FINC 484 – REAL ESTATE INVESTMENT AND FINANCING FBA, UNIVERSITY OF MACAU, FIRST SEMESTER 2008-2009 Instructor Office Phone E-mail Office Hours : Mr. Chui Man Wai (Peter) : Block 2 A404 : 8397-8548 : petermwc@umac.mo : Monday 3:00 to 5:00 and Tuesday 2:30 to 3:30 or by appointment
PREREQUISITE: FINC 301, Financial Management II OBJECTIVES This course aims at enhancing knowledge on real estate investment and financing. Topics on real estate investments include investment and risk analysis, income property valuation and alternative real estate investment vehicles, such as real estate investment trust (REIT) and mortgage-backed securities. Topics on real estate finance include an introduction of secondary mortgage markets, residential mortgage analysis (including Mortgage Pricing, Underwriting, Prepayments and Refinancing) and different types of home mortgage tools. An overview of the Macao Real Estate Markets, with particular emphasis on its development, property rights, transaction costs and transaction procedure, is discussed. It will also review some interesting and up-to-date issues that are concerned with real estate markets across the globe. REQUIRED TEXT Bruggeman, W. B. and Fisher, J. D., Real Estate Finance and Investment, McGraw-Hill, 13rd edition, 2008. FINANCIAL CALCULATOR The instructor will be using Casio Financial Calculator FC-200 or Texas Instrument BA II Plus in class. It is highly recommended to purchase a financial calculator which has the following functions: IRR, NPV, FV, PV, I, N, PMT, CASH FLOW and amortization functions. GRADES: Course grades will be determined as follows: Items Homework assignments Quizzes Project (with presentation) Test 1 and Test 2 Final Exam Weight (%) 10 10 20 30 30
Both homework assignments and quizzes are done on individual basis. For the project, students are required to form into group consisting of three to four students. Please note that those who fail to form a group with other classmates should inform the instructor as soon as possible. Each group is expected to submit a project in the length of 2,000-3,000 words. The group project is designed to help students become familiar with Macau real estate markets and apply the financial theory and skills in making good investment decisions. The detail of the project requirement will be explained shortly. The project weights 20 percent of the overall grade. TENTATIVE SCHEDULE Date Topic Sept. 10 Course Overview Macau’s Real Estate Markets Part One: Financing Residential Properties Sept. 17 Time Value of Money Review & Financial Calculator Review (Text, Ch.3) and Notes and Mortgages (Ch. 2) Sept. 24 Fixed Rate Mortgage (Ch. 4) Oct. 1 No Class - Public Holiday Oct. 8 Adjustable Rate Mortgages (Ch. 5) Oct. 15 Residential Financial Analysis (Ch. 6) Oct. 22 Appraisal, Buy vs. Rent and Underwriting (Ch. 7 & Ch. 8) Part Two: Investment Analysis and Financing of Income Properties Oct. 29 Introduction to Income-producing Properties (Ch. 9) Investment Analysis (Ch.11) Nov. 5 Test One Financial Leverage (Ch. 12) Nov. 12 Risk Analysis (Ch. 13) Nov. 19 Disposition Decision (Ch. 14) Part Three: Alternative Real Estate Financing and Investment Vehicles Nov. 26 Test Two Dec. 3 Secondary Mortgage Markets – Pass Through Securities (Ch. 19) Dec. 10 Secondary Mortgage Markets - CMOs (Ch. 20) Dec. 17 Real Estate Investment Trusts (Ch. 21) Please note that the class schedule is subject to revision, depending upon the progress of the class throughout the semester. Please check the course web site to obtain the latest information about assignments, handouts, class notes and news.