Real Estate Study Questions

There are three widely recognized approaches to developing an estimate of fair market value. They

Exhibit 1 gives us an overview of each of the properties, such as the gross purchase price, the depreciable base, estimated sales prices, the amount of the first mortgage and so forth. These assumptions are significant to the calculations used throughout the entire case.

The next property presented to John and Judy was Ivy Terrace, an 80-unit apartment under construction in Arlington, Virginia. Even though this property has the lowest Net Present Value ($619) and lowest monthly mortgage ($5,500), there exist the greatest increase in Cap Rate from purchase to sale price (9.12% to 9.51%). Based on calculations, 72% of total benefits will be derived from cash flow while 41% of total benefits will come via future value. This property has the second highest After Tax Cash Flow (ATCF) but has the lowest remaining loan balance at sale ($4583.03), net cash from sale ($4868.34), net book value ($5545.45), and capital gains. Ivy Terrace has the highest depreciation and has the lowest percent of total benefit from future value and lowest amortization and reserve among the four properties. Finally, the developer of Ivy Terrace guarantees 93% occupancy.

Mr. Alexander is new to the property management arena and has no experience with multi-family dwellings. Due to our clients limited capital he cannot afford to hire a property manager. Because Mr. Alexander will also be working his normal full-time job, and doing the property management as a ‘side-job’ the ability to manage multiple subcontractors will be highly inefficient and could lead to disgruntled tenants and higher vacancy rates.

The real estate division was estimated to have a fair value of $13,890,000. This was determined by totaling the number of lots expected to sell within the next four years and multiplying it by the price per lot of $180,000. After determining total lot sales, a 20% discount rate was applied as suggested by current market conditions. Given the unique nature of the real estate development, it is not believed that there are any comparable developments to find a market multiple.

Question 1. 1. (TCO B) All of the below would be considered good selection criteria for a buyer to use to select a seller, except (Points : 10)

Let’s begin with what fair market is and how that number is produced. Fair market value is the “Fair market value is an estimate of the price at which real property would change hands in an arm’s length transaction. That is, a voluntary transaction between a willing buyer and a willing seller, both having equal bargaining power and a reasonable knowledge of the pertinent facts.” (https://fitsmallbusiness.com/what-is-fair-market-value/). Fair market value is established in three different ways, comparative market analysis, having an appraisal done by a

The definition of fair value market value is the price at which the property would change hands between a willing buyer and willing seller, neither being under compulsion to buy or to sell and both having reasonable knowledge of all relevant facts.

Real estate speculation is a highly profitable form of property investment. Speculators go through three stages.

This case involves an investigation of the factors that affect the sale price of oceanside condominium units. The sales data were obtained for a new oceanside condominium complex consisting of two adjacent and connecting eight-floor buildings. The complex contains 200 units of equal size (approximately 500 square feet each).

Consequently, taking into consideration the disadvantages of REITs as opposed to purchasing a commercial real estate directly, it is observed that the greatest adverse to

Moreover, this sector has ended up creating a win win situation for all the stakeholders who happen to hold direct or indirect interest in the same. This is one of the vital reasons that has contributed to the growth of real estate business in general, which is exactly why we see a number of real estate companies and agencies laying base in every nook and corner of the street.

Both the supply and demand sides of the real estate asset market consist of investors; all of these investors are operating within

Investment sales can sell themselves in the sense that there are investors willing to pay a certain price for a property based upon an economic return they deem appropriate for that asset. The real role of the “broker” is to “market” the property to achieve the best possible price in the shortest period to a buyer that has the financial ability to close on the transaction.

This section will address who are the investors, what types of property they are buying and where; their motivations and it will conclude by looking towards the future.