INVESTEMNT PROJECT

Objectives

This research project is designed 1) to help students become familiar with the real estate financial market and the loan origination process; 2) to apply the knowledge learned in this class to a practical case, and 3) to study some specific real estate topics in depth, according to the students' personal interests. This research project is investment-decision oriented. Students are encouraged to select topics involved in investment properties, residential or commercial, of various sizes. The grade for the project will be based on the clarity and effectiveness of the market analysis, the depth of the financial and investment analyses, the creativity in spreadsheet template design.  This project will constitute 20% of the total grade.

Recommended Sections

1. Introduction. Form a group of three or four, and determine the research objectives. Define research questions for the group.  You can begin by selecting the X, Y, and Z variables below:

X:  Property Type                         Y:  Market Area                      Z: Investor

Commercial Properties                  Downtown Boston                   LLC

Multiple Family                              Brighton, MA                          Individual Investor

Condominium                               NU Area                                 A Group of Investors

Distressed Properties                    Miami                                     Investor Profile

The goal of the research is to make an optimal investment decision based on the investor's needs, wealth, the required rate of return and risk tolerance.

2. Market Analysis. In order to provide a preliminary market analysis of demand, supply and vacancy conditions, each team is required to collect "second-hand" macroeconomic data and "first hand" micro-market data.  Search for evidence that the selected market area is a "growth" market.  Collect information needed for the investment analysis.  Estimate the price, rent and value growth based on your research results.

3. Investment Pro Forma Analysis and Modeling.  Design a spreadsheet template for the discounted cash flow model and analyze your investment.  NPV, IRR and other simple investment rules are incorporated.  Investment decisions should be based on the results from the template.

4. Financial and Capitalization Analysis.  The objective of this section is to search for the optimal financing for the investment project defined above.  You are expected to conduct research over different types of mortgages offered by different mortgage lenders.

It is recommended that you contact three or more lenders and select at least three types of mortgages.  Calculate the APR and expected yields and make recommendations based on the valuation of mortgages, the affordability, and investment objectives of the investor. It is also very important to analyze the interest rate environment and trend. Make decisions based on your analysis.

Combine the previous reports and edit the final paper. The paper can also include an appendix to include the spreadsheets and other information.  Professional writing and editing are expected.  References should be provided. The suggested length is around 20 pages including tables and exhibits.

Attachment:- Assignment Files.rar