | |
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Measuring Cash Return on Investment | |
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Analyzing Cash Returns | |
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Measuring Cash Proceeds Due On Sale | |
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Price Appreciation and Efficient Real Estate Markets: A Digression | |
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Present Worth or Discounted Value | |
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Future Property Values | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Risk and Return in Real Estate | |
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Nature of the Problem | |
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Specific Types of Risks | |
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How Risk Affects Individual Properties | |
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How Risky Is Real Estate? | |
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Relationship Between Risk and Return | |
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How Diversification Can Reduce Real Estate Risk | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Federal Taxes Affecting Real Estate | |
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Tax Basics | |
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Acquisition Phase | |
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Administrative/Operations Phase | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Mechanics of Fixed-Rate Mortgage Financing | |
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Loan Terminology and Basic Financial Concepts | |
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Calculating Debt-Service Payments | |
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Compounding or Discounting More Than Once a Year | |
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Outstanding Loan Balance | |
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Interest Calculations | |
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Loan Amortization Schedule | |
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Points and Fees | |
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Borrowing Costs and Mortgage Choice | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Investment Analysis | |
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Why Invest in Real Estate? | |
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Rational Investor Versus Economic-Being Assumption | |
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How Do Different Property Types Stack Up? | |
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How Specific Investments Are Analyzed | |
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Net Present Value Analysis for Douglas Manor Apartments--An Example | |
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Process Used To Determine After-Tax Cash Flow and After-Tax Equity Reversion | |
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Net Present Value | |
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Internal Rate of Return | |
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Negotiation and Rate of Return | |
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A Caution About Being Too Optimistic | |
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A Caution About Relying Too Heavily on Internal Rate of Return Analysis | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Administrative and Property Management Issues | |
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Management Considerations | |
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Management Requirements by Property Type | |
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Property Tax Appeal | |
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Hazard Insurance | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Disposition or Alienation Decisions | |
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A Look at Ordinary Disposition Decisions | |
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Other Disinvestment Strategies | |
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Dealing with Distressed Properties | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Appraisal | |
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Overview of the Appraisal Process | |
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The Need for Market Value Estimates | |
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The Nature of Value | |
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The Appraisal Process | |
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Making a Survey and Plan | |
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Principles of Appraising | |
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Organizing and Performing an Appraisal of a Regional Shopping Center--An Example | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Income-Property Analysis and Appraisal | |
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How Income Properties Are Valued | |
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Relationship Between Discount Rates and Capitalization Rates | |
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Deriving the Capitalization Rate | |
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Limitations of Direct Capitalization | |
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Gross Income Multiplier Technique | |
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Limitations of the GIM Technique | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Appraising for Single-Family Properties | |
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Direct Sales-Comparison Approach | |
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Cost Approach to Value | |
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Reconciliation | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Advanced Appraisal Topics | |
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The Concept of Highest-and-Best Use | |
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Valuing Leasehold Interests | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Property Development | |
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Property Development Process | |
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History and Economics of Property Development | |
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Stages of the Development Process | |
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Role of the Lender | |
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Development Policy Issues | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Analysis for Property Development | |
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Site Selection and Analysis | |
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Improvement Analysis | |
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Analysis for Property Development | |
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Risk Analysis | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Land Development | |
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The Land Development Process | |
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Site Analysis | |
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Locational Obsolescence | |
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A Site-Evaluation Checklist | |
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What Is Plottage Value? | |
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Land Development Financing | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Advanced Property Development Issues | |
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Intensity-of-Use--The Case of an Office Building | |
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The Building-Envelope Calculation | |
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Analysis for Redevelopment or Modernization | |
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Redevelopment Versus Renovation | |
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Inherent Risks in Renovating a Property | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Spatial Economics | |
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Spatial Economics and Urban Area Structure | |
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Urban Area Structure | |
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Why Do Urban Areas Grow? | |
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Rent Theory and Urban Structure | |
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Example: The Trade-Off Between Land Rent and Distance to the City | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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More About Urban Area Structure and Real Estate Markets | |
