Property Analysis in West St Brompton - Case Study Example

Property Analysis Student’s Name: Instructor’s Name: Course Code and Name: University: Date Assignment is due: Property Analysis Property Description This residential property has all the legal requirements needed. It has been appraised by the surveyors as being built on a private owned land. The county government has approved the house’s construction with the plan number being 26485, and construction later done by a certified contractor. All the legal fees that include land rates are settled. The land on which it is built has a title deed, with its number being CT6070/409, implying it is recognized. Therefore, the house satifies all the legal requirements needed for it. The house is located in West St Brompton. This is a residential area. People in this neighborhood work some distance away. There are some provisional facilities in the neighborhood. To start with is a sufficient road and rail. These are the transport means obtainable in the area. It has a shopping centre where residents go to get their daily necessities. It also has restaurants where residents can take their meals or go for entertainment. Sports have been provided by having various fields, including pools and tennis courts. It is also supplied with clean water and sanitation facilities. It is also renowned for its calmness, with negligible interferences of other regions outside it. There is substantially low crime rate. There are a variety of people who stay there ranging from students to workers at the various workplaces. Therefore, there are people of all races and cultures who live in it harmoniously. There is a constant managerial team that keeps on working to see the neighborhood is in the right condition. These ensure cleanliness and repair is done. There are no restrictions, like in some other neighborhoods where smoking or rearing some animals is not permitted. The cost of living is not as high compared to others. This is due to competition from the many sellers who are available. The site on which the building is located is flat with trees and grass lawns. There are other surrounding buildings with the nearest being 50 meters away. The space allows for more privacy. The site is suitable to view a forest to the north of the locality. Various activities are available for residents as farms are not far from the neighborhood. The backyard to the house is has a beautifully trimmed hedge, making it an attractive site. A space is available in the back, where there can be more establishments. There are other man made features like the equally beautiful houses. The site gives a feeling of relaxation from the noise and congestion in towns. The building has its walls made of stones while the roof and floor are wooden. It has an area of 146 square meters. It is a one storied building. There are differing colors on the walls which depend on the room, with the extreme being the bedroom, which is brown and the living room being snow white. The interior is also well decorated by beautiful lighting, curtains, hanging pictures and luxurious furniture. There are wide windows to allow enough light into the house. Each room is spacious to accommodate all designated equipment and people in it. The backdoor is made of glass while the front door is wooden. Each room is well equipped. There is a gate that is opened using some codes or pressing a bell which alerts somebody in the house to open by pressing a button in the house. This has ensured security is tight in the area. There have not been house burglars for in the house since it was built. This is because of the hard doors, windows, and the gate. There are cameras installed in the house and at the gate. Therefore, anybody in the building or within its surrounding can be seen. Marketing Opportunity The house can be sold by either instant purchase or hire purchase. There is an additional amount of money on the instant purchase price a buyer would add if they are willing to buy using hire purchase. This is important to realize the time value of money. The method is appropriate since the amount is too large for instant purchases to be made by investors. The choice would ensure less advertising cost and time. This is because there would be more customers available than when any other method is used. The high hire purchase price shields against inflation risk. A negotiable amount of installment can be established. This depends with the buyer’s ability to pay, where a model is defined that would make the price to be higher with any additional time of payment. This also acts as a marketing strategy since a variety of customers will avail themselves to purchase it. The more the customers willing to buy, the more the money a seller would get. This is because of a high demand for a rare quality product. The most appropriate price of the house is $3,000,000. This amount considers the cost incurred in building the house. All services, which include surveyors, brokers, contractors and government fees, are catered for in the price. There is the cost of building materials, and all the furniture in it. The price of land is expected to increase with time. This is because of the tremendous rate at which the land in the location appreciates. In addition, there is considered depreciation of materials. The building and all its components are expected to lower. Each commodity has its own depreciation rate, and the present value depends on the time since they were bought and the value till they will no longer be in operation. In addition, the salvage value would be considered in setting the price. The cost at which the land is appreciating in the neighborhood is higher than the overall costs of depreciation. Therefore, the seller considers this as a going concern and hence the increased amount over costs (Scan et al 2006, pp. 5-10). The hire purchase price would be 10% more than the higher price if the installments will not exceed 5 years. This ensures the seller realizes the value of the money that would have been acquired if the purchase was made instantly and money was put in other investments. This is relevant to both the buyer and seller; since, they would both achieve. The buyer would not face liquidity risk when the purchase is made gradually. If a seller wishes to buy the house in more than 5 years, a higher rate is imposed that would cater for the same seller’s return on investment. This would also discourage those investors who would take it as