Real Estate Principles: A Value Approach, 5th Edition

By David C. Ling and Wayne R. Archer

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Short Table of Contents

p a r t 1 SETTING THE STAGE 1

1 The Nature of Real Estate and also Real Estate Markets 1

p a r t 2 LEGAL AND REGULATORY DETERMINANTS OF VALUE 18

2 Legal Foundations to Value 18

3 Conveying Real Property Interests 45

4 Government Controls and Real

Estate Markets 69

p a r t 3 MARKET VALUATION AND APPRAISAL 99

5 Market Determinants of Value 99

6 Forecasting Ownership Benefits and Value: Market Research 129

7 Valuation Using the Sales Comparison and Cost Approaches 160

8 Valuation Using the Income Approach 191

p a r t 4 FINANCING HOME OWNERSHIP 217

9 Real Estate Finance: The Laws and Contracts 217

10 Residential Mortgage Types and Borrower Decisions 244

11 Sources of Funds for Residential Mortgages 273

p a r t 5 BROKERING AND CLOSING THE TRANSACTION 305

12 Real Estate Brokerage and Listing Contracts 305

13 Contracts for Sale and also Cshedding 339

p a r t 6 TIME, OPPORTUNITY COST, AND VALUE DECISIONS 384

14 The Effects of Time and Risk on Value 384

15 Mortgage Calculations and also Decisions 410

p a r t 7 FINANCING AND INVESTING IN COMMERCIAL REAL ESTATE 430

16 Commercial Mortgage Types and Decisions 430

17 Sources of Commercial Debt and Equity Capital 455

18 Investment Decisions: Ratios 483

19 Investment Decisions: NPV and IRR 503

20 Income Taxation and also Value 523

p a r t 8 CREATING AND MAINTAINING VALUE 555

21 Enhancing Value through Ongoing Management 555

22 Leases and also Property Types 578

23 Development: The Dynamics of Creating Value 604

Glossary 633

Index 648

Preface

The research and practice of actual estate draws on a multitude of self-controls consisting of design, metropolitan and local planning, building building, city business economics, law, and finance. This diversity of perspectives presents an obstacle to the instructor of a actual estate values course. Depending on their backgrounds and also training and on the interests of the students, some instructors might choose to emphadimension the legal principles that define and limit the potential worth of real estate. Other instructors may focus even more on licensing and brokerage worries (famous topics with many kind of students) or on the investment decision-making procedure. Still others might feel that real estate industry and also feasibility evaluation have to be the core topics in a principles course. In brief, among the difficulties in teaching an introductory real estate course is that tright here show up to be too many type of “values.” The important question thus becomes: What structure need to be offered to teach these principles?

Although the subject of genuine estate have the right to be studied from many perspectives, we have embraced the value perspective as our unifying theme. Why? Because worth is central to practically all genuine estate decision making including whether and also just how to lease, buy, or mortgage a home acquisition; whether to renovate, refinance, demolish, or expand also a property; and when and also just how to divest (market, trade, or abandon) a home. Therefore, whether a perchild enters the company of genuine estate in a straight way (e.g., advance and also ownership), becomes associated in a genuine estate service business (e.g., brokerage, building management, consulting, appraisal), or simply owns a residence, he or she must continually make investment valuation decisions or advise others on their decisions. The vital to making sound investment decisions is to understand also exactly how property worths are produced, maintained, enhanced, or damaged.

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Once worth is established as the main design template, all other principles and also principles of real estate analysis can be developed approximately it. Legal considerations, financing requirements and choices, revenue and also residential or commercial property taxes considerations, and local sector problems all are vital primarily in the conmessage of just how they affect the worth of the property. For example, in Part 2 students will certainly study growth management and also land also use regulations. Although these ideas have excellent interemainder from a political and public policy perspective, they are important from a actual estate watch mainly because of their potential results on building rents and values. Similarly, the “imperfections” in genuine estate sectors discussed in Part 3—such as the absence of sufficient data, the huge dollar value of properties, and also the immobility of land also and structures—are of interemainder primarily because of their impacts on market worths. Our objective is to provide the reader through a structure and a collection of valuation and decision-making tools that deserve to be offered in a variety of situations.

The 5th Edition

Because the publication of Real Estate Principles: A Value Approach, 4th Edition, ongoing alters have actually come upon the people of actual estate. This is true in transactions and also brokerage with continued advancement of digital marketing and also the arrival of entirely new creates and also measures for the majority of real estate transactions, it is true in valuation through the expansion of automated valuation devices, a brand-new variation of the Uniform Residential Appraisal Report, and also of new residential and commercial property information resources, and it is true in advance and also building and construction with the transition to “green” structure. But it is still even more true in actual estate finance and capital sources where the dramatic advance of internet lending and the implementation of the “Dodd-Frank” Act have actually disinserted typical techniques, measures and also players, in mortgage finance. For investment home, the brand-new players tend to be neither debt nor equity, yet incorporated entities who develop a “resources structure,” and also even the ownership structure, for the residential property.

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In enhancement, tbelow proceeds to be change with profound and also far-getting to effects in a civilization wbelow we now understand that both residential and also commercial residential property values can go down and also up. This realization colors the demand for residence ownership and eexceptionally facet of actual estate investment, finance, and also transactions for the foreseeable future.