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Types of Real Estate Markets | |
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Market Characteristics | |
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Factors of Supply and Demand | |
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Real Estate Market Functions | |
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Real Estate Market Operations | |
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Local Real Estate Market Indicators | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Real Estate Market and Feasibility Analysis | |
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The Study Framework | |
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Estimating Potential Market Demand for Retail Uses--An Example | |
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Estimating Market Demand for Office Uses--A More Difficult Example | |
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Projecting Population for Milwaukee County--A Third Example | |
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Feasibility Analysis | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Real Estate Finance | |
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Debt and Equity Financing of Real Estate | |
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Equity Financing | |
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Debt Financing | |
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Land-Contract Financing | |
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Financial Leverage | |
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Measuring the Impact of Financial Leverage on the Internal Rate of Return | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Real Estate Investment Trusts | |
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How REITs Operate | |
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REIT Dividend Income | |
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How REITs are Valued | |
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Understanding Umbrella Partnership REITs | |
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Down-REIT Structures | |
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Paper Shares and Paper Clips | |
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Wholly-Owned Subsidiaries | |
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Factors that Influence REIT Value | |
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Real Estate Operating Companies | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Financing Homeownership | |
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Determining Housing Affordability | |
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Federal Tax Laws and Homeownership | |
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Rent or Buy? | |
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How Houses Are Financed | |
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Housing Affordability and Loan Repayment Plans | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Mortgage Underwriting | |
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Applying for a Loan | |
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Loan Documents | |
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The Debt-Financing Process | |
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Provisions of Mortgages and Trust Deeds | |
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Lender Risks | |
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Lender Procedures and Commitments | |
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Federal Laws Affecting Lending | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Mortgage Securitization | |
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Secondary Lenders | |
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Mortgage-Backed Securities | |
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Collateralized Mortgage Obligations | |
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Securitization of Commercial Mortgages | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Law and Brokerage | |
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Property Descriptions and Public Records | |
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What Is Real Property? | |
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Legal Descriptions of Real Property | |
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Public Records | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Real Property Rights and Interests | |
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Freehold Ownership Interests | |
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Owning Real Estate by Business Organizations | |
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Encumbrances to Ownership | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Leasing and Lease Analysis | |
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Creating a Valid Lease | |
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Typical Lease Clauses | |
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Termination of Leases | |
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Tenant Unions | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Governmental Limitations to Ownership | |
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Police Power | |
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Eminent Domain | |
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Taxation and Special Assessments | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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The Investor-Broker Relationship | |
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The Law of Agency | |
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Listing Agreements | |
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Critical Issues in the Listing Arrangement | |
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Selecting a Broker | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Brokerage Operations and Practices | |
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The Brokerage Function | |
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The Listing Process | |
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Selling the Listed Property | |
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Advertising Real Estate | |
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Brokerage Trends | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Contracts for the Purchase and Sale of Real Estate | |
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Essentials of a Valid Real Estate Contract | |
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Types of Sales Contracts | |
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Components of an Earnest Money Contract | |
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Remedies for Nonperformance | |
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Escrow Arrangements | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Title Assurances and Title Transfer | |
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Methods of Transferring Title | |
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Title Evidence | |
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Deeds | |
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Essentials of a Valid Deed | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Title Closing | |
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Preliminaries for Closing | |
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Elements of Closing Costs | |
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Closing-Statement Entries and Prorations | |
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Escrow Closing | |
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Title Conveyance | |
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Real Estate Settlement Procedures Act (RESPA) | |
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Summary | |
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Glossary | |
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Questions for Review and Discussion | |
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Problems | |
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Time Value of Money | |
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Compounding or Future Value | |
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Discounting or Present Value | |
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Time Value of Money Factors | |
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Principal Recovery Factor | |
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Time Value of Money Tables | |
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Index | |