Real Estate Case Study

In: Business and Management

Submitted By Summer88
Words 838
Pages 4
Case Study 1
Real Estate Finance
May 2012

Given the chance to qualify up to a $10million dollar loan, these are three properties that caught my attention as possible investment opportunities. Owning apartment buildings is actually an investment goal that I hope to achieve within the next 10 years. Let’s look into these three different properties and see how they compare.

Property 1 - Expected Total Cost of Purchase – $1,750,000 cost * 15 years @ 7% interest = $2,831,220
- Monthly Mortgage - $15,729 * 12 months = $188,748 yearly
- Expected Annual Payments for Mortgage Interest – $72,000
- Expected Annual Payments for Property Taxes – $27,000
- Expected Annual Payments for Insurance – $14,000
- Expected Gross Rent Income – 14 units * $2,000/avg rent = $28,000/month = $336,00/year
- Expected Net Operating Income – $336,000 - $229,748 = $106,252/year
- Net Income vs Payments – $106,252 / $229,748 = .46 or 46% profit margin
- Conclusion –
This property seems like a gold mind. The location alone is great and in a prestigious city like Hollywood, California, the property value can only go up. The profit margin of 46% is huge and with gains like that, this location is a no brainer. I would definitely not let this property slip by, but instead jump on it, and begin to bring in the revenue. This 14 unit building is not too big where the expenses are out of control, but big enough for the rent revenue to offset by far the current expenses for the property. This is a great find and I feel very positive about this investment.

Property 2 - Expected Total Cost of Purchase – $1,850,000 cost * 15 years @ 7% interest = $2,993,220
- Monthly Mortgage - $16,628 *12 months = $199,536 yearly
- Expected Annual Payments for Mortgage Interest – $76,214
- Expected Annual Payments for Property Taxes – $9,000
- Expected Annual…...

Similar Documents

Real Estate Case Studies

...CASE STUDIES (1-4) Allison Circle – Addison, Texas Specifics: Addison Circle is a mixed-use urban village built around a circle and grid street system, with apartments and office spaces as the primary uses. The 80-acre development incorporates 2,700 to 3,000 dwelling units along with neighborhood retail, parks, civic space, and 3 to 4 million square feet of office and commercial use. It is a mainly rental project and has a density of 50 dwelling units per acre. Financing: The mixed-use project is part of a public and private partnership between Post Properties, Inc. and the town of Addison, providing a positive public relation for the development. Post Properties contributed $134,000,000 (65% debt / 35% equity) and the town of Addison contributed $10,200,000 to the development. Experience: Successful rezoning for the public and private partnership developments must use joint efforts of city staff and developer’s team. The strategic planning process incorporated the developer, consultants, and task force comprising of town staff, enabling a cohesive project. This relationship helped ensure understanding and attain a final consensus on adoption and implementation. Additionally, the development team needs time to market the concept, while cities must be proactive in the process to develop a sustainable and integrated mixed-use residential development. CityPlace – West Palm Beach, Florida Specifics: CityPlace is a mixed-use development town center that......

Words: 1180 - Pages: 5

Real Estate

...CHAPTER 1 1.1 Introduction: Real estate is a term used to describe land, including all natural attributes as well as man-made improvements of a permanent nature placed on the land thereon such as buildings. A real estate agency is a firm whose work is to bring together a buyer and seller or even landlord and tenant. The property being exchanged in this case refers to apartments, houses, office space etc. Details availed to clients include size of the property, location, available services, cost and payment plans if any etc. Setim Real Estate Management is an agency located at Westland. It currently uses a manual data entry system as well as manual processing of data. This involves handling volumes of documents stored in different cabinets. The documents contain information from owners of houses of houses for sale or rent. The process begins with, all the information of the apartment property is put onto the database and when a suitable client comes to the firm he is provided with the details of the property. If the client likes the property, the agency marks the property as booked for rent and this is reflected in the database. 1.2 Problem statement In Setim Real Estate Agency the managers are responsible for the appraisal process in various operations such as recording new property details, new buyer details and also new seller details. The appraisal process is done manually by supervisors or mangers filling out forms on the work performance of certain employees......

