Case Study Essay Example | Topics and Well Written Essays - 1250 words - 12

Case Study - Essay Example Edward Alexander wants to invest in real estate, thus building equity based future. He believes that increasing his return would be best done by managing his own investment. He thinks that paying someone for rent is a not a smart idea since it’s simply a waste of money. Alexander wants to invest in the popular Beacon Hill area and thus he initiated a thorough search about the area. He found out that the value of the area is increasing rapidly due to the natural advantages surrounding it such as Charles River and public parks. The properties were listed in the market from $299,000-2.4 million dollars. The rent for a one bedroom apartment in that area ranges between $1100-1600 per month and the two bedroom apartment ranges from $1600-$2100. Alexander has $80,000 cash and the required investments about 21.5%. Thus, Alexander needs $70,000 in cash. Alexander decided to invest in a complex priced at $350,000 that needs renovation of $165,000, he decided to invest his $80,000 and get a $19,000 from an investor and take a mortgage loan of $450,000. Taking into consideration of miscellaneous costs and fees that totaled $549,000, consequently, a mortgage higher than $450,000 would result in a higher interest of $2000 during renovations. This paper will analyze Alexander’s options with regard to this property. And provide forecast of the most important financial ratios. The cases regarding to Alexander Edward, who is a graduate from Harvard College, and recently working in a biotech firms since four years. Due to the good knowledge of the location, and his perspective to give a hand in real estate business included their urge to have a home a good location, he started to explore the location with all possible sources. The business in the sector is on its peak and growth is very good since last ten years. The home liked by Alexander is almost priced at $500,000