The final guest lecture for the semester was from Dr. Mark G. Dotzour. He discussed his views on job growth and the economy. He highlighted that 3 things make up the economy: the consumers, businesses, and the government. He stated that American consumers have the highest spending pattern in the world and this is what drives the American economy.
Dr. Dotzour said something that particularly interested me. He said that if you own real estate or stocks, your net worth has increased, but if you don't, the recession never really ended for you.
He also mentioned some indicators that may cause concerns with the economy and job growth. for example, the uncertainty in the cost of healthcare and affordable care act will affect the decisions made by businesses. However, there are a lot of companies moving manufacturing to America and there are about 4 million jobs available. The issue on ground is the lack of skilled labor to occupy these vacant positions
Tuesday, April 29, 2014
Dr Gaines Lecture
Guest Speaker. Dr. James P. Gaines
Commercial Real Estate Outlook in 2014:
Commercial Real Estate Outlook in 2014:
- Continued Slow but steady economic improvement.
- Rising consumer/business confidence
- stronger & improving residential market
Clouds & Risks
- Interest rates
- political factor especially FED
- Deflation
- General recession
Generally after recessions since 1947, there has been average 3.4% rate of growth per year (1947-2004)
15% of GPD is comprised of consumer functions.
Commercial Real Estate
Tends to be local but also have regional/ national buyers and users
Cap rates revert to pre-2002 levels
Big wave of problem loans has been avoided
Multi-Family is the darling of Real Estate investment community
Commercial Property Price Index
the market had its dip in 2008/2009 but bounced back relatively quickly
According to Dr. Gaines, investing is hoping things go right but really understanding what can go wrong. some common issues in Real Estate investment can be seen below
- Market conditions & opportunities
- Property utilization
- insufficient, conflicting data
- "guesstimates" of current and future conditions
- Due Diligence
- Risk Assessment
Basic Strategies
1. Entry Strategy
- Sources of capital
- price
- ownership form
- financing
- altitude
2. Operating Strategy
3. Exit Strategy
- How to get rid of the property
- Expected gain/loss
4. Tax Strategy
Dr Gaines also talked about Risk Management and risk variables
Known Unknowns: Generally have good idea about level and variability
- interest rate
- lease renewals
- vacancy rates
- individual expenses
Unknown unknowns: "out the blue" but still possible
- New projects
- Industry Changes
- Expenses created from changes in law
- Technology
- General Recession
The key is to evaluate the probability of occurrence and the magnitude
Dr. Harold Hunt Lecture
Dr. Harold Hunt Lecture
Dr. Harold Hunt gave a lecture on the History of Real Estate Credit Markets. The lecture comprised of a summary of the evolution of Real Estate Credit Markets over the last century to what the situation is today.
prior to the early 1900's, the major loans available to people were variable rate and interest only with balloon payments. The balloon payment structure was done so that ranchers could pay interest only just in case their products or farms did not produce yield within the loan period. Around this period, Building & Loans were started to help the working class own their own homes.
In 1933, S&L accounts and deposit insurance for banks was introduced. Amortized mortgages over a period of 20-30 years were also introduced. Low inflation and stable rates allowed this to work successfully in the 1940's and 1950's.
The Vietnam war caused inflation which caused interest rates to fluctuate and this affected Lenders drastically.
In more recent times, the 1980's to be specific, bad lending practices and over-saturation of the real estate building market led to several problems that had serious effect on the economy.
A similar thing also happened in 2007. Aggressive lending and overbuilding caused the United States to go into a recession.
http://www.milkeninstitute.org/pdf/riseandfallexcerpt.pdf
http://www.financialsense.com/contributors/ronald-griess/2011/06/21/the-balance-sheet-of-households
#Task2
Real Estate Development In Nigeria. Potentials and Concerns
Nigeria recently became the largest economy in Africa and is a land full of resources and opportunities. Amongst these opportunities is real estate development. The Oil boom in the 1970's helped the Nigerian government to invest largely in the development of new cities. since then, real estate development has remained a major opportunity for local and foreign investors. However, there are also risks involved in investing in Nigerian Real Estate. Some of these pros and cons are discussed in the articles below
http://online.wsj.com/news/articles/SB10001424127887324251504578579933994141760
http://www.globalpropertyguide.com/Africa/Nigeria
Dr. Harold Hunt gave a lecture on the History of Real Estate Credit Markets. The lecture comprised of a summary of the evolution of Real Estate Credit Markets over the last century to what the situation is today.
prior to the early 1900's, the major loans available to people were variable rate and interest only with balloon payments. The balloon payment structure was done so that ranchers could pay interest only just in case their products or farms did not produce yield within the loan period. Around this period, Building & Loans were started to help the working class own their own homes.
