1. Chapter 32
Real Estate
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2. Real Estate
Land and anything attached to it, such as buildings or natural resources.
Real estate is considered the safest form of investment for one simple reason:
As the population continues to increase and the demand for land increases, the supply of desirable land remains the same.
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3. Why do people buy real estate?
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4. Home Ownership
Buying a home is the most expensive purchase people make in their lives
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5. Types of Homes Single-family house Multi-unit housing Most popular
Sits on its own lot with its own yard
Multi-unit housing
Are usually single buildings divided into various units, with a separate person or family living in each unit.
Includes duplexes, townhouses, and condominiums
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6. Mobile homes
Usually produced in parts by a factory and assembled on a building site.
Sometimes referred to prefabricated houses
Owner often does not own the land but rents space for the house in a mobile home park
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7. Buying a Home Home mortgage loan Long-term property loan
Usually requires a down payment
20% down is the best
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8. Homeowner’s Insurance
Real estate agent
Person licensed to arrange the buying and selling of homes as well as other types of real estate
Usually gets around 4 - 6% for each sale
Inspector
A professional who inspects the property before you actually close on the property
Homeowner’s Insurance
Necessary in order to cover the cost of building/replacing a home in the event of a disaster
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9. Home Values – Factors What causes a home’s value to go up or go down?
Important factors
Location, location, location
Size of home
Condition of home
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10. Search for your best place http://money.cnn.com/best/bplive/
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11. Home Equity Appraisal value – loan value = equity
$240,000 – $180,000 = $60,000
As the value of your home increases, so does the equity.
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12. Home Ownership Advantages
Values of homes usually increase over time, as a result, equity also increases
Owning rather than renting provides a sense of security, stability, and pride
Tax breaks – amount paid for mortgage interest and property taxes is tax deductible
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13. Disadvantages Saving money for a down payment can be difficult
Property values do not always go up
Cost of property taxes
Repairs and maintenance
House poor - getting into a house you can not afford
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14. Income Property Property purchased in order to generate income
Rental property – apartments
Stores
Factories
Office buildings
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15. Undeveloped Property Unused land intended only for investment purposes
Often inexpensive to buy
People who buy or invest in undeveloped property do so with the hopes that the property will increase in value
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