FINS3633 Real Estate Finance - 2020 Take home ProjectSolution.pdf
Real Estate Finance - 2020
Take Home Project
This exercise is to purchase a home in AUSTRALIA and is fictional, please do not contact any brokers/banks/real estate agents etc.
Purpose: This project requires students to apply disciplinary knowledge to collect and use relevant information for the purpose of buying a residential real estate property.
The scenario: You are buying a house! You can either buy a home for an investment property or for your own personal use.
You will need to use comparable home sales to determine your offer price, research current interest rate options available and to track your desired property over the course of the project in real time.
Your role: Your job is to use online property listing platforms to identify your desired purchase and to showcase your decisions and why you have decided to buy that home for either investment or personal use.
1. A word (text) document roughly 3000 words that includes the following:
a. Your decision to buy an investment property or an owner-occupied property. b. Your decision regarding your desired postal code. c. The specific features you desire in your home and why, make sure to relate this back
to whether the property is for investment or personal consumption. d. A budget (a table included inside the text document) detailing the purchase
requirements of the home, for example, the down payment, stamp duty, solicitor fee, bank fees, transfer fees, government fees and an ongoing monthly payment.
i. Make special note on the monthly payment, is it based on a fixed variable rate, for how long is the rate fixed, or a variable rate, how much of the mortgage is partitioned to an offset account, why chose that amount. e. A budget (a table included inside the text document) that will detail your monthly
expenses in order to be able to service your monthly mortgage payment based on your monthly income (you decide the amounts, but give a detailed description of what needs to be included in a personal budget, for example, food, insurance, public transportation costs, energy, gas, water, internet etc.) f. Your opening offer for the home based on at least three comparable recent sales.
Defend the comparable sales. g. Detail how the home is being sold, for example is there a price guide? is it listed for
Auction? Detail how did the way the home is being sold affect your decision. h. Your final offer for the home based on your budget and comparable research. i. A downside risk plan, say for example if you lost your job etc., for ways you could
cover the cost of your monthly mortgage. j. Speak with someone who has personally purchases real estate in Australia, without
sharing anything personal, explain their experience with the process, general advice, etc. (This can be a family member, a friend, a colleague, a family member of a friend, etc.) k. Provide a timeline and follow your desired property in real time, are there changes to
the price guide? was it sold prior to auction? l. An appendix to your word document with the photos, maps, plan layouts, available of
your desired purchase and the rate options from your chosen lenders (downloaded from the internet.)
2. A power point presentation, maximum 3 slides, of the home you chose and your comparable. Be prepared to explain details from your thought process, but only as highlights. Students will present to each other in break-out sessions during week 8 on Zoom (remotely).
Information requirement: You will need to collect the following information.
1. Realestate.com.au or Domain.com.au
i. Under the “Buy” option, search your desired post code for homes for sale; and
ii. Use the pictures and home descriptions to decide on a home. (DO NOT ATTEND
INSPECTIONS NOR AUCTIONS IN PERSON)
iii. Under the “Sold” option, use recent home sales to choose at least three comparable
properties to defend your opening offer and final (maximum offer).
2. Collect different quotes listed online from at least four different lenders for the purpose of a first-
time home buyer.
3. Go to the homepage of IMF, locate/click on “IMF DATAMAPPER”. Navigate the pages under
“World Economic Outlook” to collect the latest forecast of
i. real GDP growth and
ii. inflation rate (average consumer prices)
for Australia. Use the above economic data to defend your rational for purchasing an investment property or owner-occupied home and for which postal code you chose.
1. Students must submit the two templates (Word, PowerPoint) via Moodle no later than 11:55pm
Monday April 6th. 2. Students must attend their Week 8 lecture via Zoom and participate in the break-out sessions
organized for them. The exam timing for each student’s presentation will be announced on Moodle by Week 8.
Grading criteria: Grading of this group project is informed by the Business School Program Learning Goal rubric on business knowledge, problem solving, business (written) communication.
To do well in this project, you need to
1. Show command of Real Estate knowledge and application of this knowledge. For example,
when you collect information to estimate your monthly mortgage payment. 2. Demonstrate critical thinking and problem-solving skills. For example, explaining your
decision for your comparables and price offers. 3. Be able to communicate ideas effectively to promote understanding by expressing
arguments clearly, precisely, concisely, logically and convincingly in language appropriate for the intended context and purpose, with accurate expression/grammar. For example, when your purchase preference and geographical preference.
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