Course Discussion Questions

Discussion Questions 20
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Answer the questions that are listed using the information written in the passage above the question as well as referencing the pickney st case.
Prompt 1
Edward Lee requires a cash flow-producing property, and choosing the right location was essential as the area affects the current and potential property value. Furthermore, housing rules and regulations affect investors’ willingness to invest in real property in certain areas more than others. Lee is already familiar with the Beacon Hill area. However, he needs to find more information that will inform his decisions about the property market there and surrounding areas.
1 Question:  As a first-time real estate investor, should Lee be looking to maximize his profits in a riskier, high-growth area (i.e. the early 2000's Las Vegas housing boom) in order to quickly grow his personal balance sheet, or should Lee be conservative by investing in slower growth, but safer, areas like Beacon Hill? 
The question of whether Lee needs to consider a riskier, high-growth area or conservative slower growth depends on his appropriate for risk and whether he has the patience to wait for returns in the short-term or long-term. Thus, Lee needs first to get information about the different property markets. There are different factors affecting property markets, and rankings on growth potential indicate that the investment is likely safe.
2 Once we have determined an area we believe will have a high occupancy, what types of properties (single-family, duplex, apartments) should a new investor begin with to gain firsthand experience with investing? 
Lee already knows about the Beacon Hill neighborhood. However, he needs to get familiar with the demand for property in the area and what the people prefer. For instance, some properties are more likely to have better than average long-term asset appreciation in the neighborhood. There is heterogeneity in the real estate market and getting local knowledge of the community is necessary to make decisions o the type of property he should choose. Both the demand for different real properties and return on investment are priorities in decision-making.
3 Question: What is other important information that Edward may have missed in his research and how could these help him better assess an investment opportunity in Beacon Hill?
Location and the demographics of the area have a direct impact on the property value. Physical characteristics of the property and the surrounding areas, including social amenities and infrastructure, ought to be considered. Wealthy neighborhoods tend to have more amenities, and investors are more willing to bring businesses closer to the people. There are higher rates of property delinquency in poor areas and when the unemployment rate is rising.
4 Question? We learned about how neighborhoods change over time. Between Real Usage Value & Time – Where do you see Beacon Hill in the property cycle and please explain why?
Bonnie Wall
Land and real estate are mostly appreciating assets, and location affects how people build their net worth. However, Lee first needs to get financing. In area...