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V11 Economic Feasibility

- Real estate market and financing - Economic model - Client counselling services

- Real estate market and financing - Economic model - Client counselling services

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This flashcard set delves into the intricate world of economic feasibility at a university level, focusing on the interplay between cost, rent, and investment in property markets. It explores how to calculate chargeable floor area, evaluate land purchases, and estimate production costs from building expenses. The set also covers different types of rents, mortgage rates, and their suitability for various investors, as well as the components of management costs and gross yield. Ideal for students and professionals in real estate and finance, this flashcard set provides essential insights into making informed investment decisions by comparing economic and market rents, and understanding the risks and benefits associated with different financing options.
Cartes-fiches
11
Utilisateurs
0
Langue
Anglais
Niveau
Université
Créé / Mis à jour
30.01.2020 / 30.01.2020
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Cartes-fiches

What specific costs are part of the investment costs?

  • Land Cost
  • Production cost

What has to be accounted for the gross yield?
Mention the typical percentage rates as well.

  • Return of investment (3% Interest Rate for owners equity / 3% mortage rate "Hypotekarzinsen")
  • Depreciation (Abschreibung) (0.5%)
  • Management Cost (1.5%)

There are 3 different kinds of mortgage rates name them, name a pro / con and sort them according to the market share its used. And tell for whom it's suitable.

Fixed:
+ Low risk, predictable
- No profit if interest rates fall
-> Suitable for private individuals

Libor mortgage
+ Profit if interests falling
- Risk of increasing interest rates
-> Suitable for semi-professionals and professionals

Variable-rate mortgage:
- Non-Transparent
-> Suitable for professionals and short term financing

What is the typical depreciation period?

25-50 years

What are typical elements of Management Costs?

  • Administration 
  • Maintanance
  • Operating costs
  • Risk premium

There are two different types of "rent" name them and explain.

  • Economic rent: Required income
  • Market rent: Possible income

Repetition: How can the production cost out of the building cost be estimated?

PC = BC / 0.9

How can be evaluated if I should buy a land for a building?

1. Calculate the Investment Cost = Production Cost + Land Cost

2. Calculate the Economic rent

3. Find out the Market rent with references

4. Affordable if: Economic rent > Market rent

If you buy, build and transfer. What Benefit and Risk rate shoud you choose?

10%

That is different in a cooperative?

The Land Cost does not have to be considered = 0

Given the Floor Area of a building how can the chargeable floor are be calculated?

ChFA: Main usable area (80%)** + Circulation area (10%) + construction ares (5%)*

*Excluding the outer wall area

** without basement area!

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