Real Estate
KNOWLEDGE EXPECTED OF: QAFP® Professionals
Highest Knowledge Level: Application
Knowledge Levels and Associated Verbs
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Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
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Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
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Application
Ability to put information to use / to use knowledge for relevant, practical purposes
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Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Determine
To ascertain / to come to a decision, such as by investigation or reasoning
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally
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Hold cursor over or click on each term to read its definition.
Owner-Occupied Real Estate
- Explain investment aspects of owner-occupied real estate, such as:
- Preservation of capital
- Capital appreciation
- Identify investment vehicles1 that are a part of the asset class of owner-occupied real estate, such as:
- Residential real estate
- Explain characteristics of an owner-occupied real estate investment, such as:
- Relative potential for loss of capital
- Level of liquidity
- Relative level of volatility
- Expected rate of return
- Determine how each of these factors may impact the suitability of an owner-occupied real estate investment:
- Time horizon
- Volatility
- Risk tolerance
- Investment objective
- Financial situation
- Personal situation
- Income
- Liquidity
- Control
- Tax impact
- Investment management process
- Economic cycle
- Cost
- Historical performance
- Performance expectations
- Explain risks associated with an owner-occupied real estate investment.
- Explain rights available to owner-occupied real estate owners, such as:
- Right to occupy the property
- Right to rent the property
- Right to participate in the profits from renting the property
- Right to develop the property
Non-Owner-Occupied Real Estate
- Identify the primary investment objectives typically associated with the asset class of non-owner-occupied real estate.
- Income stream
- Growth of capital
- Identify investment vehicles that are a part of the asset class of non-owner-occupied real estate, such as:
- Residential real estate
- Commercial real estate
- Real estate investment group
- Explain characteristics of a non-owner-occupied real estate investment, such as:
- Relative potential for loss of capital
- Level of liquidity
- Relative level of volatility
- Expected rate of return
- Explain for whom each non-owner-occupied real estate investment vehicle may be suitable.
- Explain risks associated with a non-owner-occupied real estate investment.
- Explain types of income that may be generated by a non-owner-occupied real estate investment, such as:
- Net business income / rental income
- Capital gains
REFERENCES
1 Real estate investment trusts may be included under the real estate asset class. They are covered in greater detail as an alternative investment later in this document.
KNOWLEDGE EXPECTED OF: CFP® Professionals
Highest Knowledge Level: Application
Knowledge Levels and Associated Verbs
|
Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
|
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
|
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
|
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
|
||||||
|---|---|---|---|---|---|---|---|---|---|
|
Define
To state exactly the meaning of
|
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
|
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
|
Hold cursor over or click on each term to read its definition.
Owner-Occupied Real Estate
- Explain investment aspects of owner-occupied real estate, such as:
- Preservation of capital
- Capital appreciation
- Identify investment vehicles1 that are a part of the asset class of owner-occupied real estate, such as:
- Residential real estate2
- Explain characteristics of an owner-occupied real estate investment, such as:
- Relative potential for loss of capital
- Level of liquidity
- Relative level of volatility
- Expected rate of return
- Determine how each of these factors may impact the suitability of an owner-occupied real estate investment:
- Time horizon
- Volatility
- Risk tolerance
- Investment objective
- Financial situation
- Personal situation
- Income
- Liquidity
- Control
- Tax impact
- Investment management process
- Economic cycle
- Cost
- Historical performance
- Performance expectations
- Explain for whom an owner-occupied real estate investment vehicle may be suitable.
- Explain risks associated with an owner-occupied real estate investment.
- Explain rights available to owner-occupied real estate owners, such as:
- Right to occupy the property
- Right to rent the property
- Right to participate in the profits from renting the property
- Right to develop the property
Non-Owner-Occupied Real Estate
- Identify the primary investment objectives typically associated with the asset class of non-owner-occupied real estate.
- Income stream
- Growth of capital
- Identify investment vehicles3 that are a part of the asset class of non-owner-occupied real estate, such as:
- Residential real estate4
- Commercial real estate
- Real estate investment group
- Explain characteristics of a non-owner-occupied real estate investment, such as:
- Relative potential for loss of capital
- Level of liquidity
- Relative level of volatility
- Expected rate of return
- Explain for whom each non-owner-occupied real estate investment vehicle may be suitable.
- Explain types of income that may be generated by a non-owner-occupied real estate investment, such as:
- Net business income / rental income
- Capital gains
Additional Knowledge Expected of CFP Professionals
Owner-Occupied Real Estate
- Explain how a return is generated for an owner-occupied real estate investment.
- Explain opportunities for diversification within the asset class of owner-occupied real estate, such as:
- By the country in which the real estate is located (geographic diversification)
- By the type of real estate (residential)
- Explain types of income that may be generated by an owner-occupied real estate investment, such as:
- Rental income
- Capital gains
- Identify the tax treatment (based on asset location) for each owner-occupied real estate investment.
- For the disposition of owner-occupied residential real estate
- For the income derived from renting residential real estate
- For the expenses related to the maintenance and improvement of the real estate.
- Estimate the tax impact (based on asset location) of income for each owner-occupied real estate investment.
- For the disposition of owner-occupied residential real estate
- For the income derived from renting residential real estate
Non-Owner-Occupied Real Estate
- Explain how a return is generated for a non-owner-occupied real estate investment.
- Explain risks associated with a non-owner-occupied real estate investment.
- Explain opportunities for diversification within the asset class of non-owner-occupied real estate, such as:
- By the country in which the real estate is located (geographic diversification)
- By the country in which the real estate investment firm resides.
- By the type of real estate (residential, commercial, industrial)
- Identify the tax treatment (based on asset location) for each non-owner-occupied real estate investment.
- For the disposition of non-owner occupied residential real estate
- For the income derived from renting residential real estate
- For the expenses related to the maintenance and improvement of the real estate.
- Estimate the tax impact (based on asset location) of income for each non-owner-occupied real estate investment.
- For the disposition of non-owner occupied residential real estate
- For the income derived from renting residential real estate
REFERENCES
1 Real estate investment trusts may be included under the real estate asset class. They are covered in greater detail as an alternative investment later in this document.
2 Includes rental and owner-occupied properties.
3 Real estate investment trusts may be included under the real estate asset class. They are covered in greater detail as an alternative investment later in this document.
4 Includes rental and owner-occupied properties.
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