Part One - Introduction
Chapter 1 An Introduction to Environments and Activities in Real Estate
1.1 Why Real Estate?
1.1.1 Real Estate as Space
1.1.2 Converting Real Estate Rights into Money
1.2 Real Estate Environments
1.2.1 Real Estate Markets
1.2.2 Why Real Estate Markets Are Inefficient
1.3 Real Estate Activities
1.3.1 The Process of Creating Space: An Activities Model of Real Estate
1.3.2 Real Estate Activities as Real Estate Careers
1.4 Organization of This Book
Summary
Discussion Questions
Glossary
References
Chapter 2 Real Estate as an Academic Topic
2.1 Why the University?
2.2 The Personality of Academic Disciplines
2.2.1 A Special Class of Academic Discipline
2.2.2 The Applied Discipline of Real Estate
2.3 How Disciplines Do Their Descriptive Duty
2.3.1 Paradigms and the Nature of Science
2.3.2 Real Estate as Description
2.3.3 Real Estate with One Paradigm?
2.4 Real Estate in the Professions versus within the Academy
2.5 Inside the Industry: The Informational Interview
Summary
Discussion Questions
Glossary
References
Chapter 3 “Gut Feeling” The Human Element
3.1 Human Judgment in Real Estate
3.2 Human Problem-Solving Model
3.3 Heuristic Behavior and Bias
3.4 General Behavioral Findings in Real Estate
Summary
Discussion Questions
Glossary
References
Chapter 4 “Location, Location, Location” The Space Dimension
4.1 The Importance of Location
4.2 Spatial Economics
4.2.1 Basic Concepts: Von Thünen Rings
4.2.2 Basic Concepts: Urban Economics
4.3 Competitive Advantage Concepts
4.3.1 Skilled and Educated Workforce
4.3.2 Natural Resources
4.3.3 Climate
4.3.4 Transportation
4.3.5 Attitude and Leadership
4.4 Economic Base Concept
4.4 Urban Growth Models
Summary
Discussion Questions
Glossary
References
Chapter 5 The Mathematics of Real Estate Analysis: Time Value of Money, Investment Criteria, and Cash Flow Statements
5.1 Making Choices in Real Estate
5.2 Compounding Today’s Dollars into the Future
5.3 Discounting Tomorrow’s Dollars to the Present
5.4 Calculating the Present Value of a Real Estate Annuity
5.5 Installment to Amortize: Calculating the Mortgage Payment
5.5.1 Making Monthly Payments
5.6 Future Value of an Annuity and the Sinking Fund
5.7 Recapitulation of Time Value of Money Equations
5.8 Calculating Net Present Value and IRR
5.9 Using NPV and IRR as Investment Decision-Making Aids
5.10 Calculating the MIRR
5.11 Projecting Investment Cash Flows
5.12 Important Ratios in Real Estate Analysis
5.12.1 Value Ratios
5.12.2 Return Measures
5.12.3 Leverage Risk Measures
5.12.4 Operating Relationships
Summary
Discussion Questions
Glossary
References
Part 2 - Markets and Environment
Chapter 6 Real Estate Markets
6.1 The Pricing Function of Real Estate Markets
6.2 Real Estate and the Supply and Demand Model of Market Equilibrium
6.3 Real Estate and Perfectly Competitive Markets
6.4 Real Estate Cycles, Fluctuations, and Production Lags
6.5 The Market for Space
6.6 The Market for Real Estate as a Capital Asset
6.7 An American Dream in Crisis
6.8 The Development of a Residential Secondary Mortgage Market
6.9 The New Residential Mortgage Business Model
6.10 Disintermediation, Deregulation, and the Savings and Loan Crisis
6.11 Mortgage Rapture, Housing Rupture
6.12 Real Estate Takes a Stroll Down Wall Street
6.13 Making Bad Bets on Bad Debts
6.14 The Blame Game
6.14.1 Appraisers
6.14.2 Homebuyers and the Poor
6.14.3 Alan Greenspan and the Fed
6.14.4 Loan Originators
6.14.5 Phil Gramm and the U.S. Congress
6.14.6 Bill Clinton
6.14.7 George Bush
6.14.8 Rating Agencies
6.14.9 Federal Regulators
6.14.10 Fannie and Freddie
6.14.11 Wall Street
6.15 Lessons Learned if Ill-Remembered
Summary
Discussion Questions
Glossary
References
Chapter 7 Political and Legal Environments
7.1 Regulation of Real Property
7.2 Government Powers
7.2.1 Police Powers
7.2.2 Eminent Domain
7.2.3 Taxation
7.2.4 Escheat
Summary
Discussion Questions
