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General Information

Course ID (CB01A and CB01B)
REST D061.
Course Title (CB02)
Real Estate Investments
Course Credit Status
Credit - Degree Applicable
Effective Term
Fall 2023
Course Description
This real estate investments course explores investments in apartments and commercial and industrial buildings. Topics include capital gains calculations, tax implications, installment sale methods, tax-deferred exchange, appraisal methods, financing, leases, and land development and syndication. This course may not be applied toward the DRE Salesperson license.
Faculty Requirements
Course Family
Not Applicable

Course Justification

This course serves as both a CTE course in Real Estate and it serves as an elective, transferable to the CSU for Business majors. This course belongs on the Real Estate A.A. degree. This course is an introduction to real estate investments with a focus on the different types of real estate investment in California and the risks and returns investors, lenders and real estate professionals will encounter in the marketplace.

Foothill Equivalency

Does the course have a Foothill equivalent?
No
Foothill Course ID

Course Philosophy

Formerly Statement

Course Development Options

Basic Skill Status (CB08)
Course is not a basic skills course.
Grade Options
  • Letter Grade
  • Pass/No Pass
Repeat Limit
0

Transferability & Gen. Ed. Options

Transferability
Transferable to CSU only

Units and Hours

Summary

Minimum Credit Units
4.0
Maximum Credit Units
4.0

Weekly Student Hours

TypeIn ClassOut of Class
Lecture Hours4.08.0
Laboratory Hours0.00.0

Course Student Hours

Course Duration (Weeks)
12.0
Hours per unit divisor
36.0
Course In-Class (Contact) Hours
Lecture
48.0
Laboratory
0.0
Total
48.0
Course Out-of-Class Hours
Lecture
96.0
Laboratory
0.0
NA
0.0
Total
96.0

Prerequisite(s)

Corequisite(s)

Advisory(ies)

  • ESL D272. and ESL D273., or ESL D472. and ESL D473., or eligibility for EWRT D001A or EWRT D01AH or ESL D005.
  • Elementary algebra or equivalent (or higher), or appropriate placement beyond elementary algebra

REST D050.

Limitation(s) on Enrollment

Entrance Skill(s)

General Course Statement(s)

Methods of Instruction

Lecture and visual aids

Discussion of assigned reading

Discussion and problem solving performed in class

Quiz and examination review performed in class

Homework and extended projects

Collaborative learning and small group exercises

Assignments

  1. Required reading from text.
  2. Written homework assignments:
    1. Problem solving exercises involving tax treatment of income property and appraisal of residential and commercial property
    2. Written report involving analysis of real property from an after tax cash flow perspective.

Methods of Evaluation

  1. Objective examinations to evaluate mastery of key terms and concepts as well as application skills related to analysis and comprehension of the California real estate market from an investor's perspective. The exams will be designed with an eye toward the CA Dept of Real Estate License exam and will cover the topics that are currently covered in the professional exams.
  2. Problem solving exercises to show comprehension and mastery of real estate quantitative issues the areas of net present value, taxes, financing, and minimum rates of risk and return.
  3. Comprehensive final exam to cover all major topics to show a broad understanding of real estate investment concepts such as net present value, internal rate of return and similar objectives with an eye toward the current license exams in California.

Essential Student Materials/Essential College Facilities

Essential Student Materials: 
  • None.
Essential College Facilities:
  • None.

Examples of Primary Texts and References

AuthorTitlePublisherDate/EditionISBN
Geltner, Eichholtz and Miller, "Commercial Real Estate Analysis and Investment," Thomson Learning, Mason, OH, 2016

Examples of Supporting Texts and References

AuthorTitlePublisher
Sirota, David , "Essentials of Real Estate Investments," 1st ed, Cincinnati, OH: Dearborn Trade, 2004.
Selected readings from various publications: Wall Street Journal, Business Week, Forbes and Fortune Magazines.

Learning Outcomes and Objectives

Course Objectives

  • Calculate capital gains and losses on real estate investments.
  • Utilize the installment sale method as a means of buying and selling real property.
  • Employ the tax deferred exchange method in purchasing property.
  • Define the primary methods of acquiring title to real property.
  • Appraise investment property utilizing the three primary methods of real estate appraisal.
  • Recognize and identify the tax advantages and disadvantages in the purchase, ownership, and sale of real estate investment property.
  • Identify and evaluate the various methods of financing real estate investment property
  • Define, compare, contrast, and evaluate the different leases used in real estate investment property.
  • Evaluate mobile home parks and raw land as real property investments.
  • Illustrate the primary risks and returns of land development and syndication.
  • Review, recognize, compare and contrast the different methods for taking title to real property in California.

CSLOs

  • Identify, analyze and evaluate real estate investments and construct cash flow models utilizing discounted cash flows for analysis of economic viability of investment property.

  • Evaluate the risks and returns of real estate investment in residential, commercial, industrial properties as well as land development.

  • Explain and evaluate the taxation and financing issues in the acquisition, ownership and sale of real estate investments.

Outline

  1. Calculate capital gains and losses on real estate investments.
    1. General concepts in investments
    2. Capital gain and loss computation
      1. Buying power loss
      2. Tax losses
      3. Cash flow
      4. Economic forecasting
      5. Depreciation and recapture (also see tax section)
    3. Equity and leverage
  2. Utilize the installment sale method as a means of buying and selling real property.
    1. History/Definition
    2. Advantages/Disadvantages
    3. Tax treatment
  3. Employ the tax deferred exchange method in purchasing property.
    1. Like kind property
    2. Boot
    3. IRS requirements
    4. Costs associated with exchange
    5. Use of 3rd party trustee
  4. Define the primary methods of acquiring title to real property.
    1. Definitions
      1. Joint tenancy
      2. Tenancy in common
      3. Several
      4. Community property
      5. Limited partnership
      6. Corporation
    2. Advantages/Disadvantages of Ownership Forms
    3. Tax treatment
  5. Appraise investment property utilizing the three primary methods of real estate appraisal.
    1. Feasibility study
    2. Appraisal methods
      1. Market approach
      2. Capitalization approach
      3. Cost approach
  6. Recognize and identify the tax advantages and disadvantages in the purchase, ownership, and sale of real estate investment property.
    1. Current tax law concerning loss limitations
    2. Depreciation
      1. Straight line
      2. Accelerated
    3. Recapture of depreciation
    4. Before tax cash flow
    5. After tax cash flow
    6. Loss carry forward
    7. Profit and loss statements
      1. Includable expenses
      2. Excludable expenses
    8. Tax deferred exchange (See item C)
  7. Identify and evaluate the various methods of financing real estate investment property
    1. Government programs
    2. Conventional loans
    3. Loan to value ratios
    4. Residential vs. commercial requirements
    5. Secondary markets
    6. Credit score and rating
    7. Lender risk issues
  8. Define, compare, contrast, and evaluate the different leases used in real estate investment property.
    1. Gross leases
    2. Triple net leases
    3. Percentage leases
    4. Sharing economy - short-term leases, local property controls and regulations
  9. Evaluate mobile home parks and raw land as real property investments.
    1. Operation of mobile home parks
    2. Land speculation
  10. Illustrate the primary risks and returns of land development and syndication.
    1. Residential development
    2. Commercial development - Anchor tenants and commercial leases
    3. Other properties (hospitals/government funded housing/historical properties)
    4. Role of the syndicator
  11. Review, recognize, compare and contrast the different methods for taking title to real property in California.
    1. Real vs personal property
    2. Title methods
    3. Tests for ownership
    4. Methods of joint ownership
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