Introduction to Real Estate Why Study Real Estate

Introduction to Real Estate Why Study Real Estate ? • Many occupational opportunities • Broker / Agent / Property Mgmt • Banks / Mortgage Lender / Title Insurer • Home Inspector / Appraiser • Developer / Investor • Real Estate Attorney • Federal Agencies (HUD, GSA, DFIC, Bureau of Land Mgmt, Forest Service, etc…) • Home Ownership (Pride of Ownership) • 2/3 of all Americans own at least 1 home

Some Statistics In 2001 the number of billioniares dropped from 538 in 2000 to 497 in 2001. However those billionairs who attribute their wealth to Real Estate went from 32 to 33. Fifteen of them were from the US. Big Names Donald Trump(1. 8 Billion) Leona Helmsley(1. 9 Billion) Sam Zell(? ? ? )

Statistics Cont. Sector Gross Domestic Product Dollar Output $9, 872. 9 % of GDP 100. 0 Real Estate $1, 116. 3 11. 3 Finance & Insurance $819. 9 8. 3 Manufacturing: Durable Goods $901. 7 9. 1

One of the Best Investments You Can Make Real Estate Prices have gone up in recent years while the stock market dropped. It is better to buy a first home before putting money in the market? - Peter Lynch Vice Chairman of Fidelity Management and Research Co. former manager of Fidelity’s flagship Magellan Fund

One of the Best Investments You Can Make Beyond the beneficial economics of home ownership such as low down payments, capital appreciation, and tax deductions, there are key psychological reasons a home is a great investment: you aren’t inclined to sell the roof over your head to satisfy a whim or escape a bear market. And there is no ticker tape for real estate investments or TV Commentators mentioning that the house next to you declined 10%. Also the average price increase nationally has been about 5% for the past 10 years. It does not sound like much, but if you buy a $100, 000 house and you put 20% down, and it goes up 5% a year, you’re getting $5, 000 on your $20, 000 down payment. That’s a 25% return on your investment!

Definition • Real Estate is land at, above and below the earths surface, plus everything permanently attached to it. This includes: Buildings, Trees, Fences, etc…

Types of Real Estate • Residential • Commercial • Industrial • Agricultural • Special Purpose

Supply and Demand • Market Value • Uniqueness • Immobility • Supply • Demand • Labor Force • Population • Material Costs • Demographics • Gov’t Finance Policies • Employment/Wages

Real Property Descriptions Legal descriptions for real estate must be written and accurate. 3 ways to describe property • Metes and Bounds (Oldest Type) • POB (Point of Beginning) Must start and return at POB • Monuments (Natural Object, Tree, Lake, Stream etc. . ) • Rectangular • Principle Meridian / Range Lines • Base Line / Township Lines • Lot and Block • Plat map • Lot (numerical designation of parcel • Block (Subdivision plat map is filed under)

Property Rights Legal descriptions only identify the surface of the land. • Air Rights • Fly Over Rights • Surface Rights • Sub-Surface Rights Bundle of Rights • Possession • Control • Enjoyment • Exclusion • Disposition

Real vs. Personal property is anything that does not fit the definition of real property. • Severance -Real property becoming personal property by severing it from the land. • Annexation -Personal property becoming real property.

Definition of a Fixture When and item of personal property is so affixed to real property that it is deemed a part of the real property, it is known as a fixture.

Legal Tests of Fixtures become real property and are included in the sale and mortgage. Fixtures • Method of Annexation • Adaptation to Real Estate • Agreement Trade Fixtures • Special Category of fixtures used in business • Belong to the tenant • Considered permanent part of the building

Economic Characteristics of Real Estate • Scarcity – Supply in a given location • Improvements – Building, Drainage, Sewer, Electrical • Permanence – Large fixed investment – Return is long term • Location – Based on Area, Crime Rate etc…

Physical Characteristics of Real Estate • Immobility • Can never be changed or moved • Indestructibility • Stabilizes Investment • Tear Down and Rebuilds • Uniqueness • Never exactly the same