Sunday, February 26, 2012

Chapter 6 Real Estate Market

by: Mario Jaurgeui

True or False
In a supply demand curve, when prices go down, usually demand follows along with prices.

FALSE: When prices go down, demand goes up.

Multiple Choice
Real estate markets establish decisions to
(A) inform real estate investment decisions
(B) stimulate (or discourage) real estate development
(C) allocate space among competing land uses
(D) establish land use patterns
(E) all of the above


Multiple Choice
What is a characteristic of a perfectly competitive market?
(A) Free Market
(B) Product Equilibrium
(C) Production Lags
(D) The Development Of A Residential Secondary Mortgage Market


True or False
Population increase or decrease causes the demand curve to shift up or down on a demand curve graph.


True or False
In a secondary mortgage loan a lender is allowed to sell a mortgage that it had just created, the lender could then lend the proceeds of that sale to another borrower to create another mortgage.


True or False
Demand that went up in the 1940 for more money to buy more mortgages motivated the government to create a market for mortgages to recapitalize lenders.


True or False
The equilibrium market price is the price where all products are when all products are equally priced so that consumers do not shop around for prices.

FALSE: The equilibrium market price is when both supply and demand are in balance and all available product will be cleared from the market.

Multiple Choice
An asset whose value is derived from the value of underlying assets that back it is called a(an) ______________________.
(A) Commercial Mortgage
(B) Situs
(C) Mortgage Securitization
(D) Derivative
(E) Subprime Market


Thursday, February 16, 2012

Wednesday, February 8, 2012

Chapter 5 The Mathematics of Real Estate Analysis

by: Mario Jauregui

True or False
When it comes to money, there are two rules: (1) More is better than less and (2) sooner is better than later.


Multiple Choice
Rate of return that exactly equates the investment outflows with the investment inflows once we consider the timing f the cash flows.
            Internal Rate of Return (IRR)
            Break Even Point
            Present Value
            Time Value of Money

Internal Rate of Return (IRR)

True or False
Equation for IRR is PVo=FVn(1+r)n      

FALSE -> FVn=PVo(1+r)n

Multiple Choice
An annuity is ___________________________________.

            (A) Systematic reduction of debt through a series of scheduled principle
            (B) That portion of investment cash inflow designated as the interest earned
            on investment capital
            (C) Specific type of income stream characterized by equal periodic payments
            over its life.
            (D) Discounted value of income–producing asset considering both cash inflow
            to the asset owner and cash outflows from the asset owner.


True or False
Amortization is the process of determining the future value of an income stream by applying appropriate time value of money concepts.

FALSE-> The systematic reduction of debt through a series of scheduled principal repayments that lead eventually to the complete extinction of the loan.

True or False
It is important to plan for future needs and setting aside the appropriate amount each year can help with capital investments. In other words, upkeep is necessary.


Multiple Choice
What is the formula for discounting annuities?
(A) MP=MBo{(r/m)/[1-(1+r/m)-N*M]}         
(B) a=FVa{r/[(1+r)n-1]}
(C) a=PVa{r/[1-(1+r)-n]}
(D) PVa=FVn(1+r)-n


True or False
The real estate decision aid is a set of tools based on the concept of time value of money.


Monday, February 6, 2012

FAR Investor Group Review

FAR Investor Group Review
February 2, 2012

Fresno Association of Realtors Investor Group is dedicated to promoting the professionalism of realtors, and to make available the programs and services that allow members to conduct their business with integrity and competency. 

What you just read was the mission state of FAR Investor Group. Having attended a few of the Friday meetings, I am a witness of the accuracy their mission statement reflects their actions. They not only promote professionalism, integrity, and competency to their members, but also to guests and students eager to learn how the real estate ecosystem works.

