hours

• 27 hours Advanced Concepts in Commercial and Investment Real Estate
• 3 hours Current Issues in Washington Residential Real Estate Core 2010-2011

27 hours Advanced Concepts in Commercial and Investment Real Estate Course Syllabus

Introduction to Commercial and Investment Real Estate

Topics covered in this chapter include "non-residential real estate compared to amenity real estate", "the market place", "types of commercial real estate", "price vs. value" and "source of value". Learning objectives for the licensee include:

• The differences between commercial and investment and personal use real estate
• The nature of a real estate market
• The types of commercial real estate
• The primary sources of value in commercial and investment real estate

Areas of Activity in Commercial and Investment Real Estate

Topics covered in this chapter include "an introduction to commercial and investment real estate", "agent activities and investing". Learning objectives for the licensee include:

• Owner vs. user real estate
• Agent activities in commercial and investment real estate
• The reason for investing is to generate cash flow

Anatomy of an Investment in Commercial and Investment Real Estate

Topics to be covered in this chapter include "investment in general", "characteristics of investment", "financial factors in real estate investments", "the cash flow model", "rules of thumb found in the market place" and "characteristics of investors' behavior". Learning objectives for the licensee include:

• The characteristics of an investment
• The financial factors in real estate investments
• The cash flow model
• The calculator financial keys
• The characteristics of investors' behavior

Capitalization Rate as a Valuation Tool

Topics to be covered in this chapter include "derivation of capitalization rates", "supply and demand in C-I real estate", "buy low, sell high philosophy in commercial investment real estate" and "the appraisal industry's approach to value". Learning objectives for the licensee include:

• The derivation of the capitalization rate
• Supply and demand in C-I real estate
• The appraisal industry's approach to value

Financing Commercial and Investment Real Estate

Topics to be covered in this chapter include "amortization", "loan terminology", "calculator techniques relating to financing" and "lender rules of thumb”. Learning objectives for the licensee include:

• The types of loans available
• Some loan terminology
• Using the calculator to solve financing problems
• Some lender rules of thumb

Before Tax Cash Flow Analysis

Topics to be covered in this chapter include "an introduction to cash flow analysis", "reviewing the annual property operating data form", "reviewing the cash flow analysis form", "reviewing the alternative cash sale worksheet", " a case study #1 ~ The Emily Bridger Apartments Case" and "Case Study #2 ~ The Brady Roberts Case". Learning objectives for the licensee include:

• Using the Annual Property Operating Data form
• Using the Cash Flow Analysis form
• Using the Alternative Cash Sale Worksheet form
• How to use these forms in a case study

Understanding the Tax Classification of Assets

One of the three phases in real estate investing is the disposition phase. Agents who practice in the field of commercial and investment brokerage, need to be able to assist their clients in formulating appropriate disposition strategies and they need to be aware of the current state of the Federal Income Tax law relating to disposition issues. Learning objectives for the licensee include:

• Know the law and the regulations which affect the disposition phase of commercial and investment real estate
• Determine when they are in position to analyze the different investment strategies in the disposition of commercial and investment real estate
• Determine when it is advisable to suggest to their clients that they seek professional legal and accounting advice
• Recognize when a tax deferred exchange is a possible strategy for clients
• Recognize when an installment sale is a possible strategy for their clients

Applying The Passive Loss Rules At Disposition

Topics in the chapter include learning what assets are subject to the passive loss rules at their disposition and application of the passive loss rules to different methods of disposition. Learning objectives for the licensee include:

• Understand the current income tax rules.
• Explain the three types of activities recognized by the Code.

Netting Of Gains And Losses

Topics in the chapter include a discussion of the tax treatment on the disposition of the various assets a commercial and investment agent or broker will encounter and the tax treatment when an investor has multiple transactions in a single year. Learning objectives for the licensee include:

• Be able to recognize when a client needs to seek professional accounting or tax advice when the client will experience or has experienced capital gains or capital losses on the sale of assets.
• Understand the treatment of capital gains and losses from the disposition of capital assets, including Section 1231 assets.
• Explain how the Section 1231 gains or losses are determined.
• Learn the tax treatment of the disposition of Section 1221 assets.
• Understand how to integrate the passive loss rules on a sale with the netting of capital gains and losses.

IRC Section 1031 Highlights

Topics in the chapter include understanding the basics behind a simultaneous tax deferred exchange and learning the time requirements placed on non-simultaneous exchanges. Learning objectives for the licensee include:

• Recognize when a tax deferred exchange is a possible strategy for clients.
• Understand how the Starker Philosophy affected the IRS Section 1031 code.
• Explain the 3-property rule and the 200 % rule.
• Determine the rules that are applied to the exchange period.
• Determine what unlike property would be during an exchange.

Recognizing When It Is Better To Sell Than To Exchange

This chapter contains a Case Study that will apply the tax concepts covered in earlier chapters to a typical ‘real life’ situation. Learning objectives for the licensee:

• 1. Analyze the Case Study and so as to determine when it is better to sell or exchange.

Investment Base

This chapter introduces the student to the concept of Investment Base and shows the student how to apply this concept. Learning objectives for the licensee:

• Learn how to decide whether it is beneficial to complete a disposition in an exchange transaction.
• Define the investment base theory.
• Understand when it is best to sell or hold.
• Explain Partnership distributions and how it affects the IRS code.

Special Issues In Exchanges

Topics in this chapter include two special areas the student may encounter while working with tax free exchanges. Learning objectives for the licensee:

• Understand the term "Which is to be Held".
• Explain Partnership Distributions.

