PROPERTY 251 : Property Finance and Investment

Business and Economics

2023 Semester One (1233) (15 POINTS)

Course Prescription

Financing represents a fundamental part of how properties are purchased, developed and managed. The application of general theories of property investment, discounted cash flow, risk and return, and financial mathematics is vital for property professionals. Debt and equity financing options are discussed for residential and income-producing property and development projects.

Course Overview

This course introduces students to the fundamental framework of financial principles in property investment. By the end of this course, students will be able to use relevant tools and techniques to better understand and evaluate the processes of financing and investing in residential and commercial property. Many of the topics in this course involve the consideration of the Time Value of Money (TVM) concepts. TVM will be an important foundation piece and a good grasp of this concept is essential for success in this course. What students learn in this course is relevant to other subjects in the degree, especially valuation and development, as it integrates the evaluation of the costs of debt and equity in property investment and enables students to model and analyse cash flows (leveraged and unleveraged) and assess risks and returns. The course is delivered using a blended learning design that combines face-to-face and online methods of course delivery. The online component of the course gives students the flexibility on where and when the knowledge is acquired from the pre-recorded online lectures. While face-to-face teaching is dedicated to the revision of the online material. The revision sessions are interactive and students are encouraged to contribute by answer live questions via an online response platform.

Course Requirements

Prerequisite: 15 points from ACCTG 101, BUSINESS 114, PROPERTY 102

Capabilities Developed in this Course

Capability 1: Disciplinary Knowledge and Practice
Capability 2: Critical Thinking
Capability 3: Solution Seeking
Capability 4: Communication and Engagement
Capability 6: Social and Environmental Responsibilities
Graduate Profile: Bachelor of Property

Learning Outcomes

By the end of this course, students will be able to:
  1. Use and apply Time Value of Money concepts to solving property investment opportunities. (Capability 1)
  2. Develop and demonstrate application of mortgage financing, forecasting and discounting of cash flows for decision making in residential and commercial property investments. (Capability 1)
  3. Critically evaluate and reflect on the role of financial policy tools, home loan options and borrower characteristics on the availability and cost of debt financing. (Capability 2 and 6)
  4. Differentiate and explain the differences in typical commercial lease terms and their impact on the property investment cash flows. (Capability 1 and 2)
  5. Construct a Discounted Cash Flow model for a commercial property and evaluate its investment feasibility applying the risk-return trade-off. (Capability 2)
  6. Analyse, interpret and make recommendations on the results of quantitative investment modelling in a written summary. (Capability 3 and 4.2)

Assessments

Assessment Type Percentage Classification
Computational quizzes 10% Individual Coursework
Panopto lecture quizzes 5% Individual Coursework
Assignments 15% Individual Coursework
Test 20% Individual Test
Final Exam 50% Individual Examination
Assessment Type Learning Outcome Addressed
1 2 3 4 5 6
Computational quizzes
Panopto lecture quizzes
Assignments
Test
Final Exam

To pass this course you must obtain at least 50% of the total marks awarded for the course and, in addition, achieve a Final Exam mark of 45% or higher.

Workload Expectations

Following University workload guidelines, a standard 15 point course represents approximately 150 hours of study.

During a typical teaching week, you can expect 2 hours of pre-recorded online lecture content and a 1-hour live review session. In addition, you should spend 2 hours per week studying, reviewing the learning materials and completing quizzes. Since the course as a whole represents approximately 150 hours of study, that leaves a total of 90 hours across the entire semester for independent study, e.g. reading, revision, preparing for tests and exam.

Delivery Mode

Campus Experience

Attendance is expected at scheduled activities including weekly review sessions to receive credit for components of the course.
Lectures and review sessions will be available as recordings.
The course will include live online events including group discussions for students who are unable to participate in-person.
Attendance on campus is required for the tests and exam.
The activities for the course are scheduled as a standard weekly timetable.

Learning Resources

Course materials are made available in a learning and collaboration tool called Canvas which also includes reading lists and lecture recordings (where available).

Please remember that the recording of any class on a personal device requires the permission of the instructor.

Completion of the computational aspects of this course will be done using financial functions in MS Excel and/or the HP 10b+ financial calculator. Students need to bring their calculators to test and exam. Therefore, HP10b is the required calculator for this course.

Students can access pre-recorded online lectures from Canvas. All lecture slides will be posted on Canvas and will be available in advance of each topic.

