Real Estate Investment
FINA 4201 - 10
Fall 2014
Monday and Wednesday 3:45-5:00 PM in Room 221 of Funger Hall
Instructor:
Dr. T.G. Geurts, FRICS
Phone: +1 (202) 994-7542
E-mail: TGG@gwu.edu
Room: Funger Hall 510
Teaching Assistant:
Yixuan Luo at yixuan@gwmail.gwu.edu
Course Overview:
This course is designed to introduce students to the various topics of real estate investment and
finance in a systemic way. The course covers public and private real estate markets, debt
instruments, as well as equity investments. Investing in real estate is a complicated matter and quite
unlike investing in stocks and bonds, for two main reasons: 1) There are information asymmetries in
the market (for example regarding the property itself, but also regarding laws and financing) and 2)
It is an actively managed investment, either direct or via a property management company.
To be a successful investor one needs to know the 1) Housing and Land market, 2) Market for Real
Estate Capital, 3) Correct Investment Analysis Tools, and 4) Securitized Real Estate Market.
Consequently all four components will be analyzed from different viewpoints.
Office Hours:
Monday = 5:00pm - 6:00pm
Tuesday = 2:00pm - 5:00pm
Wednesday = 1:00pm - 2:00pm
Course Objectives:
By the end of the semester, students are expected to be able to:
1. make informed decisions regarding investing in real estate with regards to the property and
the market it is located in, its cash flows, and the legal framework surrounding it.
2. value real estate using the accepted methodology.
3. finance real estate using the various debt and equity instruments.
4. make a final investment decision by applying time value of money methodology to future
cash flows.
You will demonstrate these capabilities through class discussions, assignments, and exams.
Required Textbooks:
1. Real Estate Principles: A Value Approach by Ling and Archer. 4th Edition (2013): McGraw-Hill Irwin.
You are free to use an earlier edition, however, any discrepancies with the 4th edition are your
responsibility. Or differently stated, if you are making mistakes because you are using an outdated
edition of the textbook you cannot expect any clemency on my side.
2. Financial Calculator (if you do not have any yet, you should buy the Texas Instruments BA II Plus).
The ability to use a financial calculator is critical to your success in the class. You are
responsible for learning how to operate your financial calculator—and it is crucial that you
are familiar with your calculator by the time we begin Chapter 15. Make sure that you bring
your calculator to class. Students may not share calculators on exams. Please be sure to
check your batteries before quizzes and exams.
3. Use of Blackboard for all class material including homework problems, solutions, and grades.
Recommended Textbooks or Readings:
The Financial Times.
Course Requirements:
Class attendance and participation are strongly suggested. Attendance at exams is mandatory.
Failure to complete an exam will result in a failure for the final grade. Only illness (with a note
from the doctor) or a job-interview (with a company invitation) are acceptable reasons for missing
an exam and being granted a make-up exam. Other reasons, like a family reunion, the birthday of
your grandfather or if you or your parents have already booked a plane flight home, are not
acceptable and the professor will ignore such requests. Or differently stated, you can send me an email with such a request, but I will simply delete it. In such cases you will have to take the exam on
the scheduled date.
Note that the exam dates and assignment submission dates are tentative, hence it is possible that
they change. Any changes will be announced in class. It is the responsibility of the student to know
about any announcements made by the professor!
Final Grades:
Final grades will be determined using the following scale:
A for 93 points and above
A- for 90-92 points
B+ for 87-89 points
B for 83-86 points
B- for 80-82 points
C+ for 77-79 points
C for 73-76 points
C- for 70-72 points
D+ for 63-69 points
D for 56-62 points
D- for 50-55 points
49 points or less is an F.
Note that in order to get a grade you will need to pass the threshold listed above. Hence an 89.75 is
still a B+, since an A- requires 90 points. Requests to deviate from this rule, regardless of the
argumentation, will be ignored. At the discretion of the professor class-wide extra credit projects
and/or questions on the exam can be added to the regularly scheduled points. However, individual
extra credit projects will not be granted and such requests will be ignored.
First Mid Term Exam
20 points
Second Mid Term Exam 30 points
Final Exam
20 points
Assignments
30 points
==== +
100 points
The material to be learned for al exams will be non-comprehensive and will encompass the lecture
material, the course textbook, and class discussions. The format of the exams will be multiple
choice and true/false questions and problems.
A total of 5 assignments will be assigned throughout the course, each problem set is worth 6 points.
You have to do the assignments alone. No credit will be given for assignments handed-in late,
regardless of reason!!
In order to receive full credit one has to show the work leading to the answer. Assignments with
just the answers will NOT get full credit. Assignments need to be typed, hence I will ignore
handwritten assignments.
Academic Integrity:
The School of Business at GW strives to promote an ethical learning environment and want to
ensure that all students understand the concepts of academic integrity. We see this as an extremely
important issue for the students' time at GW, but also for after graduation. Hence we require that
all students familiarize themselves with the Code of Academic Integrity as found on the following
link: http://www.gwu.edu/~ntegrity/code.html
Please read the Code of Academic Integrity carefully and make sure that you follow it whenever you
submit any work for this course.
Sessions:
08/25/2014 = Course Overview and Introduction to Real Estate.
LITERATURE :
* Book: Chapter 1.
08/27/2014 and 09/03/2014 = What Is So Special About Real Estate?
LITERATURE :
* Nothing.
09/08/2014 and 09/10/2014 = Legal Foundations to Value.
LITERATURE :
* Book: Chapter 2.
09/15/2014 = Conveying Real Property Interests.
LITERATURE :
* Book: Chapter 3.
On 09/15/2014 ASSIGNMENT 1 (6 points) is due: See Blackboard for Instructions.
09/17/2014, 09/22/2014, and 09/24/2014 = Government Controls and Real Estate Markets.
LITERATURE :
* Book: Chapter 4.
09/29/2014 and 10/01/2014 = Market Determinants of Value and Market Research.
LITERATURE :
* Book: Chapters 5 and 6.
On 09/29/2014 ASSIGNMENT 2 (6 points) is due: See Blackboard for Instructions.
10/06/2014 = Review.
10/08/2014 = Exam One (20 points).
10/13/2014 and 10/15/2014 = Valuation Using the Sales Comparison and Cost Approaches.
LITERATURE :
* Book: Chapter 7.
10/20/2014 = Valuation Using the Income Approach.
LITERATURE :
* Book: Chapter 8.
On 10/20/2014 ASSIGNMENT 3 (6 points) is due: See Blackboard for Instructions.
10/22/2014 = Real Estate Finance: The Laws and Contracts.
LITERATURE :
* Book: Chapter 9.
10/27/2014 and 10/29/2014 = Residential Mortgage Types, Borrower Decisions, and Sources of
Funds.
LITERATURE :
* Book: Chapters 10 and 11.
On 10/29/2014 ASSIGNMENT 4 (6 points) is due: See Blackboard for Instructions.
11/03/2014 and 11/05/2014 = Mortgage Calculations and Decisions.
LITERATURE :
* Book: Chapter 15.
11/10/2014 and 11/12/2014 = Investment Decisions: Ratios.
LITERATURE :
* Book: Chapter 18.
11/17/2014 = Review.
11/19/2014 = Exam Two (30 points).
11/24/2014 and 12/01/2014 = Advanced Investment Decisions and Taxation.
LITERATURE :
* Book: Chapters 14, 19 and 20.
12/03/2014 = Enhancing Value through Ongoing Management.
LITERATURE :
* Book: Chapter 21.
On 12/03/2014 ASSIGNMENT 5 (6 points) is due: See Blackboard for Instructions.
Final Exam (20 points) during Final Examinations Period.