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    Department of Business Administration

BA 48XX & BA 58XX Real Estate Finance Fall, 2009

    Z. Nuray Güner Office: H 113

    Office Phone: 210-3075 Class hours: MW 11:45 13:00 (G 107)

    Email: Office Hours: TTH 13:15-14:30 or by appointment

Yahoo groups for this course: TBA

Course Objectives

    The primary purpose of this course is to introduce students to the real estate markets and financing alternatives for real estate investments. Real estate has been a traditional investment alternative for Turkish investors. With the development of the legal framework for financing real estate investments via mortgages, investment in real estate will become more affordable and important for individual as well as institutional investors.

    A broad spectrum of topics on residential and commercial real estate finance and investments will be covered in this course. In the first part of the course, topics specific to residential real estate will be discussed. In the second part of the course, issues related to commercial real estate investments will be covered. In the last part of the course, alternative ways of investing in real estate will be introduced. Furthermore, the performance of real estate investments and their affect on the portfolios of investors will be evaluated in this part of the course.

Learning Outcomes

    Students who complete this course should be able to:

    ; understand different aspects of residential and commercial real estate investments

    ; evaluate the attractiveness of different financing alternatives for real estate investments

    ; understand different ways of investing in real estate

    ; discuss the portfolio implications of real estate investments


    To achieve these goals and learning outcomes, I will be evaluating your performance in class on a continuous basis and giving you timely feedback on your performance. This assessment will be done via the interim and final exams, periodic homework assignments from the end of chapter problems and class participation.

Course Prerequisites

    Students enrolled in this course should have completed the equivalent of a course in Financial Management (BA 2802, BA 5802 or an equivalent). In addition to this, students should also have completed basic courses in economics, accounting and statistics. If you haven’t taken

    these courses and you are still interested in taking this course, please talk to me as soon as possible.

Course Material:

    Required Textbook: Real Estate Finance and Investments by William B. Brueggeman and thJeffrey D. Fisher, 13 Edition, 2008, McGraw Hill International Edition.

    Course Requirements

Interim Exams

    Students will take two interim exams. These exams will be administered in the evenings and will start at 17:45. These exam dates are November 3 and December 10, 2009. Please make

    a note of these exam dates since they are firm and will not be changed unless something very

    important and unforeseeable comes up during the term.

Final Exam

    A comprehensive final exam will be given on during regularly scheduled final exam week.

No exam make-ups will be given, except for extreme reasons. If you believe that you have

    an extreme reason, please try to notify me in writing before the exam and obtain my permission for not taking the exam. Please make sure that you added all supporting documents to your letter. If you cannot notify me before the exam, then try to do so as soon as possible after the exam in writing. If I am convinced that you had an extreme reason, I will redistribute the weight of the exam that you missed to the remaining exams.

Class Participation

    Students are expected to participate in class discussions. A student who did not participate at all but came to all the class sessions will only get 40% of the class participation grade. A seating chart is maintained and absences are recorded periodically.


    Students will be required to submit their solutions to some end of chapter problems from the book on a regular basis. These problems will be discussed in class on the day that they are due. Therefore, late homeworks will not be accepted. Students can work in groups on these homeworks as long as they provide the list of students that they worked together at the upper right hand corner of the first page of their own homework. If a student does not provide the list of students with whom s/he worked together on the homework, this student will be penalized for cheating on the homework and get a grade of 0. Even if homework is a group product, each student should still submit a separate individual homework for herself or himself to get a grade for that homework.

Student Background Form

    Students are expected to fill out a student background form. Due date for these forms is October 7, 2009. Students should submit their forms in class on that day. At the beginning of the class on October 7, 2009, the instructor will take digital photos of the students in class. Five points will be deducted from the overall grade of students for late submission regardless of how late the submission is. These forms will help the instructor learn the names of students and associate names with faces.

Yahoo Groups

    Students are required to become a member of the yahoo groups that I created for this course. All the course material, your grades, assignments and announcements will be posted there. So, if you are not a member then you will not have access to this material. To become a member of this group, you need have a yahoo ID. If you don’t have one, you need to get one.

