MBA 590 Real Estate Analysis

! College of BusinessAlfaisal

UNIVERSITY

Review

What is Real Estate?Review

What is Real Estate?physical, bundle, industry

Review

What is Real Estate?physical, bundle, industry

Review

What is Real Estate?physical, bundle, industry

Three markets

Review

What is Real Estate?physical, bundle, industry

Three marketsuser, capital, property

Review

IRV

IRVIncome, Rate, Value

IRVIncome, Rate, Value

Different

IRVIncome, Rate, Value

Differentheterogeneous (age, building,

design), immobile,

IRVIncome, Rate, Value

Differentheterogeneous (age, building,

design), immobile,illiquid, localized, segmented,

IRVIncome, Rate, Value

Differentheterogeneous (age, building,

design), immobile,illiquid, localized, segmented,private complex negotiations

IRVIncome, Rate, Value

Differentheterogeneous (age, building,

design), immobile,illiquid, localized, segmented,private complex negotiations

Chapter 2 !

Legal Foundations to Value

Chapter 2 !

Legal Foundations to Value

Value is a function of rights

Value is a function of rights

no rights = no value

Rights

Rightsgovernment protected claim

non-revocable enduring

Rights

Rights

claims the government

enforces

Rights

Rights

non-revocable

Rights

Rights

enduring

Two kinds of Rights

Two kinds of Rights

Personal Property

Two kinds of Rights

Two kinds of Rights

Personal Property

Personal or Civil

Personal or Civillife

expression assembly others

Property

Property

Exclusive Possession

Property

Exclusive PossessionEnjoy Use

Property

Exclusive PossessionEnjoy UseDispose

Two kinds of property Rights

Two kinds of property Rights

Personal Real

Two kinds of property Rights

Two kinds of property Rights

Personal Real

Real

Realrights in land and permanent

structures

Realrights in land and permanent

structures

Realrights in land and permanent

structures

Personal

Realrights in land and permanent

structures

Personaleverything else

Realrights in land and permanent

structures

Personaleverything else

Surface

Surface

Surface

Buildable Air Space

Surface

Buildable Air Space

Air Traffic Space

Surface

Buildable Air Space

Subsurface

Air Traffic Space

Surface

Buildable Air Space

Subsurface

Air Traffic Space

oil, gas, mines, water

MetLife Building New York City

!

Build above the railroad right-

of-way entering Grand Central

Station

Subsurface rights can be extremely valuable

Fixtures

Fixtures

personal property that has become

real property

Four Fixture Rules

Four Fixture Rulesattachment adaptation intention relation

Sale Contracts

Sale Contracts

must be clear what are personal

fixtures

Bundle of Rights

Bundle of Rights

Bundle of Rights

Bundle of Rights

Bundle of Rights

Bundle of Rights

Bundle of Rights

Interests

Bundle of Rights

Interests

Can separate interests

Can separate interests

Can separate interests

Can separate interests

Can separate interests

Can separate interests

Can separate interests

different people can hold

Can separate interests

different people can hold

Possessory Interests Estates

Possessory Interests Estates

fee simple absolute tenancy at sufferance

Fee Simple Absolute

Fee Simple Absolutecomplete limited by

government and prior owners

Fee Simple Conditional

Fee Simple Conditional

fee simple as long as …

Life Estate

Life Estatefee simple

until someone dies !

Remainder Estate

Legal Life Estate

Legal Life Estate

special rules for couples with children

Leaseholds

Leaseholdslimited in time no disposition

no title temporary right

Estates

Estatesowner

freehold renter

leasehold

Ownership Estates

Ownership Estates

with inheritance without inheritance

Ownership with inheritance

Ownership with inheritance

fee simple absolute !

conditional with reverter interest

Ownership without inheritance

Ownership without inheritance

life estate !

legal with remainder interest

Leasehold Estates

Leasehold Estatestenancy for years periodic tenancy tenancy at will:

tenancy at sufferance

Tenant at Sufferance

Tenant at Sufferance

a former tenant does not leave

Leasing Laws

Leasing Lawsrepair

right of entry deposits

notifications

Non-possessory Interests

Non-possessory Interests

rights that do not include possession

Non-possessory Interests

Non-possessory Interests

easements restrictive covenants

liens

Easement

Easementright to use land for a specific and limited

purpose

Easement Right

!

License Permit

Easement Appurtenant

Easement Appurtenant

dominant - servient runs with the land

Easement

Easement

Driveway Easement

Easement

Driveway Easement

Easement

Driveway Easement

Easement

Driveway Easement

Dominant Parcel

Easement

Driveway Easement

Dominant Parcel

Servient Parcel

Easement

Easement Appurtenant

Easement Appurtenant

driveways water, sewer, power,

phone parking

Restrictive Covenants

Restrictive Covenants

clause in the deed limit uses

Lien

Lien

security for an obligation

Would you build if you didn’t own the land?

Would you build if you didn’t own the land?

Would you build if you didn’t own the land?

Would you loan someone the money to build if you could not get the property if they

failed to repay?

property rights

property rights

provide incentives to create wealth

Lien

Lientaxes

Lientaxes

mortgage

Lientaxes

mortgagemechanic’s

Lientaxes

mortgagemechanic’s

court

Lientaxes

mortgagemechanic’s

courtorder

Co-Ownership

Co-Ownership

business entity tenancy in common

joint tenancy

Condominium

Condominium

fee simple to area common to elements

can mortgage

Condominium

Condominium

create a little government for your

building