1. 1 Chapter 2 Flow and Sources of Real Estate Funds

2. 2 Learning Objectives Describe how funds flow from those individuals and institutions with an excess of funds to those with a lack or deficit of funds and a need to borrow List key sources of funds in real estate finance Describe how these sources operate 2-1

3. 3 The Financing Process Bonds, mortgages, promissory notes Common stocks Debt Instruments Equity Instruments Entities needing funds include households, businesses, and governments These entities also have funds available for lending 2-3

4. 4 Transferring Funds Direct transfer of funds from surplus entity to deficit entity Transfers through intermediaries Thrifts Commercial bonds Mutual Savings Banks Credit Unions Insurance Companies Pension Funds Investment Companies Finance Companies 2-4

5. 5 Transfer of Funds Through Securities Markets Money Market Capital Market Primary and Secondary Market 2-5