CALIFORNIA STATE UNIVERSITY FULLERTON
MIHAYLO COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF FINANCE
Spring 2012
(14603)
Dr. Daniel Lee Finance 355 MW 10:00-11:15am
Office: SGMH 5173 Real Estate Investment Analysis Classroom: SGMH 1117
Office Hours: MW 11:15-11:45am Section 1 Phone: (657) 278-5785
Email: Fax: (657) 278-2161
Prerequisite: Finance 320
Course Objectives and Teaching Methods:
The objective of the course is to provide you with an introduction to the real estate investment process. This process may be viewed as a series of organized and coordinated steps that investors can follow to systematically analyze potential real estate investments in the real world. A number of topics are discussed throughout the course as they apply to the real estate investment process. Topics discussed include the basics of the investment decision, the application of financial leverage, the development of cash flow statements, the determination of the fair market value and the investment value of a property for the specific investor(s), and the application of various investment criteria. By the end of any investment analysis, the investor must make a choice between various alternatives. The choice is what real estate investment is all about. By following the investment process developed in this course, the choice can be made easier and the results will be more consistent with expectations.
The teaching methods employed in the course include lecture, lecture-discussion, homework assignments, case studies, small-group exercises, and market research.
Required Textbooks and Materials:
Investment Analysis for Real Estate Decisions by Phillip T. Kolbe & Gaylon E. Greer, 7th Edition, published by Dearborn Real Estate Education. ISBN-10: 1-4277-8314-4.
One chapter (chapter 1) from Modern Real Estate, by Charles H. Wurtzebach & Mike E. Miles, 5th edition published by John Wiley & Sons, Inc. ISBN: 0-471-30951-6. A copy of this chapter will be available online at the course Blackboard site.
A package of Lecture Notes (coursepack) consisting of Xeroxed materials is available for purchase at the University Bookstore on the second floor. The lecture notes package contains lecture outlines, problems, mini-cases, and sample exams. The lecture notes should be used as the pre-class reading and will be covered in the exams. You are expected to read the assigned pages before attending the lectures. Reading of the Wall Street Journal and /or other business journals may be recommended or required for keeping abreast of current real estate investment issues.
PLEASE BRING A FINANCIAL CALCULATOR, THE COURSEPACK AND THE TEXTBOOK TO EACH CLASS MEETING.
Review one of the following tutorials available online at the course Blackboard site:
Technology Supplement Financial Calculator Tutorials for Texas Instruments' BAII PLUS
Technology Supplement Financial Calculator Tutorials for Sharp's EL-733A
Technology Supplement Financial Calculator Tutorials for HP-10B
Technology Supplement Financial Calculator Tutorials for HP-12C
Technology Supplement Financial Calculator Tutorials for HP-17BII
Grading
Course grades will be determined by the scores on 2 midterm exams, a final exam, a group research project and presentation, class participation and homework assignments. The total points available:
Class Attendance / 60 / pointsHomework / 40
Group Project Report / 90
Group Presentation / 90
1st Midterm Examination / 160
2nd Midterm Examination / 160
Final Examination / 400
Total / 1,000
Plus /minus grading will be used in this course. You are guaranteed at least the following grade if your weighted average course score falls within the following percentiles:
A+ = 4.0 / 98 -100%; / A = 4.0 / 94 - 97%; / A- = 3.7 / 90-93%;B+ = 3.3 / 88 - 89%; / B = 3.0 / 84 - 87%; / B- = 2.7 / 80-83%,
C+ = 2.3 / 78 - 79%, / C = 2.0 / 74 - 77%; / C- = 1.7 / 70-73%;
D+ = 1.3 / 68 - 69%, / D = 1.0 / 64 - 67%; / D- = 0.7 / 60-63%;
F = 0.0 / less than 60% of total points
At the instructor's discretion, a curve may be applied to these scores.
After review of exams during class all exams must be returned to the instructor for filing.
Course Policies and General Information:
1. Unless otherwise told, you are not responsible for all the material in the chapter(s) assigned. Pay more attention to my class lectures and my lecture notes package.
2. If you miss a lecture, you are well advised to check with a classmate about the material covered in the class. Some of the material discussed in class may not be covered in the textbooks.
3. NO MAKE UP EXAMS ARE GIVEN, nor will exams be given at any other time unless approved in writing by the Department Chair. If a midterm is missed due to a valid reason approved by the instructor, the final exam will be “double counted,” based on a relative class ranking. Each student must turn in his/her homework assignments and projects on time for credit, as late homework assignments and projects will receive a score of “0”.
4. A financial calculator is required. HP-12C is recommended and will be used in class.
5. The students are expected to follow the syllabus and class schedule and review the assigned chapters, modules, and problems prior to each class meeting. The course material is cumulative and the student cannot afford to miss any lectures or skip any assignments. ATTENDANCE IS IMPORTANT in that the text is supplemented by additional in-class materials.
6. Academic Dishonesty: confirms with the official policy of CSUF
The Department of Finance requires that students engaging in academic dishonesty receive a grade of F. In addition, Department Policy requires that all individuals engaging in academic dishonesty be reported to the Vice President, Student Affairs.
Academic dishonesty takes place whenever a student attempts to take credit for work that is not his/her own or violates test-taking rules. Examples of academic dishonesty during test taking include looking at other students work, passing answers among students or using unauthorized notes. When students sitting next to each other have identical answers, especially the same mistakes, this may indicate academic dishonesty. Examples of academic dishonesty on out-of-class projects include submitting the work of others or quoting directly from published material without footnoting the source. If you have any questions about the proper use of outside sources, please consult with your professor.
