Anderson Street Harvard Case Solution & Analysis

Anderson Street Case Solution

Important element of Charles property research

The following case illustrates the interest to invest in the real estate business where Charles was one of the buyers, who was interested to purchase the property under low rates as well as to generate income through the use of rentals received from the particular tenants. However, the case defines the importance of generating the revenues from the real estate business by the use of financing activities to cover the funds required for the investment.

Under this scenario, it was analyzed that Charlie was determined to step up into the real estate business, where he wanted to gain some experience in order to expand the business in the future. To do so, he first analyzed the entire market and the property rates, which were highly attractive in order to sale immediately. After the critical evaluation to determine which property would be suitable for him, he analyzed that there was an apartment for sale near Beacon Hill, and its worth was sufficient for the Charlie’s need.Therefore,he determined that the property had 4 units of apartments, which were of same value however the top floor was considered as one room unit, therefore it was worth 60,000.

In order toidentify the expected rate of the property, Charliewent through different methods and met different people who helped to given an idea of the property. Therefore,it was analyzed that the important element of his research was to know the expected rates of the property at the end of the period through the use of financing because of the high cost incurred by paying the interest over the principle amount given by the bank regarding the mortgage. This shows that with 80% funding from the creditor, it was important for Charlie to be aware of the risk associated with the inability to pay certain amount of payments due to the decrease in the value of the property.

Thus, with the high stake covered by the bank, it was determined that the risk factor was also high as the power of attorney was held by the creditor instead of the property owner due to lack of funds available. Therefore, it has been identified that the property near Beacon Hill required a total investment of 225,000. As a result,in order to analyze the important element, Charlie wanted to know the factors which would contribute to the success of such proposal, hence he went to various property brokers and determined the exact rate of the given property.

It was analyzed that with the high stake by the bank, it was imperative important to know the ability to repay within a certain period of time. Therefore,it is concluded that the most important element of the case was the ability to repay the loan due to the availability of the funds, which would be acquired by receiving rent from the tenants and that would be only possible if Charlie would acquire the property immediately.

To live in a building already owned by Charlie

After analyzing the conditions to hold the property, in order to generate the necessary income for repaying the debt to the bankers and to save additional amount for future investments it has been determined that living in the same property by the owner would not be preferable due to the fact that it might create some conflicts in the future according to Charlie’s wife. The impact would affectthe relationship between the tenants, whichwould not allow to increase the rate of the rent.......................

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