| Preface | | xiii | |
| Acknowledgements | | xix | |
| 1. Why Location Matters: The Bid Rent Surface and Theory of Rent Determination |
| |
| | 1 | (2) |
| Classical Location Theory |
| | 2 | (1) |
| | 2 | (1) |
| | 3 | (4) |
| Example #1-Two Competing Users in the Same Industry |
| | 3 | (2) |
| Example #2-Several Competing Users in Different Industries |
| | 5 | (2) |
| Is the Bid Rent Curve Linear? |
| | 7 | (1) |
| | 8 | (4) |
| An Economic Topographical Map |
| | 12 | (1) |
| | 13 | (3) |
| | 16 | (1) |
| | 17 | (2) |
| |
| | 19 | (4) |
| Who Shall Decide-The Problem of Externalities |
| | 20 | (3) |
| | 23 | (1) |
| | 24 | (3) |
| Optimization and Comparative Statics |
| | 27 | (1) |
| | 28 | (4) |
| | 32 | (1) |
| A Case Study in Aesthetic Regulation |
| | 32 | (4) |
| | 36 | (1) |
| | 37 | (1) |
| Appendix: Comparative Statics for Chapter 2 |
| | 37 | (2) |
| 3. The "Rules of Thumb": Threshold Performance Measures for Real Estate Investment |
| |
| | 39 | (4) |
| Threshold Performance Measures |
| | 40 | (2) |
| | 42 | (1) |
| The Gross Rent Multiplier (GRM) |
| | 43 | (6) |
| | 44 | (1) |
| | 45 | (4) |
| | 49 | (18) |
| The Three Bad Assumptions |
| | 49 | (1) |
| Capitalization Rate and Discounted Cash Flow Analysis |
| | 50 | (2) |
| | 52 | (2) |
| The Expense Ratio and the "Honest" Capitalization Rate |
| | 54 | (2) |
| The Normal Approach to Data |
| | 56 | (4) |
| Questioning the Assumption of Normality |
| | 60 | (2) |
| The Stable Approach to Data |
| | 62 | (1) |
| | 62 | (2) |
| | 64 | (1) |
| | 64 | (3) |
| Cash-on-Cash Return (C/C) |
| | 67 | (1) |
| | 67 | (4) |
| | 71 | (1) |
| | 72 | (1) |
| 4. Fundamental Real Estate Analysis |
| |
| | 73 | (2) |
| The Role of Computational Aids |
| | 73 | (2) |
| Deterministic Variables of Discounted Cash Flow Analysis |
| | 75 | (1) |
| Single Year Relationships and Project Data |
| | 76 | (2) |
| | 78 | (1) |
| Sale Variables Relationships |
| | 79 | (2) |
| | 81 | (1) |
| Insight into the Analysis |
| | 82 | (5) |
| An Illustration of Bargaining |
| | 87 | (3) |
| | 90 | (3) |
| | 93 | (5) |
| | 98 | (1) |
| | 98 | (1) |
| 5. Chance: Risk in General |
| |
| | 99 | (2) |
| Objective and Subjective Risk |
| | 100 | (1) |
| Games of Chance and Risk Bearing |
| | 101 | (3) |
| The Utility Function Revisited |
| | 104 | (3) |
| The "Certainty Equivalent" Approach |
| | 107 | (4) |
| Multiple (More than Two) Outcomes |
| | 111 | (1) |
| The Continuous Normal Case |
| | 112 | (4) |
| | 116 | (1) |
| | 117 | (2) |
| 6. Uncertainty: Risk in Real Estate |
| |
| | 119 | (2) |
| Non-normality-How and Where Does it Fit? |
| | 119 | (2) |
| The Continuous Stable Case |
| | 121 | (6) |
| | 123 | (3) |
| Still More Distributions? |
| | 126 | (1) |
| | 127 | (1) |
| | 128 | (3) |
| Determinism and House Prices |
| | 131 | (4) |
| Determinism and Real Estate Investment |
| | 135 | (3) |
| | 138 | (3) |
| | 141 | (4) |
| Real Estate-The "Have it Your Way" Game |
| | 145 | (2) |
| | 147 | (3) |