Face-to-face review sessions will be recorded and links posted on Canvas. Students will be using their own digital devices to participate and submit answers to live review questions.

There is no New Zealand-focused property finance and investment textbook. However, many of the concepts covered in this course are universal and textbooks listed below (although not exhaustive) are a useful supplementary resource:
BRUEGGEMAN, W.B. & FISHER, J.D., Real Estate Finance and Investments, McGraw-Hill/Irwin (There are multiple editions of this text, any earlier editions of the book cover the fundamental concepts of this course)
ROWLAND, P.J., Australian Property Investment and Financing (2010), Thomson Reuters (Professional) Australia Ltd (Sydney)
ISAAC, D. & O’LEARY, J., Property Investment (2011), Palgrave Macmillan

Student Feedback

At the end of every semester students will be invited to give feedback on the course and teaching through a tool called SET or Qualtrics. The lecturers and course co-ordinators will consider all feedback and respond with summaries and actions.

Your feedback helps teachers to improve the course and its delivery for future students.

Class Representatives in each class can take feedback to the department and faculty staff-student consultative committees.

Students appreciated to have detailed tutorials on how to solve financial calculations using both MS Excel and financial calculator. Given the reliance of the property industry on MS Excel, more resources will be developed to ensure that all students gain confidence with calculations in MS Excel.

Academic Integrity

The University of Auckland will not tolerate cheating, or assisting others to cheat, and views cheating in coursework as a serious academic offence. The work that a student submits for grading must be the student's own work, reflecting their learning. Where work from other sources is used, it must be properly acknowledged and referenced. This requirement also applies to sources on the internet. A student's assessed work may be reviewed against online source material using computerised detection mechanisms.

Class Representatives

Class representatives are students tasked with representing student issues to departments, faculties, and the wider university. If you have a complaint about this course, please contact your class rep who will know how to raise it in the right channels. See your departmental noticeboard for contact details for your class reps.

Inclusive Learning

All students are asked to discuss any impairment related requirements privately, face to face and/or in written form with the course coordinator, lecturer or tutor.

Student Disability Services also provides support for students with a wide range of impairments, both visible and invisible, to succeed and excel at the University. For more information and contact details, please visit the Student Disability Services’ website http://disability.auckland.ac.nz

Special Circumstances

If your ability to complete assessed coursework is affected by illness or other personal circumstances outside of your control, contact a member of teaching staff as soon as possible before the assessment is due.

If your personal circumstances significantly affect your performance, or preparation, for an exam or eligible written test, refer to the University’s aegrotat or compassionate consideration page https://www.auckland.ac.nz/en/students/academic-information/exams-and-final-results/during-exams/aegrotat-and-compassionate-consideration.html.

This should be done as soon as possible and no later than seven days after the affected test or exam date.

Additional information on the Department-specific study policies and guidelines is available at this link: https://www.auckland.ac.nz/en/business/about-business-school/property/study-options/policies-and-guidelines.html

Learning Continuity

In the event of an unexpected disruption, we undertake to maintain the continuity and standard of teaching and learning in all your courses throughout the year. If there are unexpected disruptions the University has contingency plans to ensure that access to your course continues and course assessment continues to meet the principles of the University’s assessment policy. Some adjustments may need to be made in emergencies. You will be kept fully informed by your course co-ordinator/director, and if disruption occurs you should refer to the university website for information about how to proceed.

Student Charter and Responsibilities

The Student Charter assumes and acknowledges that students are active participants in the learning process and that they have responsibilities to the institution and the international community of scholars. The University expects that students will act at all times in a way that demonstrates respect for the rights of other students and staff so that the learning environment is both safe and productive. For further information visit Student Charter https://www.auckland.ac.nz/en/students/forms-policies-and-guidelines/student-policies-and-guidelines/student-charter.html.

Disclaimer

Elements of this outline may be subject to change. The latest information about the course will be available for enrolled students in Canvas.

In this course students may be asked to submit coursework assessments digitally. The University reserves the right to conduct scheduled tests and examinations for this course online or through the use of computers or other electronic devices. Where tests or examinations are conducted online remote invigilation arrangements may be used. In exceptional circumstances changes to elements of this course may be necessary at short notice. Students enrolled in this course will be informed of any such changes and the reasons for them, as soon as possible, through Canvas.

Published on 31/10/2022 01:19 p.m.