7. Withdrawal policy: confirms with the withdrawal policy of CSUF
8. Mihaylo College of Business and Economics Assessment Activities
The main purpose of the degree program at Mihaylo College of Business and Economics (MCBE) at Cal State Fullerton is to provide you with the knowledge and skills that prepare you for a successful career in business. In order to assist us in achieving this goal, we will use a number of assessment tools to track your progress throughout the MCBE curriculum. Please expect to participate in MCBE assessment activities in several of your courses while at MCBE. As you do so, you will assist us in identifying our program’s strengths and weaknesses as well as areas for potential improvement. In other words, you are making an important investment in the value of your degree.
9. Students with disabilities
The University is committed to supporting all students and providing reasonable accommodations when it is possible and appropriate to do so. Students with temporary or permanent disabilities may receive assistance and support services through the Disabled Student Service Office, UH 101, 714-278-3117, www.fullerton.edu/disabledservices. This office reviews documentation and determines the necessary specific accommodations for students with disabilities. Students with a disability are entitled to reasonable accommodation after they have identified themselves as a student with a disability. Those students must request specific accommodations and provide documentation in support of their request. The student will be given a form which then must be given to me. This form will advise me of the reasonable accommodation that is to be provided.
10. Course Schedule
Spring 2012 Finance 355-S1
1 / 01/23
01/25 / Course Regulations, Instructor Introduction, Schedule & Goals
The Analytical Framework of the American Real Estate Industry
Ch. 1. The American Real Estate Industry, an Overview (from Modern Real Estate)
Lecture Notes, Module 01. The Analytical Framework of the American Real Estate Industry
2 / 01/30
02/01 / Lecture Notes, Module 02. The Legal Environment: Property Rights
Ch. 3 Land Utilization and the Rental Value of Real Estate
Lecture Notes, Module 03. Theories of Urban Land Use Development Pattern
3 / 02/06
and
02/08 / Real Estate Investment Mathematics (Bring a financial calculator to the class)
Appendix A: Mathematics of Compounding and Discounting
Appendix B: Compounding and Discounting with Financial Calculators Lecture
Lecture Notes, Module 04. Real Estate Investment Mathematics
4 / 02/13
02/15 / The Financing Environment and Decision (Bring a financial calculator to the class)
Ch. 7 Financial Leverage and Investment Analysis
Ch. 7 (Homework: EOC Problems 3, 4, 5, 7) (EOC = End of the Chapter)
Ch.8 Credit Instruments and Borrowing Arrangements
Lecture Notes, Module 05. The Financing Environment and Decision
5 / 02/20
09/22 / Presidents’ Day - Campus Closed J J J J J
Ch. 9 The Cost of Borrowed Money (Bring a financial calculator to the class)
Ch. 9 (Homework: EOC Problems 1, 2, 5)
Case Problem - Part 3 (Ch.7-8)
6 / 02/27
02/29 / 1st Midterm Examination
Estimation of the Market Value of a Property
Lecture Notes, Module 06. Tools for Property Analysis
7 / 03/05
03/07 / Estimation of the Market Value of a Property
Lecture Notes, Module 06. Tools for Property Analysis
Ch. 5 Reconstructing the Operating Statement
Ch. 5 (Homework: EOC Problems 1, 2)
8 / 03/12
03/14 / Ch. 6 Forecasting Income and Property Value
Ch. 6 (Homework: EOC Problems 1, 2)
Lecture Notes, Module 06. Tools for Property Analysis
Case Problem - Part 2 (Ch.4-6)
Spring 2012 Finance 355-S1
03/21 / Ch. 10 Basic Income Taxes
Ch 10 (Homework: EOC Problems 1, 2, 3)
Lecture Notes, Module 07. The Tax Environment
The Tax Environment
Ch. 11 Tax Consequences of Property Disposal
Ch. 1: The Real Estate Investment Decision (pages 9-17)
Lecture Notes, Module 08. The Pricing Mechanism.
Lecture Notes, Module 09. The Market and Marketing Environment
Case Problem - Part 4 (Ch.10-11) Reading: Greer, p. 229 (Questions 1 and 2 only)
03/26 to 04/01 Spring Recess J J J J J
10 / 04/02
04/04 / Project Presentation
Project Presentation
11 / 04/09
04/11 / Discounted Cash Flow Models
Ch. 13 Discounted Cash Flow Analysis
Ch. 14 Investment Goals and Decision Criteria
Ch. 14 (Homework: EOC Problems 1 – a. and c. only, and 2)
Lecture Notes, Module 10. Real Estate Investment Analysis & the Discounted Cash Flow Model
Lecture Notes, Module 11. Computer-Assisted Analysis
12 / 04/16
04/18 / 2nd Midterm Examination
Case Problem - Part 5 (Ch.12-14) Reading: Greer, pp. 279-281 (Problems 1, 2)
13 / 04/23
04/25 / Ch. 1: The Real Estate Investment Decision (pages 3-8, 18-20)
Ch. 12 Traditional Measures of Investment Worth
Ch. 12 (Homework: EOC Problems 1)
Ch. 19 Investment Feasibility Analysis
Lecture Notes, Module 12. Ratios Analysis
14 / 04/30
05/02 / Ch. 15 Risk in Real Estate Investment
Lecture Notes, Module 13. Risk Management
Ch. 16 Traditional Risk Adjustment Methods
Lecture Notes, Module 14. The Legal Environment: Forms of Ownership
15 / 05/07
05/09 / Ch. 22 Office Building, (pp. 416-423) and Shopping Center (pp. 423-433) Analysis+
Lecture Notes, Module 15 Shopping Center
Lecture Notes, Module 16 Office Building+
16 / 05/14 / Comprehensive Final Exam (Monday, noon - 01:50 p.m.); Paper Due Date
+ Tentatively scheduled and subject to change.
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Fin355 RE Investments Sp12 MW Dept.doc