Glossary
References
Part 3 - Real Estate Activities
Chapter 8 Entrepreneurial Activity
8.1 The Two Operative Attitudes of Real Estate Development
8.2 The Process of Real Estate Development
8.3 Project Precommitment
8.3.1 Stage 1: Conceive a Development Project
8.3.2 Stage 2: Examine the Feasibility of the Project
8.3.3 Stage 3: Refine the Concept
8.4 Project Postcommitment
8.4.1 Stage 4: Design the Project
8.4.2 Stage 5: Construct the Design
8.4.3 Stage 6: Manage the Asset
Summary
Discussion Questions
Glossary
References
Chapter 9 Investor Activity
9.1 The Essence of Investing
9.2 Fundamentals
9.2.1 Strategies
9.2.2 Risks
9.2.3 Benefits
9.3 Quantitative Analysis: DCF and The Investment Problem
9.3.1 Introduction
9.3.2 Step 1: BTCF
9.3.3 Step 2: Taxable Income
9.3.4 Step 3: ATCF
9.3.5 Step 4: Before-Tax Equity Reversion
9.3.6 Step 5: Capital Gains Tax
9.3.7 Step 6: DCF Analysis
9.3.8 Step 7: The Decision
9.3.9 Practice Problem
9.3.10 Conclusion and Caveats
9.4 Quantitative Analysis: Ratios
9.4.1 Risk
9.4.2 Return
9.4.3 Ratio Analysis Practice Problem
Summary
Investment Problem Assignments
Discussion Questions
Glossary
References
Chapter 10 Lending Activity
10.1 Mortgage Basics and Activities
10.2 Mortgage Concepts and Products
10.2.1 Mortgage Concepts
10.2.2 Product: Fixed Rate or Payment Mortgage
10.2.3 Product: Hybrid and Adjustable Rate or Payment Mortgage
10.3 Mortgage Underwriting
10.3.1 Commercial
10.3.2 Residential
Summary
Discussion Questions
Glossary
References
Chapter 11 Government Activity
11.1 Government as a Partner
11.2 Property Taxation Administration
11.3 Real Property Regulations
11.3.1 Comprehensive Plan
11.3.2 Zoning
11.3.3 Building Codes and Subdivision Regulations
Summary
Discussion Questions
Glossary
References
Chapter 12 Professional Activity
12.1 The Diverse Realm of Real Estate Professionals
12.2 Real Estate Appraisers: Arbiters of Value
12.3 The Prescriptive Appraisal Process
12.3.1 Gathering Relevant Data and Performing Supportive Analyses
12.3.2 Valuing the Subject Property
12.4 A Descriptive Understanding of Real Estate Appraisal
12.5 The Managers: Warders of Property and Value
12.6 The Real Estate Attorney: Master Shipwright
12.6.1 Attorney as Technician
12.6.2 Attorney as Negotiator
12.6.3 Attorney as Adviser and Counselor
12.7 Brokers: Intermediaries of the Virtual Marketplace
12.8 The Developer’s Team: Architects, Engineers, and Contractors
12.8.1 Architects
12.8.2 Engineers
12.8.3 Contractors
12.8.4 Contractual Relationships for the Development Team
12.8.5 Subcontractor Concerns
12.8.6 Scheduling Tools
Summary
Discussion Questions
Glossary
References
Chapter 13 Consuming Activity
13.1 The Space Users
13.2 The Household Location Decision
13.2.1 To Own or Not to Own Your Home
13.2.2 Borrowing to Buy Your Home
13.3 Business Use and Management of Space
13.3.1 Managing Real Estate to Support Corporate Strategy
13.3.2 The Corporate Location Decision
13.3.3 The Corporate Tenure Decision: Rent or Own
13.3.4 The History and Future of Corporate Space Management
13.4 Government Use and Management of Space
Summary
Discussion Questions
Glossary
References
Chapter 14 Successor Entrepreneurial Activity
14.1 The Other Real Estate Entrepreneurs
14.2 Who Owns Our Space?
14.2.1 Publicly Held Property: REITs
14.2.2 How Successor Entrepreneurs Own Property
14.2.3 Institutional Investors
14.3 How Successor Entrepreneurs Build Wealth in Real Estate
14.3.1 The Entrepreneurial Ownership Cycle
14.3.2 Case Study: Jackson, Oats, Shaw
14.3.3 The Importance of Relationship Development and Maintenance
14.3.4 Residential Successor Entrepreneurship: Flipping Houses
Summary
Discussion Questions
Glossary
References
Appendix 1 Behavioral Findings in Real Estate: The Research
Appendix 2 History in a Box of the World over the Last 13,000 Years
Appendix 3 Derivation of the Equation for the Present Value of an Annuity
Index