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Definition
real estate investment trust
a type of business trust
allows groups of investors to invest in income-roducing property
pools resources to invest in large, pro managed properties
REIT sell and issue share to its members |
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Definition
Possibility of losing all or part of investment
2 primary types are: dynamic & static |
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Term
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Definition
risk associated w changes in general market conditions.
Capital risk-compares constuct. cost to forecasted construction cost
Operating business risk...actual cost to budgeted cost
Operating financial risk...having enough $, may have to borrow
Interest rate risk..economy changes dollar up or down |
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Definition
| risk that can be offset w insurance..like fire, flood, robbery etc. |
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Term
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Definition
investors attempting to evaluate and minimize risk use study toassesses financial, governmental, legal, social, physical, or loactional factors to determine.
based on anticipated risk and potential |
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Term
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Definition
leverage is the use of borred funds to purchase assets.
Positive leverage returns more $ than cost of loan
Negative leverage returns less than cost of loan |
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Term
| reconstructed operating statement |
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Definition
used to evaluate investment property
+ PGI (contract rent plus market rent)
- V&C vacancy and collections losses
+ OI other income
= EGI Effective gross income
- OE Operating expenses
= NOI net operating income
- ADS Annual debt service(1yr mortgage payments
= CTO Cash throw-off (before-tax cash flow) |
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Term
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Definition
relationship between operating expenses and effective gross income.
Less the better, below 50% is good
Operating expense ratio= OE/EGI |
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Term
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Definition
measure financial risk by comaparing mortgage loan amount to value of property
a higher loan-to-value ratio increases risk of the borrower to default
Loan-to-value ratio= loan $/prprty $ |
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Term
| calculating profit on investment |
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Definition
| MADE / PAID = PROFIT OR LOSS % |
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Term
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Definition
modified accelerated cost recovery adopted in 1986 allows investors to deduct a portion of the money INVESTED in their property ea yr from their gross income.
residential & low income property over 27.5yr straight-line basis
nonresidential income property over 39yrs straight-line basis |
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Term
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Definition
tax reform act of 1986
3 categories:
active-income frm salaries/wages
passive-income frm investments
portfolio-income frm dividends |
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Term
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Definition
value of all assets combined.
such as real estate, personal property, and intangible assets such as contracts, franchise, noncompetition contracts etc |
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Definition
| uniform commercial code is a body of standardixed rules regulating commercial transactions thoughout the nation, focusing on the sale and financing of personal property. |
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Term
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Definition
when personal property is used to finance to secure a debt...acts like a mortgage.
an attorney must be used...real estate agents cannot do this |
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