In 1933, S&L accounts and deposit insurance for banks was introduced. Amortized mortgages over a period of 20-30 years were also introduced. Low inflation and stable rates allowed this to work successfully in the 1940's and 1950's.
The Vietnam war caused inflation which caused interest rates to fluctuate and this affected Lenders drastically.
In more recent times, the 1980's to be specific, bad lending practices and over-saturation of the real estate building market led to several problems that had serious effect on the economy.
A similar thing also happened in 2007. Aggressive lending and overbuilding caused the United States to go into a recession.
http://www.milkeninstitute.org/pdf/riseandfallexcerpt.pdf
http://www.financialsense.com/contributors/ronald-griess/2011/06/21/the-balance-sheet-of-households
#Task2
Real Estate Development In Nigeria. Potentials and Concerns
Nigeria recently became the largest economy in Africa and is a land full of resources and opportunities. Amongst these opportunities is real estate development. The Oil boom in the 1970's helped the Nigerian government to invest largely in the development of new cities. since then, real estate development has remained a major opportunity for local and foreign investors. However, there are also risks involved in investing in Nigerian Real Estate. Some of these pros and cons are discussed in the articles below
http://online.wsj.com/news/articles/SB10001424127887324251504578579933994141760
http://www.globalpropertyguide.com/Africa/Nigeria
Sunday, January 26, 2014
The Royal Swazi Spa Valley Resort
My most fascinating parcel of real estate is The Royal Swazi Spa Valley Resort. It is located in the Ezulwini Valley, Mbabane, Swaziland.
What inspires me mostly about this parcel of real property is the efficient incorporation of natural elements to the architecture; both the landscape and the buildings.
The interiors of the buildings are beautifully furnished and the landscape is well maintained and kept in perfect condition all year round. The resort is a big tourist attraction, as well as a destination for many international retreats and conferences.
The resort is made of The Royal Swazi Sun hotel and The Lugogo Sun. These 2 hotels are connected to an 18-hole championship golf course with fascinating views and beautiful scenery. There is also a casino, a spa, and a variety of retail shops in the resort.
What inspires me mostly about this parcel of real property is the efficient incorporation of natural elements to the architecture; both the landscape and the buildings.
The interiors of the buildings are beautifully furnished and the landscape is well maintained and kept in perfect condition all year round. The resort is a big tourist attraction, as well as a destination for many international retreats and conferences.
The resort is made of The Royal Swazi Sun hotel and The Lugogo Sun. These 2 hotels are connected to an 18-hole championship golf course with fascinating views and beautiful scenery. There is also a casino, a spa, and a variety of retail shops in the resort.
About Me
My name is Nanven Dogun. I am a graduate student at Texas A&M University. I am presently working on my masters in Architecture as well as masters in Land and Property Development. I plan to graduate with both degrees in December 2014.
I am from Delta State, Nigeria. I was Born in Plateau State, Nigeria December 1988. I am from a family of 5, the third of 3 children of my parents.
My special interests include watching basketball, writing songs, playing golf and driving fast cars.
I am presently taking a Real Property Analysis class and i hope to gain as much knowledge on property development as i can through this class.
My long term career goal is to run a design and development company focused on Integrated Project Delivery.
I love to travel and I wish to travel the world in my lifetime. This may be for work and pleasure. I also wish to own a golf course and run a golf course community.
I am from Delta State, Nigeria. I was Born in Plateau State, Nigeria December 1988. I am from a family of 5, the third of 3 children of my parents.
My special interests include watching basketball, writing songs, playing golf and driving fast cars.
I am presently taking a Real Property Analysis class and i hope to gain as much knowledge on property development as i can through this class.
My long term career goal is to run a design and development company focused on Integrated Project Delivery.
I love to travel and I wish to travel the world in my lifetime. This may be for work and pleasure. I also wish to own a golf course and run a golf course community.
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