Applied Real Estate Market Analysis

Real estate is an authorized organization that has been allowed by a set of laws to permit improvements to be made on the land to suit the various human populations. The real estate projects include immovable constructions of building such as homes, schools, wells and fences. The entire real estate phenomena includes the building of several homes and selling them to individuals who will personalize the building after the real estate company has obtained the funds that it used to construct the building with additional profits. Because of the increase in demand of household, the real estate system has really gained market in the current world since it is considered to be more reliable and cheaper than the normal process of building of one own house (Brown 113).

Constraints on the development of the project

There are various limitations that are posed to real estate especially on the development of the various projects. Some of this limitations includes lack of the available material that are used in the building projects, lack of skilled labor, extremities in the weather conditions,  lack of potential customers who are able to purchase the already constructed houses.

Lack of Raw Building Materials

The real estate system of building homes also faces major challenges in the entire process. For instance, the real estate company can allocate its clients to build a home in a given location where the necessary building materials are difficult to be accessible (Smith 141). This makes it very hard for the developing of the houses since the entire process will require large amount of capital before it is completed and well furnished.

Lack of Well Trained and Skilled Man-Power

Another limitation that the real estate suffers is the lack of well trained and skilled man-power that is very vital for the entire process of constructing the new homes. Since the real estate organization builds the different homes according to latest designs, it endures the problem of searching for new employees who are well versed with the latest house construction designs. Although the real estate ahs got plenty of unskilled labor, the skilled labor has been a persisting problem that has affected the company for a very long duration of time.

Unfavorable Weather Condition

The weather condition is another aspect that severely affects the developed of the real estate. Since the real estate has various projects internationally, weather climates are also a major threat to the house and mortgage company. Different materials that are used in the construction of the houses have different reaction to various weather conditions. This makes it very difficult for the success completion of the house mortgage because the building might take long to get completed or might get destroyed after its completion because of the weather conditions. Some of the weather conditions such as snow are also not appropriate for both the building and the people that are involved in the building processes (Lynn 145).

 

 

Lack of Potential Customers

An extra constraint that is associated with the real house building project is the lack of potential customers who are able to purchase the already constructed houses. Most of the houses that are constructed by the real estate organization are of modern class and are of high standards especially the homes that are constructed in the modern towns and cities. Therefore, the real estate experience problems when it comes to the buying of the houses since the customers do not meet the expected tagged price of buying the houses. The customers who come to buy the houses do not reach the expected amount of price that the real estate organization would wish to sell the houses.

How large will the market be in future periods and what proportions can be attracted to the subject site?

The market of the real estate will have increased and become wider in the future to ensure that it meets the desire and needs of the customers that will be willing to acquire the built homes. The market will be internationally recognized and the number of homes bought will have increases since the price of land and building of houses will be more expensive than that of buying a home from the real estate company (Kahr & Thomsett 194). The number of proportions of people that will be interested in the purchasing of the mortgage of the real estate will increase since people have gained trust in the quality of the house that are build by the real estate company.

The graph indicates that the prices of the houses in the United States has gradually increased from twenty five thiousand dollars ($ 25,000) in the early years of 1970 to almost two hundred and twenty five thousand dollars ($250,000) in the current years. This is to indicate that most citizenz in the United States opt living in retail houses that have been built by the real estate company rather than self-built houses since they are expensive and lrequire more money for maintaince and renovations.

How much might be charged in the market?

The market of the real estate might change severely in the future because more advanced facilities are yet to be introduced into the house market. This implies that the homes and mortgages that are being constructed by the real estate will be outdated in the coming years. For this reasons, the real estate must formulate strategically plans that should be implemented in the building of the homes to make them still be customer friendly even in the more advanced years that are yet to be experienced.

The company should also come up with measures to ensure that the houses are renovated in every ten year with modern facilities and advanced technologies thus ensuring that they last for many more years and are still are equipped with the latest designs in the future (Kim Hin Ho 165).

What types of units are demanded in the market?

The type of home units that the real estate are building of late and are highly in demand in the market places are the family based units. This is because families are the most involving parties that are associated with settling down activities. Therefore, the types of units that are in high demand and build by the real estate organization is the home that has several units so as to be able to accommodate all the family members. This is also for reasons that the family has a lot of machinery and resources such as cars, washing machines and various refrigerators in conjunction with machinery. This is also the main reason unto why the homes that contain more than one unit are more demanded by the customers than the other numbers houses with smaller units.  An example of a unit that might be in demand in the market is a warehouse.

