Resource: Grading Guide
Complete the activities in the Analyzing the Risks and Rewards of Existing and Proposed Real Estate Projects as a Learning Team.
Analyzing the Risks and Rewards of Existing and Proposed Real Estate Projects
Complete the following activities as a Learning Team:
- Each team member should share their spreadsheets from their Week Two Property Research assignment with the Learning Team. The team must then evaluate each real estate investment using the financial analysis tools in Chapter Three of the text. Complete the following:
- For each property, use the formula in Ch. 3 of your text to set up a Microsoft® Excel® spreadsheet as follows:
Gross Income
Less: Vacancy and Collection Loss
Equals: Adjusted Gross Income
Less: Operating Expenses (list routine operating expenses)
Equals: Net Operating Income
Less: Mortgage Payments and Reserves
Equals: Net Cash Flow
- Calculate estimated cash flow for each property per the formula in Ch. Three (shown above) by completing the spreadsheet for each property using the data from Week Two and assuming an average of only 2 months vacancy over 60 months.
- As a Learning Team, you should review the individual spreadsheets completed by individual team members to verify the accuracy, to make suggestions as to how to improve the analysis, and to compare the individual spreadsheets and results.
2. For each property, consider a lease provision instead of the original purchase assumption. At what maximum monthly lease price would a lease make more sense than proceeding with the proposed purchase? Provide the conclusions in a Microsoft® Word document.
3. Discuss within the team what strategies could be employed to reduce and manage risk in the proposed acquisitions. Share the conclusions in a Microsoft® Word document.
Submit two deliverables: a Microsoft® Excel® worksheet that shows the computations described above, and a Microsoft® Word document of between 700 and 1,400 words that presents the strategies and conclusions.
This assignment contains a Microsoft Word document.
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