Chap 20

What homes do not provide tax benefits

(NEED TO FIND OUT)

What's a syndicate

An association of businesses or people put together to preform a task thta requires a large amount of funds (Corporation, trust, or limited partnership)

Why is owning a home a good investment

Home prices rise steadily, tax benefits from mortgages

What's a participation certificate

Investment in a group of mortgages thta has been purchased by the government (Ginne Mae, Freddie Mac, Fannie Mac, Sallie Mae)

What's commercial property

Land and buildings that produce rental income

Unlike stocks and bonds a piece of property is something you can:

See, touch, take pride in

Example of direct investment

Single fam houses, duplex, apartment, land, COMMERCIAL PROPERTY

Direct investment

The owner owns legal tittle to his property that he purchased

Indirect investment

Typically done when you don't have enough money to purchase property on your own, a trustee is appointed to hold the legal tittle on behalf of all the investors

What are advantages of real estate investments

Use of borrowed funds for direct investments (financial leverage, Hedge against inflation, limited financial responsibility messy entry into commercial property ownership

Disadvantages of real estate

hard to turn to cash (illiquidity), declining property value, lack of diversification, no tax shelter, management problems bcus property management is a full time job