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Chapter 2
Flow and Sources of Real Estate Funds
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Learning Objectives
• Describe how funds flow from those individuals and institutions with an excess of funds to those with a lack or deficit of funds and a need to borrow
• List key sources of funds in real estate finance
• Describe how these sources operate
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The Financing Process
• Bonds, mortgages, promissory notes
• Common stocks
Debt Instruments Equity Instruments
•Entities needing funds include households, businesses, and governments
•These entities also have funds available for lending
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Transferring Funds• Direct transfer of funds from surplus entity to
deficit entity
• Transfers through intermediaries• Thrifts• Commercial bonds• Mutual Savings Banks• Credit Unions• Insurance Companies• Pension Funds• Investment Companies• Finance Companies
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Transfer of Funds Through Securities Markets
• Money Market
• Capital Market
• Primary and Secondary Market
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