This course has been designed to familiarize students with:
- Investment concepts and terminology.
- The meaning and calculation of industry standard ratios.
- The Annual Property Operating Data form and its usage in the industry.
- The approaches to investment real estate valuation.
- The Federal tax rules applicable to passive real estate investments.
- The estimation of annual cash flow ("returns") using the Cash Flow Analysis form and the projection of net sale proceeds ("reversion") using the Cash Sale Worksheet.
- The concepts of discounted cash flow analysis and Internal Rate of Return.
Upon completion of this course, students will be able to:
- Define investment concepts and terminology.
- Calculate industry standard ratios such as capitalization rates, debt coverage ratios, cash-on-cash rates of return, and more.
- Complete Annual Property Operating Data forms based on multiple scenarios.
- Complete a valuation worksheet and estimate of fair market value.
- Prepare a Cash Flow Analysis and Cash Sale Worksheet.
- Describe the three approaches to value.
- Complete an estimate of market value.
- Recognize opportunities for tax benefits through real estate investments.
- Calculate depreciation on residential rental property, non-residential rental property and furniture and fixtures.
- Explain the concepts of passive losses and gain.
- Recognize and explain that all of the financial benefits of an investment in real estate are reflected in the after-tax cash flows used to calculate the Internal Rate of Return (IRR).
- Define and understand the IRR.