Reference no: EM133315582
Question: There will be an essay question near the end of the exam. You can answer it first if you wish. The question will carry a very heavy weight on the exam (perhaps 20%, or more). The purpose of this question is to make sure you understand the main topics of how to create value at the property level and the investment level. You will be given a scenario for a commercial property and asked to:
1) Propose a way to increase the value for the property itself with a plan for the property (think, 12-Unit Augusta Apartments / value-add)
2) Propose a way to produce ample returns for you personally (as the sponsor investor/developer) by means we have learned about in class (think Dawgwood Hotel scenario)
1) Clarity of Thought - 20%: does the student clearly lay out everything in an understandable and readable manner.
2) Applications of Concepts - 50%: does the student use concepts discussed in this class and apply them in the logical manner.
3) Reasoning - 25%: does the student's plan make sense (mostly within reason.)
4) Creativity - 5%: does the student find at least one creative or lesser-used value addition to property value for the 1st part of the question to use that is different than the most obvious solutions.
Notes about this exercise:
1) While using quantitative data is great, I will be looking for two things:
a. You are using the numbers for a purpose and applying them, not just showing me that you can calculate them. Other areas of the exam test your calculation ability.
b. This is a QUALITATIVE exercise, and it will be possible to score 100% on this question without a single calculation. Even if you don't use any calculations, you still must use good reasoning and application, and the burden to prove reason and logic might be tougher, but very possible all the same.
2) Try not to answer only with flat suggestions, like "raise rent", but try to answer questions like an investigator: "whom, what, when, where, how, why", not always all of them, nor in that order. For example, "Rents are low (why), and I propose that we do X (what) which will attract Y (whom) to the property. This will take Z (how) investment and Q months (when) to complete. This will put R area (where) out of use for a few months (when), but then create a three-year (when) return that is greater than T (why) by both increasing rents (how)...and....
4) You may use (and are encouraged to use) concepts from any section of class, not just finance/investment. Think...property rights, development, etc.