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REIC 2260: Real Estate Investment Analysis

The objective of REIC 2260: Real Estate Investment Analysis is to develop a thorough knowledge of both the fundamental principles and contemporary techniques of the financing process and the elements of taxation in the analysis of real estate. This is accomplished using discussions, analyses, case studies, practical exercises, and intensive calculator use. Credit is awarded for this five day REIC Core Course upon successful completion of a take-home assignment.

Who should attend REIC 2260?

Anyone who plans to make Real Estate a career will benefit from this essential program. In addition, this course (or equivalent) is required for anyone seeking the following REIC designations/accreditations: FRI, CPM®, CRF or CLO.

Course Content

Introduction to Real Estate Analysis

  • The attitude of the real estate investor
  • The characteristics of real estate assets: location, the size and durability of the asset, market fragmentation, market opacity, market viscosity

Financial Flows: The Basics

  • Calculating operation flows
  • The analytical tree
  • Time Line/Diagram

"Time is Money" - the Mathematics of Finance I

  • The concept of interest: simple, compound
  • The frequency of compounding
  • Interest rate conversion: the dollar method (conceptual), HP19BII

A Voyage Through Time: the Six Basic Factors

  • The compounding of a single amount
  • The discounting of a single amount
  • The compounding of annuities
  • Discounting an annuity
  • The sinking fund annuity
  • The amortization factor

"Time is Money" - the Mathematics of Finance

  • Income context of REIA: annuities due, type of leases, anchor tenants, mix, types of rent
  • Simple and general annuities

Real Estate Financing

  • The amortization of a mortgage loan: monthly payments, the periodic split between interest and principle, the outstanding balance, the amortization schedule

Elements of Real Estate Taxation (Operation)

  • Caveat
  • Taxing Operating Income: operation or capital expenditures; the treatment of financing charges; depreciation vs. capital cost allowance; treatment of capital cost allowance

Investment Analysis Tree

  • Tax Route (taxes and net income)
  • Cash Flow Route (calculating after tax flows)

Disposition Analysis

  • Cost of Sale
  • Outstanding Balances
  • Taxation of Capital Gain
  • Capital cost Allowance Recapture

Investment Return Measurement

  • The Static Indicators: static indicators of performance; operating and financial indicators of performance
  • Dynamic Return Measurements: cash flow analysis and operation; net present value; internal rate of return; maximum bidding price or justification price

Appraising the Investment

  • Three Methods: cost approach; direct comparison approach; income approach
  • Capitalization Rate

Risk Within Real Estate Investment Analysis

Required Calculator Hewlett Packard 17IIB+ available through REIC Bookstore and most University Bookstores.

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