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Real Estate Principles II
Unit 9: Real Estate Investments
Unit 9: Real Estate Investments
• Investing in Real Estate
▫ Types of Investors
 Investor Motivation
 Investor Profile
 Yield Expectations
 Risk Tolerance
▫ Risk/Return Balance
• Investment Criteria
▫ Characteristics of Real Estate Investments
▫ Comparing Investments
Unit 9: Real Estate Investments
• Pros and Cons of Investing in Real Estate
▫ Advantages of Investing in Real Estate
 Equity Buildup
 Appreciation
 Cash Flow
 Tax Benefits
 Depreciation
 Capital Gains
 Installment Sale
 1031 Tax-Deferred Exchange
 Increased Leverage
Unit 9: Real Estate Investments
• Pros and Cons of Investing in Real Estate
▫ Disadvantages of Investing in Real Estate
 Illiquidity and Immobility
 Large Initial Investment and Transaction Costs
 Imperfect Market
 Increased Burden of Management
 Tax Burdens
 Government Interference
 Economic Downturns
Unit 9: Real Estate Investments
• Real Estate Investment Syndicates, Trusts, and
Conduits
▫ Real Estate Investment Syndicates
 Structure of Syndicates
 Types of Investment Opportunities
 Raw Land
 New Construction
 Existing Property
 Government-Assisted Housing
 Historical Rehabilitation
Unit 9: Real Estate Investments
• Real Estate Investment Syndicates, Trusts, and
Conduits
▫ Real Estate Investment Syndicates
 Structure of Syndicates
 Types of Investment Opportunities
 Raw Land
 New Construction
 Existing Property
 Government-Assisted Housing
 Historical Rehabilitation
Unit 9: Real Estate Investments
• Real Estate Investment Syndicates, Trusts, and
Conduits
▫ Real Estate Investment Trusts (REITs)
 Characteristics of REITs
 Capital Structure of REITs
 The REIT Tax Status
▫ How REITs Avoid Taxation at the Trust Level
▫ Taxation to Unitholders
 Analyzing REITs
▫ Real Estate Mortgage Investment Conduits
 Advantages of REMICs
 Limitations of REMICs

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09

  • 1. Real Estate Principles II Unit 9: Real Estate Investments
  • 2. Unit 9: Real Estate Investments • Investing in Real Estate ▫ Types of Investors  Investor Motivation  Investor Profile  Yield Expectations  Risk Tolerance ▫ Risk/Return Balance • Investment Criteria ▫ Characteristics of Real Estate Investments ▫ Comparing Investments
  • 3. Unit 9: Real Estate Investments • Pros and Cons of Investing in Real Estate ▫ Advantages of Investing in Real Estate  Equity Buildup  Appreciation  Cash Flow  Tax Benefits  Depreciation  Capital Gains  Installment Sale  1031 Tax-Deferred Exchange  Increased Leverage
  • 4. Unit 9: Real Estate Investments • Pros and Cons of Investing in Real Estate ▫ Disadvantages of Investing in Real Estate  Illiquidity and Immobility  Large Initial Investment and Transaction Costs  Imperfect Market  Increased Burden of Management  Tax Burdens  Government Interference  Economic Downturns
  • 5. Unit 9: Real Estate Investments • Real Estate Investment Syndicates, Trusts, and Conduits ▫ Real Estate Investment Syndicates  Structure of Syndicates  Types of Investment Opportunities  Raw Land  New Construction  Existing Property  Government-Assisted Housing  Historical Rehabilitation
  • 6. Unit 9: Real Estate Investments • Real Estate Investment Syndicates, Trusts, and Conduits ▫ Real Estate Investment Syndicates  Structure of Syndicates  Types of Investment Opportunities  Raw Land  New Construction  Existing Property  Government-Assisted Housing  Historical Rehabilitation
  • 7. Unit 9: Real Estate Investments • Real Estate Investment Syndicates, Trusts, and Conduits ▫ Real Estate Investment Trusts (REITs)  Characteristics of REITs  Capital Structure of REITs  The REIT Tax Status ▫ How REITs Avoid Taxation at the Trust Level ▫ Taxation to Unitholders  Analyzing REITs ▫ Real Estate Mortgage Investment Conduits  Advantages of REMICs  Limitations of REMICs