Words: 3284 - Pages: 14

Real Estate

...ANALYSIS OF REAL ESTATE SECTOR IN INDIA REPORT SUBMITTED TO Dr. Dennis Raj Kumar Submitted by (GROUP-9) Lavanya Sriharshini Vinod Varun Ashok P Manju harsha Pramit CONTENTS CHAPTER NO. | CHAPTER NAME | PAGE NO. | | ABSTRACT | 3 | 1 | INTRODUCTION | 4 | 2 | MARKET STRUCTURE | 6 | 3 | ANALYSIS OF INDIAN REAL ESTATE IN HOUSING SECTOR | 11 | 4 | PRICING STRATEGIES | 16 | 5 | ADVERTISING STRATEGIES | 19 | 6 | FINANCIAL ANALYSIS OF INDIAN REAL ESTATE COMPANIES | 21 | 7 | FUTURE OUTLOOK OF REAL ESTATE | 32 | | CONCLUSION | 35 | | REFERENCES | 36 | ABSTRACT EXECUTIVE SUMMARY: Real estate sector in India is assumed greater heights with the labor migration, liberalization of economy which led to raise for commercial and housing space.2012 was very sluggish year in terms of growth where GDP contribution of real estate declined from 10.6% to 6.5% due to raise in input cost, high lending rates which impacted sales as a result of inflation. Real estate sector is described as cyclic moments in terms of price over a period of time which caused fluctuations in commercial and residential markets. This resulted in change in economic policies of Indian market environment. The change in macro-economic factors such as GDP, employment rate, population growth, House hold disposal income, stock market values, Price to income ratio, Net rental yield, Household debt service ratio, interest rate / mortgage rate, demand......

Words: 8860 - Pages: 36

Real Estate

...COMPETITION COMMISSION OF INDIA A REVIEW OF THE COMPETITION ISSUES IN THE REAL ESTATE SECTOR: AN ANALYSIS OF THE POSITION POST DLF CASE INTERNSHIP REPORT DECEMBER 2012 SUBMITTED BY: Kirti Dashora, IV Year, Gujarat National Law University (GNLU), Gandhinagar A REVIEW OF THE COMPETITION ISSUES IN THE REAL ESTATE SECTOR: AN ANALYSIS OF THE POSITION POST DLF CASE ACKNOWLEDGEMENTS The successful completion of this project could not have been completed without the valuable guidance and insights of many people. I would like to thank Mr. Yogender Chaudhary, Adviser (Law) for guiding me throughout my internship period. I would also like to thank Ms. Bhawna Gulati, Deputy Director (Law) for providing me helpful suggestions regarding the project. I also thank all the officers in the Commission who provided knowledge of the working of the Commission during the rotation exercise. The library staff also provided help whenever it was required. Page 2 A REVIEW OF THE COMPETITION ISSUES IN THE REAL ESTATE SECTOR: AN ANALYSIS OF THE POSITION POST DLF CASE TABLE OF CONTENTS ABSTRACT…………………………………………………………………………………5 OVERVIEW OF THE REAL ESTATE SECTOR IN INDIA…………………………..….6 Regulation of the Sector………………………………………………………..……7 The Real Estate (Regulation and Development) Bill, 2011………………………....7 ABUSE OF DOMINANCE IN THE REAL ESTATE SECTOR……………………..……9 Relevant Market…………………………………………………………………..…9 Assessment of dominance………………………………………………………..….9 Abuse of......