| | 150 | (2) |
| | 152 | (1) |
| | 153 | (4) |
| 7. The Tax Deferred Exchange |
| |
| | 157 | (5) |
| Taxes are Less Certain for Real Estate Investors |
| | 158 | (2) |
| | 160 | (1) |
| The Structure of the Examples |
| | 161 | (1) |
| The Base Case: Purchase-Hold-Sell |
| | 162 | (1) |
| Example 1-Modifying the Growth Projection |
| | 163 | (4) |
| Example 2-The Tax Deferred Exchange Strategy |
| | 167 | (15) |
| Exchange Variable Definitions |
| | 168 | (5) |
| The Value of Tax Deferral |
| | 173 | (3) |
| The Sale-and-Repurchase Strategy: Tax Deferral as a Risk Modifier |
| | 176 | (2) |
| The Sale-and-Better-Repurchase Strategy: The Cost of Exchanging |
| | 178 | (4) |
| Example 3-Exchanging and The Plodder |
| | 182 | (3) |
| | 185 | (1) |
| | 186 | (2) |
| | 188 | (1) |
| 8. The Management Problem |
| |
| | 189 | (1) |
| The Unavoidable Management Issue |
| | 189 | (1) |
| The Property Manager's Dilemma |
| | 190 | (5) |
| Is Building Size Really Important? |
| | 193 | (2) |
| The Property Owner's Dilemma |
| | 195 | (3) |
| The "No Vacancy Rate" Approach |
| | 195 | (2) |
| | 197 | (1) |
| Reconciling the Two Problems |
| | 198 | (3) |
| | 201 | (1) |
| | 202 | (1) |
| | 203 | (1) |
| Appendix: A Caution On the Use of Data to Construct Theories |
| | 204 | (5) |
| Making Vacancy and Rental Rates Reasonable |
| | 204 | (1) |
| The Model to End all Models |
| | 205 | (4) |
| |
| | 209 | (1) |
| | 209 | (1) |
| | 210 | (3) |
| The Capitalization Rate Approach Versus the Mortgage Equity Approach |
| | 210 | (2) |
| | 212 | (1) |
| The Borrower's Perspective |
| | 212 | (1) |
| Irrational Exuberance and the Madness of Crowds |
| | 213 | (4) |
| Bubble Theory-How High is Up? |
| | 217 | (14) |
| | 217 | (4) |
| | 221 | (1) |
| | 222 | (2) |
| Three Two-Dimensional (2D) Illustrations |
| | 224 | (3) |
| | 227 | (4) |
| | 231 | (4) |
| | 235 | (1) |
| | 235 | (2) |
| 10. The Private Lender | |
| | 237 | (1) |
| The "Hard Money" Loan Versus the "Purchase Money" Loan |
| | 238 | (4) |
| The Diversification Problem |
| | 238 | (1) |
| | 239 | (1) |
| Did We Make a Loan or Did We Buy the Property? |
| | 240 | (2) |
| | 242 | (2) |
| The Motivation of the Parties |
| | 244 | (1) |
| | 244 | (1) |
| | 245 | (3) |
| The Installment Sale Transaction |
| | 248 | (1) |
| Is the Seller's Financing a Good Deal for The Buyer? |
| | 248 | (7) |
| | 249 | (1) |
| | 250 | (1) |
| A Simple "Tax Blind" Test |
| | 250 | (3) |
| | 253 | (2) |
| | 255 | (2) |
| | 257 | (2) |
| 11. Creative Financing | |
| | 259 | (1) |
| Retirement and Creative Financing |
| | 259 | (1) |
| | 260 | (1) |
| | 261 | (1) |
| | 261 | (6) |
| The Conventional Arrangement |
| | 262 | (3) |
| The Reverse Amortization Mortgage |
| | 265 | (2) |
| Intra-Family Alternatives |
| | 267 | (4) |
| | 268 | (1) |
| The Larger House Viewpoint |
| | 269 | (2) |
| The Remainderman's Position |
| | 271 | (2) |
| | 271 | (1) |
| | 272 | (1) |
| | 273 | (1) |
| | 274 | (5) |
| Index | | 279 | |
