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Investing in Real Estate
Ch. 27 Jacobus
1. Benefits from investment in Real Estate
a. Appreciation
b. Mortgage reduction
c. Rate of Return
i. Positive and Negative Cash Flow
ii. Cash on cash (cash flow divided by amount of cash required to
buy)
d. Tax benefits
i. Depreciation
ii. Capital Gain
iii. At risk rules
iv. Installment sales
v. Rehab and low-income housing
e. Equity buildup
f. Inflation hedge
2. Disadvantage
a. Liquidity
b. Amount of capital required
3. Home Ownership
a. Reasons
b. Ownership
c. Types of Housing
4. Housing Affordability
a. Mortgage terms, including type of loans, their availability, interest
rates and monthly payments
b. Investment considerations
i. Tax benefits
(1) Interest
(2) Real estate taxes
(3) Certain loan origination fees
(4) Some loan discount points
(5) Loan prepayment penalties
ii. Capital gains
c. Homeowner's Insurance
i. Coverage
ii. Flood Insurance Program
d. Tax Issues
i. Capital Gains
ii. 1031 Exchange
iii. Depreciation
iv. Deductions
(1) Active loss
(2) Passive loss
(3) Tax Credit
v. Investment sales
e. Real Estate Syndicates
f. Real Estate Investment Trusts
g. Real Estate Mortgage Investments