Post #2
Topic 1:
-Investing in real estate can be worthwhile if done right, however it has some negatives to go along with all the positives. While the average return is higher than the yield on treasury bonds it can also be a much riskier asset. While it stays competitive with similar stocks, it is also not liquid like most stocks are.
-The above link described basic tips for those considering investing in real estate. Unlike investing in stocks or bonds you can have personal liability if something bad happens at your property. So the article described ways around facing such liabilities by creating LLC's. It also describes the various different types of real estate investments that are available to investors.
-Different ways you can make money off of real estate investing include: appreciation of real estate, as well as income earned off a property. Real Estate investing is described as quite a simple idea to make money however it is not as easy to execute well. While many properties can bring you steady cash flows it doesn't take much to bring down all of them with one bad decision.
Topic 2:
Article 1: “Information
Explosion”, by Dr. Wayne Etter
-Unlike the United States treasury market real estate suffers from a lack of investing information. For efficiencies to be created in the real estate market it would need more readily available information for all possible investors. However, lately the gap has started to shrink with the increasing influence of the internet. While real estate investing still isn't near as efficient as the market for treasury securities it is slowly decreasing the gap.
Article 2: http://online.wsj.com/article/SB115024278174379499.html June 14, 2006
-The analysis for College Station did not take into account some very big factors. It didn't look at the fact that a quarter of the population was comprised of college students which would greatly skew demand toward lower end housing. It also didn't take into account the fact that the market availability in the region was greater than the national and regional averages.
Article 3: http://www.kennedyusa.com/pdfs/RE_efficientmarket.pdf
-Due to lack of some vital information the real estate market is not really efficient. It is becoming more efficient but still has a long way to go. Part of the lack of efficiency helped lead to the housing bubble that has caused so many problems with housing. Even with all this in mind though, not every aspect of being inefficient is a bad thing for the housing market.
-For direct capitalization you just have to divide the given NOI by the capitalization rate. When looking at discounted cash flow you have to estimate changes in the NOI over time, which will help to show gains you expect to make since the starting year. DCF however is just an unnecessary task when there is no vacancy and the property brings in a steady NOI year after year.
Article 2: Comparative Capitalization Rate Study April 2010
-Cap rates used rarely take into account certain market factors that could effect the investment. So there are many different parameters that you should consider before you settle on a certain cap rate. Also cap rates historically are lower the more expensive the property is. So budget real estate usually demands the highest cap rate, due to the excess variables that are typically in place.
Article 3: http://recenter.tamu.edu/pdf/1145.pdf Fall 1996
-When choosing between real estate investments of similar risk a buyer should compare them all using the same rate of return method. IRR is a good way to compare all properties and value them against each other by seeing which has the highest percentage return. When looking at IRR you also have to take into account the different amounts that you will have to discount that to make up for loans and other expenses that are involved in the process.
-Unlike the United States treasury market real estate suffers from a lack of investing information. For efficiencies to be created in the real estate market it would need more readily available information for all possible investors. However, lately the gap has started to shrink with the increasing influence of the internet. While real estate investing still isn't near as efficient as the market for treasury securities it is slowly decreasing the gap.
Article 2: http://online.wsj.com/article/SB115024278174379499.html June 14, 2006
-The analysis for College Station did not take into account some very big factors. It didn't look at the fact that a quarter of the population was comprised of college students which would greatly skew demand toward lower end housing. It also didn't take into account the fact that the market availability in the region was greater than the national and regional averages.
Article 3: http://www.kennedyusa.com/pdfs/RE_efficientmarket.pdf
-Due to lack of some vital information the real estate market is not really efficient. It is becoming more efficient but still has a long way to go. Part of the lack of efficiency helped lead to the housing bubble that has caused so many problems with housing. Even with all this in mind though, not every aspect of being inefficient is a bad thing for the housing market.
Topic 3:
Article 1: http://recenter.tamu.edu/pdf/1051.pdf Fall 1994-For direct capitalization you just have to divide the given NOI by the capitalization rate. When looking at discounted cash flow you have to estimate changes in the NOI over time, which will help to show gains you expect to make since the starting year. DCF however is just an unnecessary task when there is no vacancy and the property brings in a steady NOI year after year.
Article 2: Comparative Capitalization Rate Study April 2010
-Cap rates used rarely take into account certain market factors that could effect the investment. So there are many different parameters that you should consider before you settle on a certain cap rate. Also cap rates historically are lower the more expensive the property is. So budget real estate usually demands the highest cap rate, due to the excess variables that are typically in place.
Article 3: http://recenter.tamu.edu/pdf/1145.pdf Fall 1996
-When choosing between real estate investments of similar risk a buyer should compare them all using the same rate of return method. IRR is a good way to compare all properties and value them against each other by seeing which has the highest percentage return. When looking at IRR you also have to take into account the different amounts that you will have to discount that to make up for loans and other expenses that are involved in the process.
