Foundations of Real Estate Finance and Investment

Online: On-Demand Course

Foundations of Real Estate Finance and Investment

In the Foundations of Finance and Investment module, you will learn foundational real estate finance terms and concepts, including the time value of money, risk/return tradeoff, and financial leverage. With use of examples and Excel, important calculations in real estate finance and investment will be described, such as internal rate of return (IRR), mortgage payment and loan balance, and property valuation.

Overview

In the Foundations of Finance and Investment module, you will learn foundational real estate finance terms and concepts, including the time value of money, risk/return tradeoff, and financial leverage. With use of examples and Excel, important calculations in real estate finance and investment will be described, such as internal rate of return (IRR), mortgage payment and loan balance, and property valuation.


This course counts toward the Foundations of Real Estate Certificate.

Learning Objectives

Upon conclusion of this course, you will be able to:

  • Understand basic real estate finance and investment terms and concepts.
  • Understand the time value of money, compounding, and discounting.
  • Understand risk and return, including opportunity costs.
  • Define cap rates and interest rates. Apply financial concepts such as leverage.  

Curriculum

Topics in this course include the following:

Introduction to Real Estate Finance
• What is finance?
• What is real estate finance?
• Inflow vs. outflow (in which direction does the money go?)
• Timing (when does the cash flow occur?)
• Risk (who receives/pays the cash flow?)
• Time value of money
• Risk/return tradeoff

Time Value of Money
• What is the time value of money?
• Why is it important?
• TVM calculation: compounding
• The basic formula
• $100 now vs. $103 two years from now
• Interpretations
• TVM calculation: discounting
• Compounding vs. discounting
• The basic formula

Risk and Return
• Risk/Reward Tradeoff
• What is risk?
• What is risk aversion?
• Implications
 Property types
 Investment strategies
 Location and quality
• Required Rate of Return
• What is required return?
• Determinants of required return
 Opportunity cost
 Risk
• Mortgage Interest Rates
• What is interest rate?
• How does a lender decide the interest rate?
• Cap Rates
• Cap rates over time
• Cap rates across property types and quality levels
• Cap rates across geographic locations

Applications of Financial Concepts in Real Estate Analysis
• Financial Leverage and Mortgage Financing
• What is leverage?
• What is financial leverage?
• Implications of using financial leverage
 Lower capital requirement
 Enhanced potential return
 Increased risk
• Features of a mortgage
• Loan amount
• Time to maturity
• Interest rate
• Amortization


All content is available for 90 days from first access. For extension inquiries, please email learning@uli.org.

ULI Learning is provided by the Urban Land Institute.

Topics

Finance and Investment

Experience Level

  • Foundational

This course is designed for beginning-level participants looking for foundational information and insights.


Career Stage

  • Undergraduate Students
  • Universities
  • Beginning Real Estate Professionals

This course is perfect for you if you are a student without a business background considering a career in commercial real estate or a professional working in the industry who would benefit from a comprehensive overview created by faculty and practitioners committed to creating a better built environment.

Course Format

This course is available on demand online at your convenience.

Charles Tu

Interim Associate Dean for Graduate Programs and Daniel F. Mulvihill Professor of Commercial Real Estate at The University of San Diego School of Business

Charles Tu is the interim associate dean for graduate programs and Daniel F. Mulvihill Professor of Commercial Real Estate at the University of San Diego School of Business. Before coming to USD, he taught real estate and finance courses at George Washington University and Cal State Fullerton, where he received the Outstanding Teacher/Scholar Award in 2002. Tu is dedicated to conducting applied research that helps improve real estate and business decision-making. His research agenda covers a variety of topics, including housing valuation, smart growth and the new urbanism, commercial mortgage backed securities (CMBS), real estate investment trusts (REITs), multifamily housing and retail shopping centers.

Tu has published articles in leading academic journals, and the findings of his research have been cited in major newspapers such as The Wall Street JournalWashington Post and Atlanta Journal-Constitution.

Tu earned his Ph.D. and M.B.A in Finance and Investments from the George Washington University, and his BS in Mechanical Engineering from National Chao-Tung University.  He also received the Chartered Financial Analyst (CFA) designation in 2000.  

Components visible upon registration.

Pricing

  • ULI Members: $295.00
  • ULI Members (Government/NonProfit/Academic): $235.00
  • Non-Members: $395.00