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Real Estate FNBSLW 348-01 (EXAM 1) Questions With Answers.
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Real Estate FNBSLW 348-01 (EXAM 1) Questions With Answers.
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Real Estate FNBSLW 348-01 (EXAM 1)Questions With Answers.
2 types of property - ANSWER- Tangible and Intangible
Tangible Property - ANSWER- Physical assets that can be owned
- Can be real or personal property
Intangible Property - ANSWER- Non-physical assets such as stocks, bonds, mortgages,
leases
3 ways real estate is used - ANSWER- 1. RE as a tangible asset
2. RE as a bundle of rights
3. RE as an industry and profession
Real estate as a tangible asset - ANSWER- "Raw" land
Improvements to the land
-Excavation and fill
-Sewers and other utilities
-Roads and driveways
Structures (improvements on the land) EX: Adding a house or adding sewers
Real estate as a bundle of rights - ANSWER- -Exclusive possession of the real property
-Use or enjoyment, Can use as rental property to generate cash flow
-Disposition
-Can be unbundled in many ways
EX: Owner leases property to renter
Dirt/Land is valuable only to the extent it can be put to...... - ANSWER- Productive Use
Real Estate as an industry and profession - ANSWER- Brokerage, Development,
Leasing,
Property management,
Asset management,
Real Estate Law,
Appraisal, Market consulting, Counseling, Planning, Government regulation and
taxation, Housing assistance, Mortgage finance,
Construction finance, Long-term finance, Investment management
How much of the world's wealth is in RE? - ANSWER- 50%
How much US GDP is generated from RE? - ANSWER- 25%
, How much revenue is generated for local government from RE? - ANSWER- 20%
How many US jobs are created from RE? - ANSWER- 9 million
What determines real estate values? - ANSWER- 1. User (space) Markets
2. Capital Markets
3. Property Markets
User Market - ANSWER- Market for the physical real estate.
-"Buyers" receive right to use space, Called the "space" market or "rental market
-Where rental rates are determined
- These markets are very "local" and usually highly competitive -Separate local markets
for various property types: retail, office, industrial, etc.
Demand and Supply of User Market - ANSWER- Demand side: Individuals, households,
and firms who require space either for consumption or production purposes
Supply Side: Real estate owners/ operators who rent space to tenants
Segmentation of User Markets - ANSWER- Both supply and demand of user markets
are very specific to location and building type.
- Implies user markets are highly segmented
- Compare to nationally integrated markets (gasoline, steel, financial, capital,
homogenous commodities that can be moved from place to place.)
Because of segmentation, rental prices for physically similar spaces can vary widely
based on... - ANSWER- 1. Across locations
2. across property types
Capital Markets - ANSWER- RE competes for funds in capital market with other asset
classes, such as stocks and bonds
Investors select a mix of investments based on expected returns & risk
Bidding by investors determines:
risk free rates of various maturities (i.e., the Treasury "yield" curve)
required risk premiums for risky investments
Main takeaway from capital markets - ANSWER- RE discount rates are largely
determined in the capital markets
4 quadrants of real estate capital markets - ANSWER- 1. Private market Equity/owners
2. Private market debt/lenders
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