Revere Street Case Study Essay
Commercial Real Estate & Investment
Mr. Alexander is a gentleman that is looking to build his investment portfolio through residential real estate. He is looking at investing in a 4-plex in a historical district located within Boston, Massachusetts. The building is located on Revere Street and has a listing price of $350,000. Mr. Alexander is evaluating the possible commitment to understand what he stands to gain from the annual cash flows while at the same time understanding the risks involved. The subject property is located within a historical district and is not yet capable of housing tenants. Property will require significant improvements prior to inhabitation. Client …show more content…
The property itself is located far enough off of the street to create a ‘grander’ entrance as well as a garden. Both of these amenities would increase the value of the property while not violating the councils policy of preserving the character of the area.
Another possibility for the property would be to convert the apartments to purchasable condos upon the completion of the construction. If our client were to net $200,000 for each of the proposed 2-bedroom units he could essentially live in the building for free.
One major issue facing our client is the lack of experience within this arena. While he does possess the ability to make improvements to the property, he lacks the knowledge of city building permit requirements. The time required to become familiar with these statutes could greatly affect the timing of the repairs. Each month he spends making improvements is a month of using capital to make payments on what would normally be variable costs (ie. water, power, etc.). The bank has made an allowance for a 6-month interest only construction