Friday, February 2nd, was the most recent FAR meeting. This meeting's focus was on the legal aspect of real estate, more specifically current laws, their problems, and real world examples of the problems. Conducting this session was Tom Hyatt, Director of FAR, as well as two lawyers by the names of Brian Cuttone and Andy Kucera. Very knowledgeable in real estate law, these two professionals ran the session with countless examples of when real estate conflicts with the law and what to do in those situations. 
One of the bigger topics was the "Protecting Tenants at Foreclosure Act of 2009," which states in the case of a foreclosure on Federal mortgages and/or residential property, if there is a tenant in house when purchased, you must give 90 day notice to vacate. If there is a lease involved with the tenant, the purchaser must abide by the valid lease until its terms are up.  Now there is an exception, If you purchase the  home and plan to live in the home, the lease may become void and you must give the tenant a 90 day notice. 

This particular topic brought about a lot of comments and real world examples some of the realtors, brokers, and investors had faced, providing valuable insight to some problems one may face while involved in real estate. 

Attending these FAR meetings is a must if one wants to become actively involved in the real estate community. Not only does it keep you updated on current issues and laws, but it also is a great networking opportunity to meet other professionals who may potentially pass business on to you. One of my favorite mottos is, "Its not what you know, Its who you know," and that definitely has some truth to it. 

To Your Success,
Forrest Miller

Wednesday, February 1, 2012

Realtor Interview

 Forrest Miller
FIN -180
Dr. Hansz

Realtor Interview

    I interviewed a local Realtor by the name of Diana Lansman. She has been a realtor for 11 years and now specializes in Short sale. The definition of a Short sale is a short payoff sell where a person has to sell their house for less then they owe the bank. Now the word short has nothing to do with how long the transaction takes because these usually take months to close. However, the benefit of a smaller purchase price is usually worth the wait.
      Diana loves what she does, especially when she gets to relieve stress from her clients. She does this by taking all the work, worry, and thinking about where to live from the clients and puts it upon herself. Her greatest satisfaction from being a realtor is being able to help people when they are in trouble. She has the ability to change someone's living status from out on the streets to a home owner. That is definitely a reward in and of itself.
     Now being a realtor isn't all sunshine and dandelions. Sadly, not all transactions have a positive outcome. Unfortunately, some deals just cant be done due to factors beyond Diana's control and she has to relay the information to the client. Imagine having to tell a single mother with 3 children she is going to be foreclosed on and there is nothing she can do to help. Not a very pleasant situation for either parties, which is why Diana does everything in her power to get the deal done smoothly.
     Both the positive and negative aspects mentioned above require special characteristics and even a specific personality in order to handle all the human interaction. To do what Diana does, one must take being a people person to a whole new level. Everything Diana does, from when she wakes up in the morning until when she goes to bed at night, involves talking, texting, emailing, meeting, shmoozing, and networking with people she already knows as well as people she is meeting for the first time. Being in real estate is a people business, especially when you are a realtor. If you don't interact with potential home buyers, you wont be a realtor for long. Also, the average person doesn't move around a lot. They buy a house and stay in it for years, which is why Diana must constantly be networking and establishing new relationships with potential home owners. 
     One thing Diana would change about being a realtor is the constant updating and strict guide lines to follow in order to conduct her work without breaking the law. She constantly is reviewing, updating, and learning new laws that the government has implemented. If she doesn't abide by them she could end up getting sued or in jail. New laws come out very frequently and it is her job to know what these laws do, how they are implemented, and how to work around them.
Diana Lansman is a go getter. She does what needs to be done in as short a time as possible, while maintaining a high level of efficiency. Being a realtor isn't easy work and demands hours and hours and hours of focus and constant thinking in order to get the tiny tedious tasks done, in the correct order, in the perfect amount of time. Realtors must be able to manage their time down to the minute, or else that minute could turn into a costly mistake. 
     Through this interview, Diana Lansman shared valuable insight into not only what a realtor does, but also the way real estate works as a whole. Real estate is a people business and demands constant networking with other professionals involved in real estate as well as common folk. If one is not a people person, one should not be in real estate.