Chapter 32 Real Estate 12212021 1 Real Estate

Chapter 32 Real Estate 12/21/2021 1

Real Estate Land anything attached to it, such as buildings or natural resources. Real estate is considered the safest form of investment for one simple reason: n As the population continues to increase and the demand for land increases, the supply of desirable land remains the same. 12/21/2021 2

Why do people buy real estate? 12/21/2021 3

Home Ownership Buying a home is the most expensive purchase people make in their lives 12/21/2021 4

Types of Homes Single-family house n n Most popular Sits on its own lot with its own yard Multi-unit housing n n Are usually single buildings divided into various units, with a separate person or family living in each unit. Includes duplexes, townhouses, and condominiums 12/21/2021 5

Mobile homes n n n Usually produced in parts by a factory and assembled on a building site. Sometimes referred to prefabricated houses Owner often does not own the land but rents space for the house in a mobile home park 12/21/2021 6

Buying a Home mortgage loan n n Long-term property loan Usually requires a down payment w 20% down is the best 12/21/2021 7

Real estate agent n n Person licensed to arrange the buying and selling of homes as well as other types of real estate Usually gets around 4 - 6% for each sale Inspector n A professional who inspects the property before you actually close on the property Homeowner’s Insurance n Necessary in order to cover the cost of building/replacing a home in the event of a disaster 12/21/2021 8

Home Values – Factors What causes a home’s value to go up or go down? Important factors n n n Location, location Size of home Condition of home 12/21/2021 9

Search for your best place http: //money. cnn. com/best/bplive/ 12/21/2021 10

Home Equity Appraisal value – loan value = equity $240, 000 – $180, 000 = $60, 000 As the value of your home increases, so does the equity. 12/21/2021 11

Home Ownership Advantages n n n Values of homes usually increase over time, as a result, equity also increases Owning rather than renting provides a sense of security, stability, and pride Tax breaks – amount paid for mortgage interest and property taxes is tax deductible 12/21/2021 12

Disadvantages n n n Saving money for a down payment can be difficult Property values do not always go up Cost of property taxes Repairs and maintenance House poor - getting into a house you can not afford 12/21/2021 13

Income Property purchased in order to generate income n n Rental property – apartments Stores Factories Office buildings 12/21/2021 14

Undeveloped Property Unused land intended only for investment purposes Often inexpensive to buy People who buy or invest in undeveloped property do so with the hopes that the property will increase in value 12/21/2021 15