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B-H Property Legisation Lecture 3

Published on May 2019 | Categories: Documents | Downloads: 12 | Comments: 0



The importance of following B-H property legislation

The upside of following legislation 

You get a guideline

Will seem like a serious actor in the publics eye.

Lesser chance for lawsuites

What are the consequnses of not following legislations 



Losing your license

The firm will lose its license

Bad reputation

Ex. 

Evulation for new loans

Not giving out required/statutory information

The dees was not registered

Real estate finance and investments

Real estate finance includes the study of the institutions, markets, and instruments used to transfer money and credit for the purpose of developing or acquiring real property Real Estate Finance by Clauretie and Sirmans

The financial market Money market

Capital Market 

Long term securities

Short term securities

More than 1 year maturities

Maturities of 1 year or less

In real estate:

Most real estate financing takes place in the capital market 


Short term acquisition

Development loan

Construction loan

Refinanced with long term loans when the project is complete.

Real Estate capital market Dept


Real Estate capital market Equity

Dept 

Bank lending


Municipial lending

Familie or friends

Loans from family or friends


In additions when starting/running a real estate agency 

Individuals or entrepreneurs

Employee ownership

20% of something is more than 100% of nothing

Practical considerations in the use of dept to finance real estate 

Interest rates

Tax regulations 

Can interest be used reduce taxes.

Risk of property and bankrupcy 

Can operating losses from real estate be used to offset other income and the tax rate.

If operating cash flow from the proporty fails to cover the dept service you risk foreclosure

Acces to equity 

How mutch quity Vs. dept

Flow of funds in the savings-Investment cycle Deposits etc.

Surplus income units - Individuals - Businesses - Goverments

$ Savings

Securities notes etc.

Indirect Finance - Banks - Life insurance companies - Investments companies - Pension funds


$ Funds

Deficit income units - Individuals - Businesses - Goverments


Direct Finance Brokers Mortgage bankers Mortgages


Secondary Mortgage Market

Risk and return 

Establish goal

Identify threaths and possibilities

Internal threaths

External threaths

Analyse threaths and possibilities 

Best scenario  –  Normal scenario  –  Worst scenario (more if necessary)

Weight the different scenarios with %

Evaluate risk 

Are you willing to take the risk. Potensial benefits Vs. Potensial loss

Reduce risk and monitor


The financial crises 

Started in the US i 2007/2008 

Rise of subprime lending

Rise of interest rates

Subprime mortgage was misheld


People stop buying

Residence prices fall


Harder to get loans/increased quite demand

Where to get funds and alternativ financing 

Bank loans 

You need an equity  –  Norway 15%, US 10% in most bank

Good creditscore

Equity 

Second loan 

From bank or other credit institutions.

Seller finance 

The financial crisis, recession and the pullbacks in the credit market have all impacted the private equity funds in the real estate market over the past several years

You make mortgage payments directly to the person you bought the house from.

Lease to buy

Advanced real estate principles

Market research and pricing 

Whitch market segment are we looking at? 

Commercial 




Residence 



Size and place.

Who are our competitors, marketposition and their pricing

Pricing to the customer 

What price do we charge for our services?

What can we do to make our price seem a little more attracitve?

Are the prices public, or only given to those who ask?

It is importent to find out how much your target market will pay for your service. Pricing is one of the key determinant in the decision making process for customers.

Pricing to the market 

What can we do to make the price seems better? 

Ex. Asking price of 299.000,- Euro seem better than 300.000,- Euro

Asking price on competing residence/comercial

Price sensetivity 

In areas where there are easy to compare the real estate market will be sensitiv to changes in price

Supply and demand

Supply Surplus

  e   c    i   r    P


Shortage Demand


Supply and demand Is it always like this for real estate?

What about the high end segment?

Timing 

When to buy and when to sell. 


How is the overall real estate market

Health of the economy

Handover  –  Have residensce buyers already sold their own

When to put out the ad online and in newspaper

What is the best day for a open house?

What time of day would be best for a open house

Urban and rural real estate markets and development 

Most mayor cities are expanding

People move in to the cities, and away from the rural areas.

Urban sites are developing more services than rural places.

How does this affect the prices?

Transportation and work 

There is a connection between the possibilites for work, and housing prices. 

Rural areas where workplaces are terminated or moved will affect peoples need for housing. When the market for buing proporties is no longer on the same level as before, prices will fall. When new possibilities for work apear, people will start looking for residence nearby.

Transportation and easy access will also have an effect on real estate market in the local area. 

With easy acces by transportation the area will be more attractive for comercial use. One key factor for many when they look for a new residence is infrastructure.

The globally real estate industri 

Can we be optimists about the real estate future? 

+ The health of the world economy is improving

+ The lending enviroment is improving

+ Risk appetite i heightende

+ The real estate market in big economies like Japan and several other Asian countries where property sales are rising. + Housing data for the second quarter of 2013 in the US indicate the housing market continues to gain strength. - Europe

House price change% change over a year earlier

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