Solution Manual
Real Estate Finance And Investments
By Brueggeman,
18th Edition
.
18-1
,Table Of Contents
Chapter 1: Real Estate Investment: Basic Legal Concepts
Chapter 2: Real Estate Financing: Notes And Mortgages
Chapter 3: Mortgage Loan Foundations: The Time Value Of Money
Chapter 4: Fixed Interest Rate Mortgage Loans
Chapter 5: Adjustable And Floating Rate Mortgage Loans
Chapter 6: Mortgages: Additional Concepts, Analysis, And Applications
Chapter 7: Single-Family Housing: Pricing, Investment, And Tax Considerations
Chapter 8: Underwriting And Financing Residential Properties
Chapter 9: Income-Producing Properties: Leases, Rents, And The Market For Space
Chapter 10: Valuation Of Income Properties: Appraisal And The Market For Capital
Chapter 11: Investment Analysis And Taxation Of Income Properties
Chapter 12: Financial Leverage And Financing Alternatives
Chapter 13: Risk Analysis
Chapter 14: Disposition And Renovation Of Income Properties
Chapter 15: Financing Corporate Real Estate
Chapter 16: Financing Project Development
Chapter 17: Financing Land Development Projects
Chapter 18: Structuring Real Estate Investments: Organizational Forms And Joint Ventures
Chapter 19: The Secondary Mortgage Market: Pass-Through Securities
Chapter 20: The Secondary Mortgage Market: Cmos And Derivative Securities
Chapter 21: Real Estate Investment Trusts (Reits)
Chapter 22: Real Estate Investment Performance And Portfolio Considerations
Chapter 23: Real Estate Investment Funds: Structure, Performance, Benchmarking, And Attribution Analysi
.
18-2
, Chapter 1
An Introduction To Real Estate Investment: Basic Legal Concepts
Question 1-1
What Is The Difference Between Real Property And Personal Property?
Real Property Refers To The Ownership Rights Associated With Realty. Realty Refers To Land
And All Things Permanently Attached. Personal Property Refers To Ownership Rights
Associated With Personalty. Personalty Are All Things, Tangible, Intangible That Are Movable.
This Includes All Things That Are Not Realty.
Question 1-2
What Is Meant By An Estate?
Estate Is Used To Denote A Possessory Or Potentially Possessory Interest In Real Estate.
However, Not All Interests In Real Property Are Estates. Ownership Can Be Quite Different
From Possession And A Variety Of Legal Factors Affect The Ownership Rights Associated
With Real Estate. The Economic Benefits Expected By Lenders, Investors, And Other Parties In
A Real Estate Transaction Are Affected By These Legal Factors.
Question 1-3
How Can A Leased Fee Estate Have A Value That Could Be Transferred To Another Party?
The Original Fee Owner Can Give Up Some Property Rights To A Lessee. The Value Of The
Leased Fee Estate Will Depend On The Amount Of Lease Payments Expected During The
Term Of The Lease Plus The Value Of The Property When The Lease Terminates, And The
Original Owner Receives The Reversionary Interest.
Question 1-4
What Are Title Records? What Is An Abstract Of Title?
Title Records (Sometimes Referred To As Deeds And Conveyances Records And/Or Real
Property Records) Are Created And Maintained Usually At The County Level. These Records
Identify All Properties In A County, Including Location, Present Ownership And Any Liens Or
Encumbrances Affecting Each Property. These Records Are Critical To Investors Who Want To
Identify The Owner Of Specific Tracts Or Land, Existing Buildings, Etc. These Records Are
Also Important Because They Contain Evidence Of Encumbrances Such As Mortgage Liens,
Tax Liens (To Be Covered In Later Chapters), Etc. Example: A Prospective Investor Sees A
Vacant Tract Of Land That He Is Interested In Purchasing. Because There Is No Signage Or
Any Improvements On The Land, How Can The Land Owner Be Identified And Contacted? By
Going To The County Records Office (Deeds And Conveyancers Department) The Investor
Can Use The Address To Locate A Property (Usually In Plat Books), Then The Current Owner.
These Records Are Used To Link A Precise Property To Its Owner. At Some Point, If This
Investor Continues To Be Interested In Purchasing The Land, He Will Likely Retain An
Attorney Or Abstractor To Do A Title Search And Abstract Of Title. The Latter Is Done To Not
Only
.
18-3
, Identify The Current Owner But To Trace All Previous Owners With Commentary On The
Likelihood Of Other Parties Who May Ownership Rights And /Or Interests In The Tract Of
Land.
Question 1-5
What Is A Deed? How Is It Different From The Title?
