This paper deals with the proposed investments of around Aus $200,000, by an investor by the name of James Kirkwood in property situated in the Victoria Park locality in Perth, Western Australia. (7/80 King George Street, Victoria Park, WA 6100 to be precise).
Research Current Rents and selling prices for this type of property in its locality:
- Outright buying of two-bedroom Apartments in Victoria Park begins from AUS$ 299,000.
Current rentals could be seen as follows:
Obviously there would be differences in the quantum or price, based on the number of rooms, number of bathrooms, locality and otherwise. Many famous and cherished souls in the unit died uncared and unheard of. Many of them were even degraded and not sought after by their own kith and kin and were forced to undergo religious change forges in order to escape the wrath of more majority and powerful rulers.
Check the patterns of past rent and prices for this type of properties and how properties in this locality have compared with average changes in Perth in recent years:
There has no doubt been steep appreciation in the prices of land in this locality, since this is an uptown location having people belonging to the economically well off and urbanized sectors either owning or living in these locales.
Property loans seem to be a more attractive proposition when compared to shares since the loanees could claim up to 90% or even 97% of the property value as a loan while in the case of share loans this is restricted to just 70%. One of the tax advantages with this greater leveraging is that you can claim a greater tax deduction on the interest charged on the loan.”
There has been a slight increase in rent in the Victoria Park area but even know they are “affordable house prices”
This is when Victoria Park Locality is compared with other areas in Perth.”The most recent median house price for Perth is $719,000 and the median unit price is $435,000.”
Forecast how rents and prices are likely to change over the next five years, based on the past patterns, the current direction of the economy and changes in the locality.
Rent and prices are going to increase in the future. This is because if one were to go by earlier years’ figures, all this has changed and newer controversies have erupted. Although worldwide recession continues to plague the service industry, especially civil land the prices of land and property in Perth, and especially in urban settings would stabilize in future.”Because both supply and demand are locational and Time-specific, real estate market prices are highly segmented.”
Further, it is also necessary to keep a good vigil on supply-demand nexus in order that production is not hampered due to lack of materials or some critical component. This is precisely the reason why more innovative thinking and enforcement is necessary for the real own thing, that has gained massive support.
Use this information, the details of any existing leases and the current and projected operating expenses to estimate how much this property would cost to acquire:
There would definitely be phenomenal growth in the industry, and therefore fares have to be scaled down to accommodate these kinds of power-sharing. Besides, it is also necessary that after consideration of various interests groups, the best interest of the organization also needs to be enforced. Therefore, it is necessary that works are undertaken that could make it less complicated and forbearing are undertaken for the pleasure of the royal household, failing which certain death would ensue. There are also reasons for enforcing more stringent and royal dictates, which, in most cases, needed time and efforts for its execution, thus leaving time for other pursuits of intents and purposes.
The net (operating) income over the next five years and the resale proceeds at the end of five years. Make sure your report shows clearly how you have estimated the outlay and projected the cash flown:
From the calculations shown, it is seen that the Net Present Value calculation has been positive at $1160. Thus, prima facie the project may be acceptable since it is positive and yielded a handsome result. The outlay has been estimated in much the similar way of first computing net incomes or gross rents and out of this reducing the property expenses in order to arrive at the net incomes. Thus, due to variations in the incomes over time, the final net incomes would be increasing over time during the five year periods, and is able to reach concrete figures of IRR, Internal Rate of Returns, required property returns and NPV or net present value, which is seen as the major dictator of the investment health of the company. “A net present value (NPV) includes all cash flows including initial cash flows such as the cost of purchasing an asset, whereas a present value does not. The simple present value is useful where the negative cash flow is an initial one-off, as when buying security (see DCF valuation for more detail)”
Both the computation of outlay and projection of cash flow are based on estimation and rising incomes in future years. This again is subject to several parameters and conditionalities that need to be fulfilled.” An NPV also often relies on uncertain forecasts of future cash flows. How much of a problem this obviously depends on how uncertain the forecasts are. The answer to this issue could be in terms of evaluation of different NPV options given discrete discount rates and projections, which would give rise to both bad and good NPV results, and chance allotments could be made using the “Monte Carlo technique.”
Reference List
2009. NPV. Graeme Pietersz. Available from internet, Web.
Geltner, David M., et al. n.d. Commercial real estate: Analysis and investment. The USA. Available from internet, 2010. Web.
Heath, Jim. 2010. Tips on where to live in Perth. Viacorp, Web.
Perth property data & trends. Realestate.com.au. 2010. Web.
Peter, K. 2010. Why invest in property? Realestate.com.au, Web.