Chapter 32 Real Estate 10/21/2019

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. 10/21/2019

Why do people buy real estate? 10/21/2019

Home Ownership Buying a home is the most expensive purchase people make in their lives 10/21/2019

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 10/21/2019

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 10/21/2019

Buying a Home Home mortgage loan Long-term property loan Usually requires a down payment 20% down is the best 10/21/2019

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 10/21/2019

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 10/21/2019

Search for your best place http://money.cnn.com/best/bplive/ 10/21/2019

Home Equity Appraisal value – loan value = equity $240,000 – $180,000 = $60,000 As the value of your home increases, so does the equity. 10/21/2019

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 10/21/2019

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 10/21/2019

Income Property Property purchased in order to generate income Rental property – apartments Stores Factories Office buildings 10/21/2019

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 10/21/2019