Search
Browse
Create
Log in
Sign up
Log in
Sign up
Upgrade to remove ads
Only $1/month
CRP 315 Midterm - Multari
STUDY
Flashcards
Learn
Write
Spell
Test
PLAY
Match
Gravity
Key Concepts:
Terms in this set (37)
real estate feasibility
includes financial, physical, environmental, legal and political analyses
Developer's team
1. architects
2. planners
3. engineers
4. accountants
5. market analysts
6. lawyers
What does calculating the PV determine?
the amounts of money that will be spent or earned in the future
PV formula
PV=FV/((1+r)^t)
discount rate
factors such as risk, opportunity cost and liquidity needs
capital budget
cash requirements: land, construction, design and permits/fees
sources of cash
1. developer's own resources
2. friends
3. family
4. partners
5. other investors
sources of real estate financing
1. banks and other financial institutions
2. insurance companies
3. pension funds
4. "real estate investment trusts" (REITs)
debt finaning
process of borrowing money through fixed rate loans, adjustable or variable rate loans (e.g. ARMs or VRMs) or combinations of these
balloon payments
the principal must be paid off completely in a lump sum
amortization
equal regular payments that over the term of the loan pay off all principal and interest
down payment
cash that is paid toward a purchase apart from the loan amount
pro forma
spreadsheets that model expected cash flow for a real estate project that involves leases or rents
take out loan
used to pay off construction loan
draws
the full amount is not given upfront, but portions of the principal are made available as progress on construction proceeds
construction loan calculation
principal * interest rate / 2
"rent up" period
how long it takes to reach full occupancy
NPV
Net Present Value; used for determining the present sum of money in contrast to future, a way to analyze profitability
-in excel: (rate, value 1, value 2,.....)
IRR
Internal Rate of Return; used to measure profitability of potential investments; it's a discount rate that makes the NPV equal zero
-in excel: (values, (guess))
PV
Present Value; current worth of a future sum of money given rate of return
-in excel: (rate, nper, pmt (fv)(type))
PMT
Annuity Payment; calculates the constant periodic payment required to pay off a loan
-in excel: (rate, nper, pv (fv) (type))
hurdle rate
a discount rate, the return you want from your cash flow to earn;
if NPV using hurdle rate is positive, cash flow achieve that rate of return
tax savings
deductions * tax rate
deduction vs. tax
A deduction reduces your taxable income whereas a tax credit directly reduces your tax (much better)
depreciation
the "wearing out" of an asset over time
triple net
property taxes, insurance, utilities
NOI
Net Operating Income, the annual net income a project generates, not including debt service
capitalization rate
NOI/estimated value of project
value of project
NOI/Cap rate
debt service coverage ratio
NOI/annual debt service
competitive market area
geographic area where project is likely to compete for buyers/renters
marketability
a study of the features or characteristics of the project in order to be competitive
absorption rates
...
capture rates
how much of market the particular project might be able to attract
leakage analysis
if per capita sales in the local area are less than expected relative to state wide averages, it's 'leaking' sales to other areas
location quotient
-used in the assessment of an area's "base" economy; comparison of local area's data to larger area's data
-% local employment/% large area employment
-if LQ> 1 then that sector is part of the base economy
multiplier
used to estimate how overall employment will change when a business in a base economy changes
YOU MIGHT ALSO LIKE...
21
Financial Management
FIN 3403 - CH 7 - Bonds and Bond Valuation
69 terms
FIN 3403 - CH 7 - Bonds and Bond Valuation rebekah…
69 terms
CFA 2 Derivatives Textbook Deck
86 terms
OTHER SETS BY THIS CREATOR
ANT Midterm
22 terms
CRP 404 Midterm
108 terms
Midterm Study Guide
3 terms
BIO 112 Exam 3
44 terms