Real Estate Finance and Investments: Risks and Opportunites

Based on his Wharton classes, this book reflects Dr. Linneman’s frustration with texts that concentrate excessively on theoretical detail and literature, while ignoring important aspects of financial decision making. This book attempts to balance the “real world” aspects of real estate finance without compromising key theoretical underpinnings. It covers the basic mathematics of real estate finance and investments, while stressing the ambiguity of decision making. It is an exploration of the key concepts of real estate finance and investment strategy. It is not a mere formulaic analysis of numbers designed to give you “the answer” to any and all real estate investment decisions. Instead, the book is designed to help you understand that there is no singular or simplistic answer to any real estate finance problem. Rather, real estate finance is fundamentally driven by judgment and experience, with an eye to the numbers. The goal is to help you evaluate the risks and opportunities of real estate assets and investments, and will hopefully help you embark upon the long and unending road of strengthening your judgment.

The formulas and templates found in the book are intended to help its reader assemble and organize information. Understanding and mastering the tools included in the book is the beginning of real estate finance. This book focuses on what to do after you have mastered the basic financial tools. Just as knowing how to use a hammer and saw is not the same as building a wonderful building that will last the ages, knowing how to build a financial model and calculating the internal rate of return for a spreadsheet is not the same as making a profitable real estate investment. Judgment comes one mistake at a time.

The new Edition 3.1 includes updated discussions about CMBS, real estate cycles, corporate real estate, the use of leverage, and development. In addition, the text includes 21 of Dr. Linneman’s articles on capital markets, real estate pricing, real estate cycles, private equity funds, REITs, and corporate real estate. These articles serve to enhance the text by providing additional depth of analysis.

The book has been adopted by more than 95 colleges and universities, including Wharton, The University of Chicago, Notre Dame, Columbia, Yale, New York University, University of California – Berkeley, University of California – Los Angeles, Brigham Young, DePaul, Duke, Villanova, Ohio State and many others. In addition, numerous companies have adopted the book for training and reference for their personnel, including Morgan Stanley, Tishman Speyer, Freddie Mac, Lubert-Adler, Welsh Property Trust, M3 Capital Partners, Stoltz USA, J. E. Robert Companies and others.