20 Questions
What is the definition of working capital?
Money needed for day-to-day operation of the business
What is debt capital according to the text?
Borrowed money appearing as a capital asset
What are examples of money markets mentioned in the text?
Short-term certificates of deposit
How are Treasury Bills (T-Bills) relevant to real estate developers?
Real estate developers can buy T-Bills as an investment
What types of investments are included in the trust fund options for pre-need companies?
Direct loans to financially stable corporations, real estate properties, and equity capital
What is the purpose of regulating the investment of the trust fund of a pre-need company?
To ensure liquidity and capital growth to meet actuarial reserve liabilities
What is a characteristic of equity financing for pre-need companies?
It involves selling a portion of a company's equity in return for capital, with no obligation to repay the money acquired through it
What distinguishes venture capitalists from individual investors and angel investors?
They specifically target businesses with high growth potential, competitive advantages, and solid prospects for success
What type of financing involves selling shares to the public?
Equity financing
Which financing option involves borrowing money and paying it back with interest?
Debt financing
What type of financing involves creating diversified portfolios of properties?
Real Estate Investment Trusts (REITs)
Which financing option represents the amount of money returned to shareholders if all assets were liquidated?
Equity funding
What is a characteristic of venture capitalists' involvement in a business?
They demand a significant share of ownership and often insist on managing the company's activities.
What is a key feature of Initial Public Offerings (IPOs)?
They involve selling company stock shares to the public to raise funds.
What does syndication involve in real estate financing?
Pooling funds of developers and other investors to create a separate company for a specific project.
What is a characteristic of pre-selling as a real estate marketing strategy?
It allows developers to generate revenue before project completion, but buyers face the risk of project failure.
What type of real estate is considered 'improved' for the purpose of mortgage?
Land with permanent building or buildings erected
In what circumstances can the owner of the land be exempted from being a party to the deed of mortgage?
When the land owner is the Government of the Philippines and a long-term lease is executed in favor of the owner of the improvements
What is the maximum percentage of its net worth that an insurance company can invest in real properties serving as its main place of business and/or branch offices?
20%
Under what condition can an insurance company acquire real property for the production of income?
The cost of the acquired property and the estimated cost of its improvement should not exceed 25% of the company's admitted assets
Study Notes
Real Estate Financing and Investment Options
- Venture capitalists demand a significant share of ownership in a business for their financial investment, resources, and connections, often insisting on involvement in managing a company's activities.
- Venture capitalists typically get involved early and exit at the IPO stage to reap profits.
- Initial Public Offerings (IPOs) involve selling company stock shares to the public to raise funds, occurring in a later stage of development.
- Crowdfunding allows individual investors to invest small amounts via online platforms to help a company reach financial goals.
- Syndication involves pooling funds of developers and other investors to create a separate company for a specific project, with Joint Ventures (JVs) being a common approach.
- Pre-selling is a successful marketing strategy for developers, allowing them to generate revenue before project completion, but buyers face the risk of project failure.
- Insurance companies engage in real estate lending as an investment, with life insurance companies preferring larger real estate projects and insisting on equity positions in projects they finance.
- Life insurance companies may lend to policyholders using the value of their policy as security, with specific regulations on real estate mortgage loans.
- Real estate mortgage loans have limitations on loan amounts based on the appraised or market value of the property and maturity period.
- Approval by the Commissioner is required for loans secured by mortgages on improved real estate if the improvements do not belong to the landowner.
- Insurance companies are regulated under RA 10607, which defines their activities, including making insurance contracts and reinsurance business.
- Insurance contracts involve one party indemnifying another against loss, damage, or liability arising from an unknown or contingent event.
Test your knowledge of real estate financing and investment options with this quiz. Explore venture capital, IPOs, crowdfunding, syndication, pre-selling, insurance company lending, real estate mortgage loans, and relevant regulations.
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