Prologue to Real Estate .

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Place versus Property Rights. Is property proprietorship natural?Is property possession desirable?What does proprietorship entail?How has proprietorship been used?What can history let us know?. Old History. Old Babylonian Period, Iraq.
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Prologue to Real Estate History and Concepts

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Place versus Property Rights Is property possession characteristic? Is property possession attractive? What does possession involve? How has proprietorship been utilized? What can history let us know?

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Ancient History Old Babylonian Period, Iraq. "Within the sight of these witnesses 36 meters square of decrepit land from Adad-nuri And Samas-rimeni his sone Sin-Remeni purchased 14 shekels of silver, at its full cost he paid (weighed)

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Document Reverse Witnesses: Nin-melam Ubaia child of Abu-wedum Manum child of Ilanum Etel-pi-Sin child of Sesani Harri-Sin-the equerry Samas-abimu Sin-apil-Sin child of Idin-ili Idin-Estar shepherd of ? Gis-u-an Ipkusa child of Sin-maba Ubaiatumu child of Aputum Idissum-Kamarki Harizum so of la-Damu-ellassu the equerry

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Contract Transfer of proprietorship (permitting?) Defined amount of land (where) Full cost in measured silver (why full?) Record of a demonstration Role of witnesses (who were they?) Why such a large number of? Why no date?

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China 82-character engraving Gebo acquired 30 plots of land from Pengsheng in return for four steeds. The engraving shows that they had the land studied and drew up a composed understanding which was then isolated between them.

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Ceremonial Vessel Bronze Inscription Bronze model of bi-partite deed contract (from later administration)

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Mortgages Mirashu faction and unforeseen family 500 B.C. Nippur. 423 demise of Atraxerxes Sogdanius versus Ochus - Darius II. Contract Defaults financed upheaval

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Excavation of Nippur

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Real Estate as Rights Property: Thing that can be utilized, delighted in, passed on Property Rights: Rights that can be practiced or passed on by proprietor Interests in Property: made by proprietor, promise or hinder property without surrendering possession.

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Estates How and how rights are claimed Estate under lock and key (or not) Freehold versus Leasehold Fee straightforward: allowed to isolate, hamper and so forth. Leasehold home: years versus year to year Lessee leases property from lessor. Title, deed General guarantee, extraordinary guarantee, quitclaim

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Title Capital does not exist without title. Capital without title is "dead." Process of exchange and advancement matters. Isolates first world from third world.

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Procedure to access abandon arrive for development purposes and to enroll property rights in Egypt (6-14 years)

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Title: Freeing up Capital Mortgages free up capital in family unit investment funds. "Securitization." Real domain as central resource.

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Land Banks Depreciation of Silver (1600\'s) Land as settled capital resource: hostile to expansion Scottish proposition: Law 1705 Examples from New England: 1686, 1733 –New London Goal: to give cash supported by genuine resource.

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Henry George (1839-1897) Freehold versus Leasehold We have achieved the wretched condition where in vast measure a capable few are in control of the world\'s assets, the land and its wealth and every one of the establishments and different benefits that yield an arrival. These positions are kept up for all intents and purposes without tax assessment; they are insusceptible to the requests made on others. The exceptionally poor, who have nothing, are the question of mandatory philanthropy. What\'s more, the rest - the specialists, the white collar class, the foundation of the nation - are made to bolster the part by their work.

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Rights to Personal Enjoyment People\'s rights versus individual rights Elimination of private property In its outcome?

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Real Estate as an Asset Features and valuation

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What\'s Special About Real Estate as an Asset Class? Idleness Location is key trademark Local financial issues win in valuation i.e. extensive work Micro financial conditions may win i.e. road locus Localized information and ability Subject to nearby laws, limitations and conditions Uniqueness of area

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Undeveloped All potential Infinitely lived so timing is significant Option incentive to advancement Land is just as profitable as the related property rights Building as physical resource

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Developed Depreciating resource Development choice re. limit decision Hard to cover or camouflage Long advancement time Relatively costly Indivisibility of building/land Uniqueness of building makes evaluating troublesome Requires financing Requires syndication

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What\'s Important About Real Estate? Huge business : 10% of U.S. economy Component of accounting reports of all organizations as resource or rent risk. Everybody\'s home >65% of family units possess. Significant securitization of the security advertise. Real individual resource and additionally risk. >6% of institutional speculation portfolios

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Securitization MBS transformation in 80\'s pass-throughs High-tech upset in 90\'s strips. I.O\'s. REIT IPO billions every year. CMBS a noteworthy settled salary class Emerging subordinates showcase

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How it Works Land essential and auxiliary righrts Timing of Development & Construction Development Choice: Office, Industrial, Retail, Residential Highest and best utilize Financing Syndication Management Bridge Permanent Management Leasing Turnover Maintenance Transaction Valuation Marketplace Negotiation Taxes Demolition Alternative utilize

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Land Primary and auxiliary rights Timing of Development & Construction

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Development Choice: Office, Industrial, Retail, Residential Highest and best utilize Financing Debt/Equity decision Syndication, organization structure Development advance Bridge advance

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Management Leasing Tenants Lease terms "package" of leases Turnover Maintenance

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Transaction Valuation Marketplace Negotiation Or pulverization and inversion to arrive

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Methods of Valuation Comparables Replacement Value Discounted Future Cash Flows

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Sources of Value Land & Other rights Building Leases Options - conceded and possessed Strategic Advantage Mortgage "Put"

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Leases Lessor: "A man who rents property to another under a rent. (Landowner)" Asking versus compelling rent Term of the Lease Base Rent Expense Responsibility Participating Income Renewal Option Expense Stops CPI Adjustment Office = "Net" or "Triple Net" "A rent giving that the inhabitant pay to all support costs, in addition to utilities, duties, and protection. This outcomes in lower hazard for financial specialists, who normally shape a restricted organization ."

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Example: The Century Tower New Haven Office Building at Church and Grove Class An Office Space 24 Floors Ground Floor Retail Parking 285,000 Net Leasable Area Built in 1989, For a cost of $50 million Mortgaged & Repossessed Fully Leased with expert workplaces @ $15 per square foot Flagship Tenant at $10, different inhabitants at $20 Flagship Lease of 7 years, Other Leases at 3 years

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Discount Rates CAPM potential outcomes - deliberate hazard Comparable conceivable outcomes Cash stream chance Building like a security portfolio convertibility re-speculation chance & rent restoration broadening & chance borrower chance go through

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Performance Measures Price Per Square Foot Gross and Rentable Cap Rate : NOI/Price Going in Going out

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Performance Measures (cont) Equity Dividend Rate BTCF1/Equity Investment Debt Coverage Ratio NOI/MTG PMT NPV Profitability: PV/Initial Investment IRR Modified IRR

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Issues with Pro Forma Single figure Discount rate decision Assumptions about resale Lacks elements and hazard Not attached to genuine economy

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