Download Law for Business

Stock Market Analysis and
Personal Finance
Mr. Bernstein
Real Estate Investment, pp 352-360
April 28, 2015
Stock Market Analysis
& Personal Finance
Mr. Bernstein
Direct Real Estate Investments
Purchase of legal title to property
Is your home an investment?
Can a vacation home be an investment?
Rental units – duplexes, storefronts, apartments,
etc.
The US Government offers tax incentives to
purchase many types of real estate
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Stock Market Analysis
& Personal Finance
Mr. Bernstein
Indirect Real Estate Investments
Limited Partnership (no longer carries former
tax advantages)
REITs
Profits from Real Estate operations flow
through to holders pre-tax
Often pools of investors and diversified
portfolio of assets
Often trade on an exchange like a stock or ETF
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Stock Market Analysis
& Personal Finance
Mr. Bernstein
Advantages and Disadvantages of Real Estate
(+) In theory, will rise with inflation
(+) You may have personal information about
properties that most potential investors do not
(+) Indirect investments provide diversification and
limited liability
(+) Lenders allow considerable leverage – 50-75% not
uncommon
(+) May reduce risk of overall portfolio
(-) Direct investments are illiquid
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Stock Market Analysis
& Personal Finance
Mr. Bernstein
Home Prices versus Inflation
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Stock Market Analysis
& Personal Finance
Mr. Bernstein
Home Prices down because Ownership is down
6
Stock Market Analysis
& Personal Finance
Mr. Bernstein
Ownership is down because Income is down
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Stock Market Analysis
& Personal Finance
Mr. Bernstein
Ownership is down because Income is down
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Stock Market Analysis
& Personal Finance
Mr. Bernstein
Bad news is: Ownership down, so rents are up
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Stock Market Analysis
& Personal Finance
Mr. Bernstein
And its worst in the Northest region…
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