     It does not take that long to get a yahoo ID. Once you have your yahoo ID, please to go to the following web site: TBA and select “Join this Group”. Then it will ask for your yahoo ID and password. After you enter the required information, it opens up a page for you. In the “Comment to Owner” section on that page, enter your full name. I check these names against

    the student list and give approval to those who are on my list of students for this course. Please do this as soon as possible.

Grade Determination

    Grades are based on judgmental evaluation of student performance by the instructor as in any other course. Students’ grades in this course will be based on their performance on two

    interim exams, a final exam, two homework projects, several end of chapter problem assignments, portfolio formation exercise and class participation. The following approximate weights will be used in determining final grades of students:

    Interim Exams (Nov. 3 and Dec. 10, 2009) 25% each

    Final Exam (TBA) 30%

    Class Participation 10%

    Homeworks 10%

    Rules of Academic Honesty

    September 2009

    Cheating: All university, faculty, and department principles on academic honesty will be strictly enforced. The usual consequence for academic dishonesty is failure in the course and additional disciplinary action. Examinations are individual and are to be completed without unauthorized outside assistance. Persons observed cheating during examinations will automatically receive a failing grade in the course. Homework assignments are individual, unless otherwise specified by the instructor, and are to be completed without unauthorized outside assistance as well. Persons observed cheating in their homework assignments will receive a score of zero for the portion of the semester grade that is allocated to such assignments. In addition to the consequences above, the instructor will initiate disciplinary action against the student(s) involved in academic dishonesty.

    Plagiarism: The instructor assumes that students will do their own work. By placing their names (individual or team) on assignments, students are affirming that the contents are their original work. Ideas should be stated in the student’s own wording. Violation of this

    provision will be considered as unethical behavior, subject to disciplinary action. If you have any doubt about the use of a specific material, see the instructor ahead of time.

Civility in the Classroom: Students are expected to assist in maintaining a classroom

    environment which is conducive to learning. In order to assure that all students have an opportunity to gain from time spent in class, students are prohibited from using cellular phones or beepers, eating or drinking in class, arriving late or leaving early without prior permission, or engaging in any other form of distraction. Inappropriate behavior in classroom shall result in, minimally, a request to leave class.

Examination Rules: Students must present a valid METU Student ID before they can be

    allowed into the examination rooms. Those students who cannot present this ID will not be allowed into the examination room under any circumstances. Cellular phones must be turned

off and stowed away during the examinations. Students whose phones are observed to be

    turned on and/or not stowed away will receive a score of zero for the examination.

Tentative Class Schedule (subject to change)

    Date Topic Reading

    Sept. 28 An Introduction to Real Estate Investments: Legal Concepts Chap. 1

Sept. 30 Financing: Notes and Mortgages Chap. 2

    Students should review Chapter 3 on their own to refresh

    their memories on time value of money calculations.

Oct. 5-7 Fixed Rate Mortgage Loans Chap. 4

Oct. 7 Student Background forms are due in class.

Oct. 12-14 Adjustable Rate Mortgages Chap. 5

    Oct. 19-21 Residential Financial Analysis Chap. 6

Oct. 21-26 Single Family Housing Chap. 7

     Underwriting and Financing Residential Properties Chap. 8

    Nov. 2-4 Introduction to Income Producing Properties Chap. 9

    Nov. 3 First Interim Exam (Chap. 1, 2, 4, 5, 6, 7 and 8)

Nov. 4-9 Valuation of Income Properties Chap. 10

Nov. 11-16 Investment Analysis Chap. 11

    Nov. 16-18 Financial Leverage and Financing Alternatives Chap. 12

Nov. 23-25 Risk Analysis Chap. 13

    Dec. 2-7 Disposition and Renovation of Income Properties Chap. 14

     Financing Corporate Real Estate Chap. 15

    Dec. 9-14 The Secondary Mortgage Market: Pass-Through Securities Chap. 19

    Dec. 10 Second Interim Exam (Chap. 9, 10, 11, 12, 13, 14 and 15)

Dec. 14-16 The Secondary Mortgage Market: CMOs and Derivative Sec’s Chap. 20

    Dec. 21-23 Real Estate Investment Trusts Chap. 21

    Dec. 28-Jan. 4 Real Estate Investment Performance and

    Portfolio Considerations Chap. 22

Jan. 6 Exam Review

TBA Comprehensive Final Exam

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