FINC 371 Real Estate Financing

The two most common loans in real estate are the fixed rate mortgage and the adjustable-rate mortgage. A hybrid loan is a combination of both. There are also reverse mortgage loans, and loans that use a different term for the amortization as the loan term. Often time people want to have the term of the loan coincide with the time they want to hold the property, but this is not always the case. For mortgages, a common example of a loan term is around 30 years. There are many sources of capital for real estate. This can come in the form of equity or debt. For example, a REIT that is public will sell shares of it's stock to get capital for real estate. There are many ways to "Creatively" finance your real estate firm. I believe that a firm should be highly levered, meaning it should favor debt over equity, because interest is tax-deductible. Firms can also offer subsidized housing to lesser off families to receive tax credits.