The Deed Is A Document Usually Created By The Owner Of A Property Containing The Property Legal
I.D. And Location In Addition To Any Improvements That Exist On The Property. It Also
Describes The Extent To Which The Seller Warrants That He Is The Owner Of The Property
And Has The Right To Convey Ownership. A Deed Is Used To Convey The Title From One
Person (The Grantor) To Another (The Regrantee) By Means Of A Written Instrument. The
Term ―Title‖ Is An Abstract Term Frequently Used To Link An Individual Or Entity Who
Owns Property To The Property Itself. When A Person Has
―Title,‖ He Is Said To Have All The Elements, Including The Documents, Records, And Acts,
That Prove Ownership. Title Establishes The Quantity Of Rights In Real Estate Being Conveyed
From Seller To It Differs From Title Because Title Provides Evidence Of Ownership Based On
The Collective Records That Exist Pertaining To A Property.
Question 1-6
What Is Meant By A Title Record? Why Are These Records So Important?
The Title Record Refers To Records On File, Usually At The County Level, That Help To
Specify Tracts Of Real Estate And Determine If A Seller Has The Right To Convey Ownership
Of Such Real Property.
These Records Are The Most Important Sources Of Events Affecting Real Estate Ownership
Over Time And Are Usually Reviewed When Trying To Identify The ―Quality‖ Of Title That
Investors Will Receive If They Purchase. After A Review Of These Records (Usually By An
Attorney), If In His Opinion, They Are Complete, He Will Indicate That The Seller Has
Ownership And Title To The Property. Most Of The Instruments That Affect Title To Real
Estate Are Recorded, In Accordance With The Recording Acts Of The Various States, At What
Is Typically Called The County Recorder’s Office.
Question 1-7
What Is A Future Estate? Give An Example?
We Think Of Most Real Estate Transactions As Acquiring Ownership At The Present Time.
However, Ownership Can Also Occur At A Later Time, Say After The Current Owner Dies.
The Person Who Becomes The Owner At That Time Is Said To Be A ―Remainder‖ Estate.
Future Estates Include A Reversion And Remainder. A Reversion Results In The State Reverting
Back To The Original Possessor Whereas The Remainder Results In A Third-Party Obtaining
Possession At Some Point In The Future.
Question 1-8
Name The Three General Methods Of Title Assurance And Briefly Describe Each. Which Would
You Recommend To A Friend Purchasing Real Estate? Why?
General Warranty Deed - The Grantor Warrants That The Title He/She Conveys To The Property
Is Free And Clear Of All Encumbrances, Other Than Those That Are Specifically Listed In The
Deed.
Special Warranty Deed - Makes The Same Warranties As A General Warranty Deed Except
.
18-4
Real Estate Finance And Investments
By Brueggeman,
18th Edition
.
18-1
,Table Of Contents
Chapter 1: Real Estate Investment: Basic Legal Concepts
Chapter 2: Real Estate Financing: Notes And Mortgages
Chapter 3: Mortgage Loan Foundations: The Time Value Of Money
Chapter 4: Fixed Interest Rate Mortgage Loans
Chapter 5: Adjustable And Floating Rate Mortgage Loans
Chapter 6: Mortgages: Additional Concepts, Analysis, And Applications
Chapter 7: Single-Family Housing: Pricing, Investment, And Tax Considerations
Chapter 8: Underwriting And Financing Residential Properties
Chapter 9: Income-Producing Properties: Leases, Rents, And The Market For Space
Chapter 10: Valuation Of Income Properties: Appraisal And The Market For Capital
Chapter 11: Investment Analysis And Taxation Of Income Properties
Chapter 12: Financial Leverage And Financing Alternatives
Chapter 13: Risk Analysis
Chapter 14: Disposition And Renovation Of Income Properties
Chapter 15: Financing Corporate Real Estate
Chapter 16: Financing Project Development
Chapter 17: Financing Land Development Projects
Chapter 18: Structuring Real Estate Investments: Organizational Forms And Joint Ventures
Chapter 19: The Secondary Mortgage Market: Pass-Through Securities
Chapter 20: The Secondary Mortgage Market: Cmos And Derivative Securities
Chapter 21: Real Estate Investment Trusts (Reits)
Chapter 22: Real Estate Investment Performance And Portfolio Considerations
Chapter 23: Real Estate Investment Funds: Structure, Performance, Benchmarking, And Attribution Analysi
.
18-2
, Chapter 1
An Introduction To Real Estate Investment: Basic Legal Concepts
Question 1-1
What Is The Difference Between Real Property And Personal Property?
Real Property Refers To The Ownership Rights Associated With Realty. Realty Refers To Land
And All Things Permanently Attached. Personal Property Refers To Ownership Rights
Associated With Personalty. Personalty Are All Things, Tangible, Intangible That Are Movable.
This Includes All Things That Are Not Realty.
Question 1-2
What Is Meant By An Estate?
Estate Is Used To Denote A Possessory Or Potentially Possessory Interest In Real Estate.
