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.
References
Real Estate Analysis Environments and Activities. Julian
Diaz and Andrew Hansz
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