Installment Sales

In this chapter the student will learn what an installment sale is and exposed to the way installment sales are analyzed on a before and after tax basis. Learning objectives for the licensee:

• Recognize when an installment sale is a possible strategy for their clients.
• Determine when an investors cash flow after taxes.

It’s A Whole New Business!

Many real estate agents and brokers view the syndication or group investment activity as just another phase of their deal making activities. They are willing to take on the risk of being the sponsor of a group investment in an effort to increase their commissions. They do not fully understand that becoming a fiduciary in a group investment is really a whole new business, with separate risks and rewards. Learning objective for the licensee include:

• Understand the role of a syndicator in commercial and investment real estate
• Know the difference between the agency duty and fiduciary duty you may be required to perform
• Determine if syndication of commercial and investment real estate is an activity you would like to pursue

Do You Want To Be In The Syndication Business?

The syndication business is a very large part of the commercial and investment section of the real estate market. There are several reasons why a commercial investment agent or broker would want to enter the business of group investing. There are also areas of the commercial investment business that a commercial and investment agent may become involved that do not require the agent or broker to actually form group investments. Learning objective for the licensee include:

• Understand that the role of a syndicator in commercial and investment real estate is different than the role a broker or agent plays
• Know the advantages and disadvantages of group investing for both the investor and the group sponsor
• Determine the areas of activities of a syndicator and the types of syndications available
• Learn the importance of using professional advisors if you are going to pursue the business of group investing

Securities Laws

Often, the commercial investment agent or brokers involve themselves in transactions that are actually governed by the security laws. Some transactions are governed by the Federal Securities laws and some are governed by state securities laws. The way agents or brokers obtain their customers is restricted by the securities laws that differ from the state real estate laws they are used to following. The learning objectives for the licensee are:

• Understand what constitutes a security under federal security regulations
• Explain the Howey test
• Know the exemptions from federal securities regulation available for commercial investment agents who sponsor group investments.
• Learn why accredited Investors do not need Protection
• Understand that the aggregate offering price may determine a private offering
• Learn that general solicitation of investors is not allowed in a private offering
• Understand integration
• Explain the regulation of the issuers

Group Ownership Entities

There are several form of ownership used in the group investment business. The agent or broker should be familiar with these ownership forms whether or not they are forming their own group investments. This chapter offers a thorough discussion of the most common ownership entities the commercial investment agent will encounter. Learning objectives for the licensee:

• Understand the advantages and disadvantages of forming a coporation
• Define the Uniform Partnership Act (1997)
• Understand the characteristics of Tenants-in-common
• Understand the characteristics of General Partnerships
• Understand the characteristics of Limited Partnership
• Identify situations where an investor would prefer to invest in a limited liability company

Private Placement Memorandum for Real Estate Securities

In this chapter there is a discussion of the major components of a Privat ise Placement Memorandum and when it would be required that one be developed. Learning objectives for the licensee:

• Understand what is required for an offering circular and why it is needed.

Steps to Take in Forming Your First Group

The chapter contains a suggested series of events that might be taken when forming an investment group. Learning objectives for the licensee:

• Understand and explain the steps required to form a group investment.

Closing Out the Group

The chapter contains a suggested series of events that might be taken when closing out an investment group. Learning objectives for the licensee:

• List the chronological activities the sponsor must undertake to properly close out the group.

Compensation to Promoter

This chapter discusses the methods of payments typically made to the sponsor, or promoter, and the common structures of thes payments in group investments. Learning objectives for the licensee:

• Explain the various methods of compensation to be paid to the sponsor of the group.

3 hours Current Issues in Washington Residential Real Estate Core 2010-2011 Course Syllabus

Short Sales

Understand the:

• Operation of note and deed of trust executed by the seller at the time the seller received the loan and any short sale agreement offered by the lender
• Effect of a short sale, foreclosure and deed in lieu of foreclosure on the seller's credit rating
• Potential tax consequences of a short sale, foreclosure and deed in lieu of foreclosure
• Ability to effectively communicate with the lienholder(s) and loan servicing companies when representing sellers in a short sale.

Carbon Monoxide

Understand the:

• basics of Carbon Monoxide
• importance of keeping current with new legislation for both new construction and rental property installation

Labor and Industries Requirements

Understand:

• L and I requirements affecting real estate licensees and review the differences between real estate sales and property management
• the L and I requirements affecting designated brokers or real estate firms
• here to secure the current rates for real estate and property management business
• the benefits from L and I Insurance
• how to comply with the record keeping requirements of L and I
• where to get further information

Real Estate Licensing Law Relating to the Referral of Title Insurance Providers

Understand:

• the basics of a title insurance policy and who it is issued to.
• who to contact if a title company or licensee is in violation of the law regarding gifts.
• term "controlling interest" as it relates to licensees and title companies.

Home Inspector Referrals

Understand:

• the disclosures required with the new Jan 30, 2009 legislation regarding home inspection referrals
• the new requirements from the July 1, 2009 legislation
• the requirements of a brokerage for home inspector referrals
• what a familial and a business relationship in terms of home inspector referrals
• where to Find the Home Inspectors Standards of Practice Rules

Property Management and the Brokerage’s Policy

Understand:

• that real estate licensees cannot perform property management without approval from management.
• that property management is a real estate activity and that the designated broker has responsibility for property management activities performed by his or her licensee.
• the necessary agreements, record keeping and funds management procedures associated with property management as described by WAC-308-124D-215.