Words: 10071 - Pages: 41

Sinyi Real Estate Case

...Sinyi Real Estate in Taiwan As countries in East Asia experience rapid economic growth and transformation, many companies ignore ethical business practices for profit maximization. This goes against traditional Confucianism, which prioritizes customer satisfaction and seeks to avoid exploiting customers for profits. Sinyi, founded by Chun-Chi Chou in 1981, has been one of the most successful real estate companies in mainland Asian markets. Chou has successfully developed a people-oriented culture, which has lead to an excellent corporate image and satisfied customers. However, challenges have accompanied Sinyi's recent growth into Asian markets, where unethical business practices exploit clients for profit maximization. Exponential growth at Sinyi has made it extremely difficult to maintain a uniform ethics-based culture. Chou plans to expand his business while maintaining rigid ethical principles focused on the welfare of customers above profit maximization. Sinyi has strived to transmit this ethical culture to employees and the community by creating continual education and outreach programs. In a chaotic Taiwanese real estate industry, Chou has realized that a "people centered" business is key to success. While some competitors use price fixing to cheat customers, Sinyi has taken affirmative actions towards applying social responsibility in management concepts. In accordance with Confucian teachings, Chou believes that the needs of both clients and employees......

Words: 1820 - Pages: 8

Real Estate

...Relationship between Real Estate and Financial Sectors in Dubai Economy Dr. Eisa Abdelgalil Data Management and Research Department Table of Contents Table of Contents............................................................................................................i ‫......................................................................................................................ﻣﻠﺨﺺ ﺗﻨﻔﻴﺬي‬ii Executive Summary ..................................................................................................... iii 1. Introduction................................................................................................................1 1.1 Background ..........................................................................................................1 1.2 Objective ..............................................................................................................1 1.3 Research questions...............................................................................................1 1.4 Methodology and data..........................................................................................2 1.5 Outline of the study..............................................................................................2 2. Dynamic of Real Estate Market.................................................................................3 3. Impact of Real Estate on Financial Institutions ........................................................

Words: 6149 - Pages: 25

Real Estate Study Questions

...price, at least by the amount of the transaction costs. b. most probable selling price will always exceed investment value, at least by the amount of transaction costs. c. investment value may be greater or less than most probable selling price, and the difference will approximate transaction costs. d. investment value need not be closely related to most probable selling price. 5. Which of the following is a real estate investment decision? a. Purchase of a $50,000 interest in a partnership which develops office buildings b. Purchase of a six-flat apartment building c. A new reservoir built by the U.S. Government d. All of the above 6. When considering a real estate investment opportunity, which of the following issues need to be addressed? a. Estimates of total costs and benefits b. The style of the architecture of the building c. The timing of disbursements and receipts d. (a) and (c) above 7. Cash flows for real estate investments may come from: a. rental. b. refinancing. c. tax savings. d. all of the above. 8. Rational real estate investment decisions require: a. a coupling of estimated costs and benefits with a forecast of the timing of disbursements and receipts. b. choosing between uncertain costs and certain present benefits. c. a methodology for ranking attainable combinations by their variety. d. computer expertise. 9. Active investors (as opposed to passive investors): a. invest primarily in debt instruments. b. invest......

Words: 2258 - Pages: 10

Real Estate

...Angus Cartwright IV – Case Study in Investments – FI 535 – Spring 2015 I. Paper: Short 3-5 page paper explaining the following. It should be double spaced, Times New Roman, Justfied alignment. 1. Tell me about the properties, people and any information on each you feel is relevant. Angus Cartwright IV is an investment advisors that is hired to work for two of his cousins John and Judy DeRight, two long-time family clients. John and Judy are at a stage in their life where they are interested in diversifying each of their portfolios to include investments in real estate assets. Both John and Judy want to purchase a property that is large enough to attract a professional real estate management company, and attain a minimum leveraged return of 10% after tax. In addition, both parties feel that real estate will give them the benefits of diversification, protection from inflation, and some tax advantages. Cartwright has four properties he believes to be perfect for his client, however, he needs to narrow them down to just one property to each client. John DeRight is currently in retirement and he has all of this wealth in securities; primarily in common stock of a company that bought his start up company and has $750,000 in dividends paid on the stock as well as another $250,000 to invest in a property. Judy is a much younger investor and she is the sole stockholder of a small-sized chemical company. Judy has accumulated over $45 million to invest in and being at......