a long term payment investment. Sale by private treaty is the best method. There are advantages with the method, as the price is already established. It gives a guide to the value of the house; given that there have been recent sales on it or in neighboring property. Time to sell is not a key factor in this case. Offers presented are considered at leisure, implying there would be enough time to establish the highest price available. Negotiations are facilitated by the time and personal contact with customers. Marketing costs under this method could be sometimes lower. The sale by public auction is not appropriate in this case, given that the price is established, and the seller knows precisely what is expected. In addition, sale by tender is inappropriate for residential real estates. Sale by private treaty is the common method of sale in the area. Involving other parties in sale by auction would lead to additional costs. This is further transferred to the customer, implying that the purchasing price would be increased (Draper & Findlay 1982, pp. 152-183). For the house to be purchased at the mentioned price, it would have to be advertised so that investors would know of the sale. The best way of advertisement would be using electronic media and internet. These would reach many people worldwide. In addition, advertising through the internet is cheap, compared to other forms of advertisements. Some social sites would be appropriate to market the house for free. The other method to be used is advertisement on billboards. These are visible to a large population. All these methods are efficient, considering they have visual aids that could assist in delivering more information to potential buyers. These are the most appropriate advertising methods which would reach the targeted market. There costs differ from one form to the other. The cost of electronic media is the most expensive, with the cost per 30 seconds on the local television going for $300. This would be done during the prime time. This would be done thrice per day in 3 stations. The billboards are the second, at the same cost per day. Advertising through the internet is the cheapest, with some sites offering free advertising services. However, a better site like Amazon which has a lot of traffic per hour would be the best. It charges $100 per day, for the product to be on display. Investment/Development Opportunity The house is located in a site that has some area to expand. There are some more rented houses in the neighborhood. Therefore, the house has an option to be a residential area lived by an individual owner, or it can be considered to be rented. Renting the house depends on the rates offered by the other houses. There could be no much differences, although the house is more outstanding than the rest given the uniqueness it has. Therefore, it would trade be rented at a higher price than the others. In addition, it is does not have restrictions on how it should be used. The building can, therefore, be transformed to anything a person would wish to have it, so far as it is for residential purpose. The materials are hardy enough to be reused in case the building is to be rebuilt (Ghysels et al 2012, pp. 106-120). Therefore, the building is worth investment analysis. It can be utilized as an income generating resource by renting it out, rather than living in it as a home. This is especially because of the high price the house is being traded at, making it unaffordable for low income earners. They would have the option to make it profit making (Wheaton et al 2001, pp. 20). Investment analysis The house is viable for investment. There are several factors that are making it a favorable investment plan. To start with, the reputation of the neighborhood gives it an advantage. Many people would wish to live in it. In addition, the house itself has unique features that make it appealing. The architectural exterior and interior design makes it attractive to people. The living standards in the area is accommodating to a variety of people. There is an option of a client putting their own preference features like house color and furniture. There is a condition to reinstate the original state as one leaves, just before contract termination. These can be negotiated further by both parties before initiating the deal. Therefore, the various options give both parties flexibility, making the investment worth (Brooks & Tsolacos 2010, pp. 59-63). The owner benefits by renting through having an assured income for the rest of the period the property would be in existence. It is a long lasting commodity, implying that it could benefit other generations. The owner does not have to involve themselves in costs, since would be catered by the tenant. These include maintenance and rates that are imposed on the land. There would be less managerial concerns, given that once an agreement is signed by the landlord and tenant, there are no more follow-ups since any breach of the contract would lead to prosecution. Therefore, the landlord can be assured of security of property and income. Conclusion The house is strategically positioned in a well established neighborhood. It has existed for 10 years. There are unique features that distinguish it from the others. The present value of the house can be established by considering the cost of building, and its future expected value. There are many people who would like to be live in the neighborhood, and the house itself. The present value is $3,000,000. This is the amount an investor would purchase the house. One has an option of either to sell or invest in the house. Renting out the house is the better option, considering it is a long term profit generating investment. Therefore, it should be rented out for more returns than selling it. List of References Brooks, C & Tsolacos, S 2010, Real estate modelling and forecasting, Cambridge University Press. Viewed 6th November 2012 . Draper, DW & Findlay, MC 1982, “Capital Asset Pricing and Real Estate Valuation.” Real Estate Economics, Vol. 10, No. 2, pp.152-183. Viewed 6th November 2012 . Ghysels, E, Plazzi, A & Torous, W 2012, ‘Forecasting Real Estate Prices.’ Peopleusich, Vol. 41, No. 919. Viewed 6th November 2012. Scan, E et al 2006, “SWOT Analysis D. Plc, ed.” Analysis, Vol. 51, No. 168, pp.5-10. Viewed 6th November 2012 . Wheaton, WC et al 2001, “Real Estate Risk: A Forward-Looking Approach’ Real Estate Finance, Vol. 18, No. 3, pp.20. Viewed 6th November 2012 . Read More