Warehouse

The amount to be paid will merely depend on the services offered by the institution associated with the building of the real estates. From the information I got from the bank representative he gave me the current rates on the commercial real estate loan on the warehouse. In a period of 15 years the loan attracts 7.25% from which, 1% is charged on the original fee, the recording cost is rated at $100. The loan may also attract $2,000 at the rate of 4% if the mortgage is not cleared. In essence the penalty is received after the grace period of 10 days. From lee, a student, he said the rent payable for the warehouse under the real estate was rated at $5 per sq ft. This was for the heated gross; $3 was charged for warehouses that were for the unheated ones.

The warehouse is a place that is used by a company for various functions such as receiving of commodities from various destinations, storage of the commodities before they are collected by various vendors, packing of the goods into the various vehicles and also record storage especially the accumulation of the orders (City of St. Cloud Minnesota, 2008).

The Sizes That the Units Should Be

The units and the houses that the real estate organization should be increased in the number of rooms since the current population and the category of people that are interested in the buying of the houses are mainly the families that have more than one member. Therefore, the designs of houses that the organization should include more than one unit to make sure that the homes are bought in large numbers. The units should also be of large sizes to be able to accommodate the numbers of the family members, family relatives and relations (Ruddock 173). The homes should also contain more number of units that are large to accommodate the family friends that might visit the person at any given time of the day.

The homes that are build by the real estate organization should contain units that are spacious to accommodate that various facilities and machines that are used in the modern homes. Every home that the real estate organization builds should be able to satisfy the needs of the customer by providing the enough room and space that is expected. The homes should have more rooms to accommodate the household’s requirements such as the seating room, dining room, master bedroom, visitor’s room and the other required rooms in the modern houses.

 

 

What amenities or special facilities should be provided?

Inbuilt Sauna and Steam Showers

The modern houses that are constructed by the real estate should contain modern facilities so as to satisfy the desires of the recent people. Modern people are used to the advanced technologies that are found in the recreational places such as hotels and the coastal beaches. Therefore, the real estate should include such facilities to attract more clients who will buy the various houses thus making more profitable gains. The special facilities such as sauna and steam showers should be the first special facility that should be installed into the houses by organizations to attract more customers to purchase the houses and mortgages.

Installation of Internet Services

Another facility that should be installed into the houses to entice the customer and increase the number of houses of real estate being bought is the internet services. The entire world depends on the internet for communication purposes thus reducing the expenses of traveling from one place to another. For this reasons, the real estate should also consider installing the internet services into the homes to ensure that the needs of the customers buying the houses are satisfied. Modern emergency facilities such as fire extinguisher should also be provided into the houses to ensure that the people living in the houses are safe from any harm (Smith 162). This will also attract more people in the buying of the houses since they will be assured of safety from the fires.

 

 

 

Work Cited

Brown, Roger. Private real estate investment: data analysis and decision making, Academic         Press advanced finance series, London: Academic Press, 2005

Lynn, David. Active Private Equity Real Estate Strategy, Volume 188 of Frank J. Fabozzi series, New York: John Wiley and Sons, 2009

Kahr, Joshua., & Thomsett, Michael. Real estate market valuation and analysis, Volume 265 of       Wiley finance series, New York: John Wiley and Sons, 2005

Kim Hin Ho, David. International real estate: Asia’s potential from a research perspective,            California: NUS Press, 2007

Ruddock, Les. Economics for the Modern Built Environment, Chicago: Taylor & Francis, 2008

Smith, Halbert. Real estate perspectives: an introduction to real estate, second edition, Florida:   university of Florida, 2006

City of St. Cloud Minnesota, 2008. http://www.ci.stcloud.mn.us/pd/PublicTrainingandbrnbspnbspnbspEvents/tabid/534/Default.aspx, retrieved on 18th November 18, 2010.

 

 

 

 

 

An exhibit of the appearance of the warehouse that the real estate is yet to construct for the purpose of serving customers demand.

 

 

 

 

 

 

 

 

Financial Analysis of the warehouse 

The warehouse to be constructed should operate on the Cost Benefit Analysis. In essence, this means that the costs that are incurred in building up the warehouse should not outweigh the benefits. Considering the information provided for the warehouse; the warehouse uses an approximate of $5,500 for it is construction cost. The rate is charged at 7.5% and if the warehouse is approximated to use a total amount of 15year then this means; annually, the mortgage is charged at the rate of 7.5% /15years which is 0.5% per year. Therefore, in a single year the construction cost will be determined by evaluating on the total cost and the annual percentage. The amount obtained should be beneficial to the company as opposed to the costs incurred.

 Return on Investment = $ 9,345

Return on Equity = $ 3,845

IRR internal rate of return = $ 1, 655

The amounts of each of the aspects of the financial analysis of the warehouse were found using the specific formulas of each component.

Direction of the Map of Saint Cloud

The warehouse is located in Garches which is one of the major towns in Saint Cloud.