Dr. Mark G. Dotzour Lecture

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

Dr Gaines Lecture

Guest Speaker. Dr. James P. Gaines
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