Words: 1117 - Pages: 5

Real Estate

...Joe Morris Real Estate Extra Credit Assignment Chapter 4 Ad Velorum Taxes are property taxes that are based on the market value of the property. Affordable housing allocation is a requirement that encourages or mandates a "reasonable and fair" component of new housing construction for lower-income families. Assessed Value is the value determined as the basis on which an owner's property tax liability is calculated, usually a percentage of market value Board of adjustment refers to that in local zoning law, a board of citizens, appointed by the governing body, to hear and make determinations on appeals for zoning variances. The board of adjustment is somewhat unique in that its determinations are final rather than merely recommendations to the governing body. They can be appealed only in court. Comprehensive Plan is a local government's general guide to a community's growth and development based on the community's goals and objectives. Concurrency is the requirement that public facilities and services, including roads, sewers and schools be available at the same time new development is completed Condemnation is the legal procedure involved with eminent domain, the right of government to acquire private property, without the owner's consent, for public use in exchange for just compensation. Dedicated (property) is the conveyance of property form a private owner to government for public use. Common examples are the dedication of streets, parks, or other areas to local......

Words: 2207 - Pages: 9

Hamilton Real Estate Case

...My BETNA invest in residential real estate where expected profit is $6m My Walkaway (reservation price) I wish not to exceed $52m where I could make around 20% profit, however $60m would be my calculated walkaway price ($66 is breakeven and my BETNA is to invest elsewhere with an estimated $6m profit. I would be willing to take this deal with the same amount of profit expected on the alternative investment with residential properties, in order to gain more experience and reputation in the commercial real estate industry.) Their BETNA take their business elsewhere, probably to a residential real estate builder ($36m is the lower-end estimate) Their Walkaway price probably $36m (lower end of value for residential use) ZOPA (bargaining zone) assuming their reservation price is $36m, between $36m and $60m. Commercial use 1.5 to 2 times as much as the value of residential use (apartment buildings) Value of property for Estate One if used for commercial use $66m (break-even point) Zoning laws in Hamilton don’t allow for commercial development of the property. So, if Pearl investments has any offer at all, it will be from someone interested in developing the land for residential use. We plan to use it for commercial use because of the advantageous knowledge of the zoning laws due to our strong ties with the local government of Hamilton. We know for sure that the rezoning will allow for commercial development in Hamilton within months. This gives us an advantage......

Words: 1738 - Pages: 7

Long Island Real Estate Study

...1. Mo and Nora are two real estate agents who wish to examine the relationship between the selling price (in K) of a home and its size (measured in sq ft). So they conducted a random survey of 90 houses in different locations. Some of the other variables they took into consideration are land size (acres), # of rooms, # of bathrooms, and whether or not a house has a pool. 2. a. Regression Analysis: AppraisedValue versus House Size(sq ft) The regression equation is AppraisedValue = 49.10 + 0.2074 House Size(sq ft) S = 121.230 R-Sq = 58.7% R-Sq(adj) = 58.3% Analysis of Variance Source DF SS MS F P Regression 1 1841760 1841760 125.32 0.000 Error 88 1293302 14697 Total 89 3135062 Fitted Line: AppraisedValue versus House Size(sq ft) 2b. The regression equation is AppraisedValue = 49.10 + 0.2074 House Size(sq ft) 2c. If the size of the house (sq ft) is 0, then the appraised value of the house is $ 49,100. The appraised value increases by $ 207.40 per additional square foot of house size. 2d. 1841760/3135062 = 0.587 The coefficient of determination (r-sq) is 0.587, hence the linear relationship between X and Y is generally neutral because not all of the variation in Y is explained in X. 2e. Sq root (1293302/n-2)= 121.23 The Standard error of the estimate Syx is 121.23 K which represents the average variation in the house prices around the fitted regression line. In other words,...

