Real Estate Perspectives: An Introduction to Real Estate

Abstract

Real Estate Perspectives: An Introduction to Real Estate, J. Corgel, H. Smith and D. Ling, Fourth Edition, Irwin McGraw-Hill, 2000. This text is very good, and I am impressed with the changes in the fourth edition. I could even see using it for a combination of courses (both for general real estate and a real estate finance course). The Internet exercises are a big plus for the text. Although there was not much text devoted to why property develops (e.g., why cities form) and other urban economic issues, at the same time the authors do a very good job of bringing forth a good explanation and description of market analysis and feasibility. A large part of the text is devoted to real estate finance and investments. This is good from the standpoint that most real estate courses are taught as "Finance" electives, and this book would be a very good choice for someone looking to bridge a general real estate course and a real estate finance course into one offering. It would not be difficult to use this book for a two-course sequence, provided: 1. For the introductory course: supplemental material was added on urban economics, an expansion of the appraisal chapters already covered in this text, and some additional material on international perspectives of real estate development and investment. 2. For the real estate finance course: additional material on the process of development of both residential and commercial real estate and additional material on real estate finance topics (e.g., creating and valuing MBSs and CMOs) and hedging and portfolio construction using physical real estate ownership and real estate securities. By including MS-Excel templates that are "basic" tools for analyzing situations, there would be an added bonus to those adopting the text. These templates, available on CD-ROM or floppy disk, could be developed as generic spreadsheets that students could use to apply their knowledge of real estate. They could then be asked to modify them to meet particular needs of end-of-chapter problems. By giving the students a starting point, they could spend their time working on the concepts presented in the chapter in the spreadsheet models and not spend a lot of "programming" the spreadsheet. In addition, the authors have constructed the text in a modular format that allows instructors the flexibility of moving around the text without losing content or flow. What follows is a chapter-by-chapter analysis of specific comments and/or concerns of this addition. For the interested reader, this review can be compared to a review of the third edition of this text that appeared in the Journal of Real Estate Literature, Volume 6, Number 2, pages 163-65. Chapters 1-5. Under Classical Land Economics, scarcity should be emphasized. Utility is important, but scarcity is what makes real estate unique since it is (generally) fixed in quantity and immobile. Under Real Estate Defined, a further explanation regarding the legal difference between "real estate" and "real property" would be a nice enhancement. Under Investment Perspective, a "share" of ownership in a limited partnership is usually referred to as a unit of ownership. Under What is Real Estate Valuation, investor returns come from two sources. There should be an emphasis of a return of and a return on real estate. In the section describing an Ordinary Annuity, the text should emphasize that the money is received at the end of every period. The use of TVM tables is archaic and should be removed. These tables are a waste of valuable space given today's calculators, and calculators are used later in the text without tables. The Internet exercises are a big plus in this text. Other texts are only starting to utilize this great source of information. I do believe that the text needs to make a distinction in the use of the word disposition. The wording in this text should more properly be "disposition (typically, the sale) of the interest in a property" since not all reversion requires the sale of a property, only the sale of an interest in a property. …