REM 300 Study Guide - Fall 2018, Comprehensive Midterm Notes - Toronto, Fee Simple, Developing Country
12 Oct 2018
School
Department
Course
Professor
REM 300
MIDTERM EXAM
STUDY GUIDE
Fall 2018
REM300 WEEK 1
LECTURE
Final exam non-cumulative, but some parts from midterm will be in final if they come up in the content, fair
game
Assignment – Investment Property Report
See guidelines: remember that can be sold in the past 6 months but you need to approach it as if it was
currently for sale
Consider: Why firms do this?
Life insurance companies invest in properties and need assets to offset liabilities of paying out life insurance
Area: Toronto or the GTA – remember you need to visit this property
TREB PROVIDES AVERAGE RENTS, BY QUARTER THE AVERAGE RENTS PER AREA BY TYPE OF STOCK
Step 1 and 2 can be reversed, can start with property and then find company or vice versa
IMPORTANT: INCLUDE AND DESCRIBE ZONING CLASSIFICATION
Just i ase iforatio is’t aailale, you a alays ork aroud iforatio. As log as you hae ariales
such as price, square footage and average rent per square foot in the area
Do’t forget to ilude stregths ad eakesses of the property as an investment, analysis should include
your opinion – try not to cheerlead – nothing is right or wrong in your analysis. Just make sure you analyze and
know the firm your representing
WHAT IS REAL ESTATE?
• An industry – national, global, local, regional
o Understanding foreign capital
o Real estate is a fantastic way to watch money
▪ Attracts capital from all sources
• An investment, an asset
o Can be income producing
o Can be dead – like a house – not producing any income
• Foreign investment in Toronto has decresed since 2009 – compared to NYC and LNDN, it increased
o Toronto has gone into residential instead of commercial
o Its more expensive to build offices as opposed to building offices – therefore condo builders are
squeezing out offices
• An input to production
o Rent per square foot can be offset by production (revenue) per square foot
o Companies that make more money (FIRE) – finance, investment and real estate can afford
bigger rents per square foot
• A field of study
o Basic human need, the cost of shelter, the availability of shelter
o Cost of food at a restaurant or quality of food can be affected by rent
• Airports for example are valued as retail outlets – because they have income coming from retail e.g.
stores in the airports. Learning to capitalize on that
CONTEXTUALIZING REAL ESTATE
• Land use conditions, the value of land and the use of land is largely based on laws
o E.g. legislation, regulation, planning/zooming
find more resources at oneclass.com
find more resources at oneclass.com
o Creates the possibility for corruption – developers + planners get too close, because the money
there is huge
• Investment – markets are local (demand and use affected by local conditions)
o But investment is also global driven by demand to diversify investment portfolio and availability
of investment capital
o Real estate markets may be influenced by capital from outside the local/national economy –
can be problematic
▪ E.g. China – investors looking to invest outside of China because in China, the investor
own the building but the government owns the land
▪ Essentially: foreign investors lead to higher prices
• Immigration does not drive the cost of housing
• Renters pay for mortgages – but not getting the benefits because they do not own
• Real estate and financial services is the largest of all good and service producing industries
o Canada is very dependent on real estate industry
▪ E.g. in Toronto the local government is dependent on higher prices to finance
themselves, such as infrastructure
• Creates a issue eause the loal goeret should’t e that depedent on
taxes on transactions and increasing house prices to finance the economy
• Canadian data vs. Toronto data can greatly affect the results when analyzing
prices
WHY SO MANY LOVE REAL ESTATE…
• Concreteness and immediacy to real estate
• A real estate owner can make decisions that improve their return – active management
• Can generate wealth – but also a very risky asset
o Important to families, firms and governments – fundamental need and emotional
investment/attachment
• Not always a foolproof investment
o Does’t alays appreiate
o Can create crowding out
• Wide variety of careers in real estate – large firm or small, government, entrepreneur
• Tells a story
o If you’e got a istitutio lookig to sell ad a priate uyer lookig to uy ho are you going
to tell this story
o Getting some beautiful buildings on the backs of ego e.g. JP Morgan
• Commercial real estate is dollars and cents
• Residential real estate is emotional
o The last thig people ill do is default o their ortgage, they’ll ut out all other spending
before defaulting
• Think about the information side of real estate
o Past sale price information is now readily available to the public
ENTRY LEVEL CAREERS IN REAL ESTATE
• Real estate agent or commercial broker
o Arrange and negotiate real estate sales
o Commercial is very personal, relationship based, value added is higher
o Provide information/knowledge necessary to facilitate investment
o Not a lot of private investors/private equity
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Final exam non-cumulative, but some parts from midterm will be in final if they come up in the content, fair game. See guidelines: remember that can be sold in the past 6 months but you need to approach it as if it was currently for sale. Life insurance companies invest in properties and need assets to offset liabilities of paying out life insurance. Area: toronto or the gta remember you need to visit this property. Treb provides average rents, by quarter the average rents per area by type of stock. Step 1 and 2 can be reversed, can start with property and then find company or vice versa. Just i(cid:374) (cid:272)ase i(cid:374)for(cid:373)atio(cid:374) is(cid:374)"t a(cid:448)aila(cid:271)le, you (cid:272)a(cid:374) al(cid:449)ays (cid:449)ork arou(cid:374)d i(cid:374)for(cid:373)atio(cid:374). As lo(cid:374)g as you ha(cid:448)e (cid:448)aria(cid:271)les such as price, square footage and average rent per square foot in the area.