Words: 3625 - Pages: 15

Real Estate Law Final Study Guide

...| A fee simple absolute estate has a potential infinite duration and unrestricted inheritability | True | A fee simple on condition subsequent estate automatically expires on the happening or nonhappening of the event stated in the deed of conveyance or the will creating the estate | False | A fixture is classified as real property | True | A foreign person affidavit is for the benefit of the purchaser | True | A foreign person affidavit is for the benefit of the seller | False | A foreign person affidavit is signed by the purchaser | False | A foreign person affidavit is signed by the seller | True | A hazard waste indemnity found in many real estate contracts is for the benefit of the seller | False | A judgment that has been recorded in the public records becomes a lien on all property of the judgment debtor owned at the time of recording as well as any future property acquired by the debtor | True | A landlord's basic remedies for tenant's default under the lease are | Sue the tenant for performance and terminate the lease | A lease is entered into between landlord and tenant on May 10 and provides that the tenant shall take possession of the premises on August 1. The lease is effective and commences on | May 10 | A life estate may be for life of a person other than the owner | True | A life estate must always be for the life of the owner | False | A life estate owner must share the income generated from the life estate with the owner of the......

Words: 3883 - Pages: 16

Real Estate

...TRAINING REPORT ON “Growth of Real Estate Sector with in 5years” A case of Corporate Real Estate Solutions Submitted to MAHARSHI DAYANAD UNIVERSITY, ROHTAK In partial fulfillment of the requirements For the award of the degree of MASTER OF BUSINESS ADMINISTRATION (INDUSTRY INTEGRATED) (II SEMESTER) Submitted by: Name: Alok Kumar Upadhayay Regn. No. Roll.No. DAV INSTITUTE OF MANAGEMENT (ELC CODE: 080923013) NH-3, NIT, FARIDABAD. JULY 2011 DECLARATION I hereby declare that the Training Report conducted at Corporate Real Estate Solutions,Delhi. Under the guidance of (Ms. Aakrity) Submitted in Partial fulfillment of the requirements for the Degree of MASTER OF BUSINESS ADMINISTRATION (Industry Integrated) TO MAHARSHI DAYANAND UNIVERSITY, ROHTAK is my original work and the same has not been submitted for the award of any other Degree /diploma /fellowship or other similar titles or prizes. Place: Date: Alok Kumar Upadhayay Regn.No: Roll No. 2 ACKNOWLEDGEMENT First and foremost, I extend my deepest thanks to my mentor and guide Mr. Vishal Srivastava, Director – Corporate Real Estate Solutions, for giving me this opportunity to work in such a prestigious organization as well as for giving me a wonderful thesis. Without his constant guidance and feedback, I would have never been able to complete the training, I did. I am thankful to Ms. Aakrity, whose consistent support and cooperation showed the way towards the successful completion of the......

Words: 15995 - Pages: 64

Real Estate

...subject area i.e. the impact of middle class on the real estate sector. The chapter links to the Research Objectives and contains secondary analysis and descriptions, which may provide a platform for later evaluation. According to a research by Deutsche Bank, World Bank, McKinsey and CNN- IBN(Sources should be with year example So Deutsche Bank,(Year) ), the total Indian middle class ranges from 300 million to approximately 360 million people; this comprises less than 30 percent of the total population of 1.2 billion (Please refer Chart 1 below). For multi-national corporations and domestic real estate companies, the middle class in India thus presents significant business opportunities. Over the last several years, the overall growth in the real estate sector has burgeoned and this explosion is primarily due to the aspirations of the lower middle, middle and upper middle class of India. Apart from this a whole new range of investment options in the real estate sector has increasingly gaining acceptance. However, keeping in mind the exposure and increasing needs and desires of the middle class, not many significant efforts have been made towards educating the masses. Dire improvements are needed to match the needs of the growing middle class and educate the masses about the real estate sector, which primarily is an unorganized sector. In order to ensure that the growing middle class integrates and understands well about the real estate, the right education has to be on......

Words: 3235 - Pages: 13

Mumford & Sons | Rate the page from any comic book or manga above you | download