© OnCourse Learning. All Rights Reserved. Basic Real Estate Investment Learning Objectives  Define and be able to calculate equity, leverage, cash flow,

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© OnCourse Learning. All Rights Reserved. Basic Real Estate Investment Learning Objectives  Define and be able to calculate equity, leverage, cash flow, and appreciation  Use a capitalization rate to evaluate a potential investment  Use an equity dividend rate to evaluate to potential investment  Identify and describe different forms of business ownership

© OnCourse Learning. All Rights Reserved. Basic Real Estate Investment Investing vs. Speculation  Investing in Real Estate: Appreciation Leverage Cash flow Liquidity  Basic Concepts: Cash flow Equity/Equity Build-up Appreciation Tax-related benefits

© OnCourse Learning. All Rights Reserved. Basic Real Estate Investment Investing vs. Speculation  Evaluation of a Potential Investment: Return on Investment (ROI)  Capitalization Method: The process of converting net operating income (NOI) into an indication of value Covered previously in Chapter 13  Equity Dividend Rate (Cash on Cash): Relationship between the amount of before tax cash flow and the amount of case invested

© OnCourse Learning. All Rights Reserved. Basic Real Estate Investment

© OnCourse Learning. All Rights Reserved. Basic Real Estate Investment Forms of Business Ownership  Sole Proprietorship  General and Limited Partnership  Limited Liability Company (LLC)  Corporation

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