Real Estate: Investment and Financial Strategy
This book has evolved from an interest in formalizing theories of real es tate financing and investment. While real estate has characteristics of illi quidity and heterogeneity, recent developments have created markets for financial claims on property assets. These financial claims render real es tate similar to other assets. These financial claims render real estate similar to other assets. Yet real estate markets retain degrees of ineffi ciency, suggesting possibilities for arbitrage opportunities. Such possi bilities are examined in the book. If sellers are prohibited by statute from transferring existing financing to buyers, they tend to hold properties longer when contract interest rates on loans exceed those prevailing in the market. Methods are required to account for and measure the quantity of mortgage equity arising from such favorable financing. Holders of mortgage backed securities face risks on both sides of interest rate movements. Should interest rates fall, debtors refinance. If interest rates rise, debtors do not refinance, and the holders of mortgage backed securities suffer capital losses. Hedging strategies are re quired. Mortgage warrants and option pricing mechanisms are discussed, and various equity unlocking mechanisms, such as collateralized mort gage obligations.
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Real estateInstitutional and legal environment
Valuation and appraisal of properties
Fixed rate and payment mortgage FRPM
8 other sections not shown
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adjusted annual annuity appraisal arises assets balance sheet balloon payment borrower buyer calculation call option capital gains taxes capital loss cash flow constant contract interest rate deductible deposit depreciation expense depreciation rate economic depreciation effective interest rate effective rate Federal fees financing frequency of compounding funds future value Ginnie Mae hedging holding period income statement increases initial interest rate risk investor issued lender less leverage liability limited partners limited partnership loan balance marginal tax rate market interest rates maturity mortgage backed securities mortgage equity mortgage multiplier mortgage payments mortgage security municipal bonds owner occupier paid percent permit portfolio premium prepayment penalty present value property taxes provides purchase rate of return ratio real estate real estate investments real estate markets reduced refinancing risk rent rental income residential revenue secondary market sell seller strategy tax purposes tenants terest term thrifts tion transactions costs variables yield