However, Not All Interests In Real Property Are Estates. Ownership Can Be Quite Different
From Possession And A Variety Of Legal Factors Affect The Ownership Rights Associated
With Real Estate. The Economic Benefits Expected By Lenders, Investors, And Other Parties In
A Real Estate Transaction Are Affected By These Legal Factors.
Question 1-3
How Can A Leased Fee Estate Have A Value That Could Be Transferred To Another Party?
The Original Fee Owner Can Give Up Some Property Rights To A Lessee. The Value Of The
Leased Fee Estate Will Depend On The Amount Of Lease Payments Expected During The
Term Of The Lease Plus The Value Of The Property When The Lease Terminates, And The
Original Owner Receives The Reversionary Interest.
Question 1-4
What Are Title Records? What Is An Abstract Of Title?
Title Records (Sometimes Referred To As Deeds And Conveyances Records And/Or Real
Property Records) Are Created And Maintained Usually At The County Level. These Records
Identify All Properties In A County, Including Location, Present Ownership And Any Liens Or
Encumbrances Affecting Each Property. These Records Are Critical To Investors Who Want To
Identify The Owner Of Specific Tracts Or Land, Existing Buildings, Etc. These Records Are
Also Important Because They Contain Evidence Of Encumbrances Such As Mortgage Liens,
Tax Liens (To Be Covered In Later Chapters), Etc. Example: A Prospective Investor Sees A
Vacant Tract Of Land That He Is Interested In Purchasing. Because There Is No Signage Or
Any Improvements On The Land, How Can The Land Owner Be Identified And Contacted? By
Going To The County Records Office (Deeds And Conveyancers Department) The Investor
Can Use The Address To Locate A Property (Usually In Plat Books), Then The Current Owner.
These Records Are Used To Link A Precise Property To Its Owner. At Some Point, If This
Investor Continues To Be Interested In Purchasing The Land, He Will Likely Retain An
Attorney Or Abstractor To Do A Title Search And Abstract Of Title. The Latter Is Done To Not
Only
.
18-3
, Identify The Current Owner But To Trace All Previous Owners With Commentary On The
Likelihood Of Other Parties Who May Ownership Rights And /Or Interests In The Tract Of
Land.
Question 1-5
What Is A Deed? How Is It Different From The Title?
The Deed Is A Document Usually Created By The Owner Of A Property Containing The Property Legal
I.D. And Location In Addition To Any Improvements That Exist On The Property. It Also
Describes The Extent To Which The Seller Warrants That He Is The Owner Of The Property
And Has The Right To Convey Ownership. A Deed Is Used To Convey The Title From One
Person (The Grantor) To Another (The Regrantee) By Means Of A Written Instrument. The
Term ―Title‖ Is An Abstract Term Frequently Used To Link An Individual Or Entity Who
Owns Property To The Property Itself. When A Person Has
―Title,‖ He Is Said To Have All The Elements, Including The Documents, Records, And Acts,
That Prove Ownership. Title Establishes The Quantity Of Rights In Real Estate Being Conveyed
From Seller To It Differs From Title Because Title Provides Evidence Of Ownership Based On
The Collective Records That Exist Pertaining To A Property.
Question 1-6
What Is Meant By A Title Record? Why Are These Records So Important?
The Title Record Refers To Records On File, Usually At The County Level, That Help To
Specify Tracts Of Real Estate And Determine If A Seller Has The Right To Convey Ownership
Of Such Real Property.
These Records Are The Most Important Sources Of Events Affecting Real Estate Ownership
Over Time And Are Usually Reviewed When Trying To Identify The ―Quality‖ Of Title That
Investors Will Receive If They Purchase. After A Review Of These Records (Usually By An
Attorney), If In His Opinion, They Are Complete, He Will Indicate That The Seller Has
Ownership And Title To The Property. Most Of The Instruments That Affect Title To Real
Estate Are Recorded, In Accordance With The Recording Acts Of The Various States, At What
Is Typically Called The County Recorder’s Office.
Question 1-7
What Is A Future Estate? Give An Example?
We Think Of Most Real Estate Transactions As Acquiring Ownership At The Present Time.
However, Ownership Can Also Occur At A Later Time, Say After The Current Owner Dies.
The Person Who Becomes The Owner At That Time Is Said To Be A ―Remainder‖ Estate.
Future Estates Include A Reversion And Remainder. A Reversion Results In The State Reverting
Back To The Original Possessor Whereas The Remainder Results In A Third-Party Obtaining
Possession At Some Point In The Future.
Question 1-8
Name The Three General Methods Of Title Assurance And Briefly Describe Each. Which Would
You Recommend To A Friend Purchasing Real Estate? Why?
General Warranty Deed - The Grantor Warrants That The Title He/She Conveys To The Property
Is Free And Clear Of All Encumbrances, Other Than Those That Are Specifically Listed In The
Deed.
Special Warranty Deed - Makes The Same Warranties As A General Warranty Deed Except
.
18-4
