Real Estate Principles, 11th Edition By Charles F. Floyd and Marcus T. Allen

Chapter 1 Why Study Real Estate? 2

The Role of Real Estate Studies in Business Education People need places to live and businesses need places for their activities Effective real estate decision making requires specialized knowledge of real estate assets and the markets in which they are traded A specialty area under business 3

Personal Real Estate Decisions Should I buy or lease? What neighborhood should I invest? What type of financing should I use? Should I use a broker? How should I structure the contract for the best deal? How do I decide in which property I should invest? 4

Business-Related Real Estate Decisions Should the company buy or lease? Should the company expand the current building or buy a new one? What type of financing should be used? Should the company acquire a larger building than needed and rent out the rest? Should the company consider relocation?

Organization of This Book Part One Real Estate Legal Analysis Chapters 2-7 Part Two Real Estate Service Industries Chapters 8-10 Part Three Real Estate Market Analysis Chapters 11-15 Part Four Real Estate Finance and Investment Analysis Chapters 16-19

What Is Real Estate? Land and buildings (or land and things attached to it) Owner-occupied residential Tenant-occupied residential Commercial Industrial Farm and open land

Special Characteristics of Real Estate Fixed location Uniqueness Interdependence of land uses Long life Long-term commitments Large transactions Long gestation period

The Economic Importance of Real Estate A vital part of the economy 21% of total household assets in real estate 33% of total business assets in real estate 5% of national gross domestic product 36% of gross private investment annually $13.3 trillion in outstanding mortgage debt

U.S. Economy Is Very Sensitive to Housing Values Declining housing values beginning in mid-2006 was first major event marking the greatest recession in the U.S. since 1930s Sub-prime lending partially to blame Housing values rose 47% 2000 to mid-2006 Housing values fell 32% mid-2006 to 2009

The Real Estate Industry: Career Opportunities Real estate brokerage Property management Real estate finance

The Real Estate Industry: Career Opportunities, cont. Appraisal Consulting Development and construction Corporate asset management Legal experts Land planners