LEARN REAL ESTATE FROM THE WORLD'S TOP INSTRUCTORS.
Course ID: REFN0104
Category: Business
This course provides participants with an advanced knowledge and understanding, appropriate to the Real Estate Finance course
self-taught course Duration: 10 Hours
This course provides participants with an advanced knowledge and understanding, appropriate to the Real Estate Finance course; it looks at the theory and practice of finance for investment in commercial real estate and the design and pricing of different mortgage instruments. It looks at commercial mortgages and residential mortgage product, the secondary mortgage market as well as the structure and valuation of mortgage-backed securities.
A thorough understanding of and ability to work with finance and financial markets and instruments is critical in the management of real estate. Particularly, learners must understand: the Financial Analysis of Real Estate, Debt Financing, Effects of Leverage, Valuation Process, Different Forms of Capital, and Understanding of the Real Estate Market.
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Professor Tom Geurts, of George Washington University, holds a PhD in Real Estate and Finance from Pennsylvania State University (1998); an M.S., Economics, University of Amsterdam (1991); an M ...
In this introductory lecture I will provide a general overview of real estate as an asset. This will help the student to better understand the asset that is being financed and the market in which it operates. Specific topics:
Now that we have defined Real Estate and understand its unique characteristics, this lecture looks at the cash flows that are being generated and these are put in a so-called Pro Forma. Specific topics:
Now that the pro forma has been created we can put the resulting cash flows from the pro forma into a discounted cash flow model to value the property. This is needed so the debt provider knows the value of the asset for which it is providing financing and which serves as collateral. Specific topics:
This lecture continues where the previous lecture ended by continuing the discussion of the Net Present Value and its input variables, such as the interest rate on debt for the Weighted Average Cost of Capital. The emphasis of this lecture is on estimating the riskiness associated with the investment, something that especially the debt financing providers are concerned about. Subsequently the students will be introduced to financing alternatives and their cost of capital. Specific topics:
This lecture provides insight into how to define and calculate risk and return and how creating a portfolio impacts risk and return. Specific topics:
This lecture discusses Debt Financing from the viewpoint of the lender and borrower. Both parties have options with respect to lending and borrowing capital and both parties make decisions based on the risk they face and the potential for returns. Specific topics:
In order to underwrite the loans that capital providers will extend to the borrower, they will try to estimate the value of real estate that is used as the collateral for the financing. This lecture gives an overview of the process of valuation, in particular the benefits and drawbacks of the various valuation methods, and for which types of real estate the various valuation methods are best suited. Specific topics:
This lecture introduces in detail the WACC, which stands for the Weighted Average Cost of Capital. It is calculated using the amounts of Debt, Preferred Stock, and Equity used for financing a real estate investment combined with their cost or yield. Please note that there are references in this lecture to calculations, which you can ignore. You need to understand the calculation, importance, and usage of the various WACCs, with the weights and cost or yield as inputs. This results in a discussion of the optimal capital structure, which minimizes the cost of capital. The latter is considered the Hurdle Rate for investment decision-making. Specific Topics:
This lecture provides an in-detail discussion of calculating the Additional Funds Needed (AFN), which consists of the capital needed to buy a building plus the initial Working Capital. The formula for AFN is developed step-by-step. Specific Topics:
This lecture shows two ways a firm can further lower their WACC, namely by using Hybrid Financing. Hybrid Financing comes in two forms, namely a Bond with Warrants and a Convertible Bond. Both will be discussed in detail to show how they impact the WACC and profitability of Real Estate Investments. Specific Topics:
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