Find Courses > Real Estate Investing

Real Estate Investing #374225-2

Course Overview

Credit

Amount

CPA

CFP^®

5.5

CDFA^®

IAR/FINRA

5.5

CIMA^®/CPWA^®/RMA^®

Course Author: Steven M. Bragg, CPA Field of Study (CPA): Specialized Knowledge Field of Study (CFP): Investment Planning Field of Study (CDFA): Investment Planning Field of Study (IAR): Products and Practice Field of Study (IWI/CIMA): Technical Investment Management

Course Description

Course publication/revision date: This course was updated on 10/07/24.

Investing in real estate can be an extremely profitable endeavor, but only if you know the pitfalls to avoid. In the Real Estate Investing course, we discuss every aspect of locating, evaluating, purchasing, financing, and operating an investment property. Topics covered include conducting a local market analysis, analyzing leases, valuing a property, and how to conduct due diligence. The course also addresses the tax aspects of real estate investing, including like-kind exchanges, installment sales, and the tax basis of property.

Table of Contents

Chapter 1 - Introduction to Real Estate Investing1

Introduction	1
Advantages of Investing in Real Estate	1
Disadvantages of Investing in Real Estate	3
Types of Real Estate Investments	4
Purchase a Residence	4
Convert a Residence to a Rental	4
Upgrade and Sell Your Home	4
Buy a Second Home	5
Buy a Timeshare	5
Buy a Residential Property	6
Flip a Residential Property	7
Buy Commercial Property	7
Buy Undeveloped Land	8
How to Acquire Real Estate	8
Foreclosures	8
Probate Sales	10
Short Sales	10
Acquisition Advisors	11
The Ideal Seller	13
Like-Kind Exchanges	13
Installment Sales	14
Real Estate Investment Best Practices	15
Summary	17
Review Questions	18

Chapter 2 - Property Financing19

Introduction	19
Asset Allocation Issues	19
Your Personal Credit	19
The Need for Cash	20
Options for Obtaining a Down Payment	20
Mortgage Options	21
Mortgage Fees	23
Application Fee	23
Appraisal Fee	23
Credit Report Fee	23
Environmental Assessment Fee	23
Inspection Fee	24
Points	24
Mortgage Duration	24
Finding a Lender	25
Recourse and Nonrecourse Financing	25
Your Personal Financial Statement	26
Assets	26
Liabilities	28
Income and Expenses	28
Summary	31
Review Questions	32

Chapter 3 - Evaluating Properties33

Introduction	33
Where to Invest	33
Regional Analysis	33
Local Market Analysis	35
Indicators of Supply and Demand	35
Other Local Market Issues	36
Investing Near Infrastructure	36
Barriers to Entry	37
The Real Estate Cycle	37
The Core Elements of an Investment	38
Rent Control	38
The Summary Page	38
Summary	39
Review Questions	40

Chapter 4 - Property Income Issues41

Introduction	41
The Nature of a Lease	41
The Value of a Lease	41
The Rent Roll	43
Summary	43
Review Questions	44

Chapter 5 - Property Valuation45

Introduction	45
The Drivers of Value	45
The Highest and Best Use Concept	46
How to Derive a Property Value	46
The Return on Property Investment	47
Net Operating Income	48
Gross Potential Income	50
Capital Expenditures	51
Common Area Maintenance Charges	51
Appraiser Valuation Methods	51
Sales Comparison Basis	52
Cost Basis	53
Income Capitalization Basis	53
The Reconciliation of Valuation Methods	54
Summary	55
Review Questions	56

Chapter 6 - Property Acquisition57

Introduction	57
The Negotiation Element	57
The Emotional Hook	58
Contract Essentials	58
Contracts with Minors	58
Contracts with Mentally Incompetent Individuals	59
The Offer	59
Offer Terminations	59
Offer Acceptance	60
Consideration	60
Written Contract	60
Contents of the Purchase Agreement	60
Earnest Money Deposit	61
Assignment of Interests	61
Closing Date	61
Contingencies	62
Personal Property	62
Vacant Property	62
Escrow Extension	62
Opening Escrow	62
Due Diligence	63
Disclosure Requirements	65
The Entity That Will Hold Title	65
Sole Proprietorship	65
Partnership	66
Corporation	67
Limited Liability Company	67
Concurrent Ownership	68
Closing the Transaction	69
Transfer of Ownership	70
Summary	70
Review Questions	71

