Monday, November 11, 2013
Throughout the textbook, my idea of how importance of professional activity
Before I take this particular class, I didn't have any idea of what is the financial, investment, or real estate. Nevertheless I have been having a big dream about developer and vaguely, I dreamed about my dream. Since I have been studying this class, it makes me rethink as a developer and real estate again. Throughout studying this class, especially chapter 9, I believe that professional activity is the most important part among the real estate system activities. Generally developers deal with a big amount of money, sometimes it brings big profit as well as risk too. In order to avoid risk condition, so many systems are developed by experiences. The most systems that I am taught tell me that professional activity is how important it is.
Of course, "vision and seeing bigger picture" are the most common them of real estate analysis in this class. I think that we all agree with that. To develop our capability of vision and seeing big picture, this particular class and textbook explain many theories, especially textbook chapter 8. We have learned "the process of real estate development". As we studied the dynamic process of real estate development, we can see professional activity involved from the beginning of stage 2, such as due diligence; title, zoning, survey, permits, utility, easements, and environmental conditions. Once developer decided to execute project, developer's responsibility is getting limited, on the contrary professional's responsibility is became serious. In other word, architect responsible for overall technical quality, developer for lower implementation decision. In order to successfully complete the project by an expert is absolutely necessary.
Regarding chapter 9, we have learned investment problem. During the studying these problems, I realized that potential gross income (PGI), effective gross income (EGI), and net operating income (NOI) are very important to decide invest project or not. Vacancy rate are effected by general economy, actually we cannot control it. Operating expenses and annual debt services are that we can control it but the most important thing that to increase income is the key to make maximum benefit. Basically it is the best way to invest good real estate but as a developer to consider investment, we should consider effectively making spaces so that increase income and inexpensive construction cost are necessary. The most of project's budgets are construction cost and engineering fees. This is why professional activity is very important in entrepreneur.
I believe that somehow professional activity must know all of real estate system of activities and control them. Probably it is possible that many people do not consent my idea of how important professional important it is. However I would like to emphasize that professional activity is involved from the beginning of process of real estate development and the biggest portion of project budget. Successfully to complete the project, developer must deal with proper professional activity is necessary. These two chapters make me feel to reopen my eyes as a developer and reconsider how to invest real estate property.
Real Estate Analysis Environments and Activities. Julian Diaz and Andrew Hansz