real estate finance - full book (500 pgs)

Real estate finance of all the aspects of real estate

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Unformatted text preview: and moderate– income families through various programs of low–cost financing. • • THE IMPORTANCE OF FINANCE TO REAL ESTATE Few individuals or firms are able to pay cash to purchase or develop real property. Those who are able generally prefer to finance their purchases in order to gain tax benefits and utilize leverage. The difference between success and failure in real estate is often determined by the ability to understand and apply financing to best advantage in each transaction. REAL ESTATE FINANCE Of all the aspects of real estate, finance is the most important after the land and buildings themselves. Without the availability of money and credit, there would be no Dynasty School (www.dynastySchool.com) 1-7 REAL ESTATE FINANCE real estate market – no real estate industry. Very few prospective buyers would be able to buy; very few prospective sellers would be able to sell. DEVELOPMENT Financing makes the projects of contractors and developers possible. Construction financing (a short–term loan to provide funds for construction) is necessary during interim building periods. Take–out financing (a long–term loan to take the construction lender out of the picture) is necessary upon project completion. REAL ESTATE BROKERAGE Financing makes sales possible for new and existing properties. The price of a property is influenced by the financing available, which affects the down-payment amount and the number of buyers capable of qualifying for loans. Many buyers “shop” financing terms even more than sale price. Their ability to purchase depends primarily on their ability to afford the monthly loan payments. PROPERTY MANAGEMENT Financing is one of the major variables a property manager considers in optimizing the income from a property. Availability of financing is a key factor in determining the value of income property to an investor. The total cost of a property, including debt services, is the primary consideration in establishing the rent schedule necessary to produc...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.

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