Chapter 7 - Property Management72

Introduction	72
Managing a Property Yourself	72
Outsourcing Work	73
Testing for Environmental Issues	73
Setting Rental Policies	74
Ongoing Tenant Relations	74
Conducting a Pre-Showing Review	75
Showing a Property	75
Screening Applicants	76
The New Tenant Move-In	77
Upgrading a Property	77
Risk Management Issues	77
Insurance Coverage	78
Creating a Filing System	80
Summary	80
Review Questions	81

Chapter 8 - Tax Considerations82

Introduction	82
Tax Impact of Property Acquisitions	82
Acquisition Costs	82
Basis	82
Original Basis	83
Costs Relating to Constructed Assets	86
Real Estate Financing Issues	86
Mortgage Financing	86
Interest Issues	87
Passive Activity Losses	87
At-Risk Rules	88
Depreciation	89
Depreciation Conventions	89
Section 179	91
Tax Impact of Real Estate Disposition	91
Sale of Real Estate	91
Characterization of Gains and Losses	91
Depreciation Recapture	92
Property Exchanges	92
Installment Sales	92
Home Use for Rental	92
Home Converted to Investment Property	93
Tax Management Strategies	93
Tax Deferral Strategy	93
Cash-Basis Tax Deferral Strategies	93
Accrual-Basis Tax Deferral Strategies	93
Tax Acceleration Strategy	94
Summary	94
Review Questions	95

Answers to Chapter Questions96

Glossary104

Index107

Course Details

Author: Steven M. Bragg, CPA

Steven Bragg, CPA, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young. He received a master’s degree in finance from Bentley College, an MBA from Babson College, and a Bachelor’s degree in Economics from the University of Maine. He has been a two-time president of the Colorado Mountain Club, and is an avid alpine skier, mountain biker, and certified master diver. Mr. Bragg resides in Centennial, Colorado. He has written more than 300 books and courses, including New Controller Guidebook, GAAP Guidebook, and Payroll Management.

Publication/Revision Date: 10/7/2026

Course Exam Questions (online): 55 (multiple-choice)

Program Delivery Method: Self-Study (NASBA QAS Self-Study)

Available Formats of Course Text: PDF or PDF plus printed copy sent in the mail

Course Level, Prerequisites, and Advance Preparation Requirements

License	Course Level	Prerequisites	Advance Preparation Requirements
CPA	Overview	None	None
CFP^®	Basic	None	None
CDFA^®	Overview	None	None
IAR	Overview	None	None
CIMA^®/CPWA^®/RMA^®	Overview	None	None

Sponsor ID Numbers

National Registry of CPE Sponsors ID: 107615

CFP Board Sponsor ID: 1008 — Course ID: 323729

Registered with the Institute for Divorce Financial Analysts

NASAA/FINRA (IAR) Sponsor ID: S17460 — Course ID: C82516

Note: A course cannot be repeated for IAR CE if it has the same Course ID as when it was last taken.

IWI CE Sponsor ID: 222740 — Course ID: 24BCNHF008

State CPA Board Sponsor ID Numbers (where applicable)

Florida Division of Certified Public Accounting: 0004761

Hawaii Board of Public Accountancy: 14003

New York State Board for Public Accountancy: 002146

Ohio Accountancy Board: CPE .51 PSR

Pennsylvania State Board of Accountancy: PX178025

Texas State Board of Public Accountancy: 009349

Learning Objectives

As a result of studying the course material, you should be able to meet the objectives listed below:

Identify the advantages and disadvantages of real estate investing.
Specify the different types of real estate investments.
Describe the different avenues to pursue to acquire property.
Identify the characteristics of an ideal seller.
Specify the features of the different types of mortgages.
Identify the fees associated with a lending arrangement.
Recall the contents of a personal financial statement.
Specify the tasks to include in regional and local real estate analyses.
Describe the different types of barriers to entry for a geographic region.
Specify the issues that can increase the value of a property lease.
Specify the factors that can increase the value of a property.
Recall the different metrics used to evaluate a property.
Recall the different types of revenue that can be extracted from tenants.
Specify how common area maintenance charges are calculated.
Identify the options for negotiating with a seller over the price of a property.
Recall the reasons why an earnest money deposit is paid.
Recall the due diligence items associated with a property purchase.
Specify the characteristics of the legal entities that can be used to own property.
Identify which parties pay the various closing costs.
Recall the advantages and disadvantages of personally managing a property.
Specify the interviewing topics to be used when selecting a property management firm.
Identify which operating policies can be impacted by government regulation.
Recall the best techniques for showing a property.
Specify how coinsurance works.
Recall how the original and adjusted bases of a property are calculated.
Recall the tax impact of mortgage financing.
Specify the depreciation durations that can be applied to property.
Identify how the passive activity loss rules apply to a real estate investment.