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The Back Bay - Beacon Hills Project


The competitive market is just beginning on the Back Bay and is allowing him to make an offer on a weathered property that could produce the return he is seeking after renovations. The property had renovation started but were not completed. There appears to be no prepayment penalty on a mortgage through an outside lender and they are willing to revisit the investment regarding additional funding after a period. .
             II. Weakness.
             Mr. Anderson has little real estate background. He is relying on self-education along with information based on brokers that are invested in the same market he is looking to purchase property in. Limited cash injection into a loan will make a funding source more difficult to obtain, as he does not have the needed 20% down payment for funds needed for most properties. He will be managing a full time job along and managing an apartment complex after this daytime job is over. His wife is not completely in concurrence with her husband regarding the living situation and management of the investment property. .
             Mr. Anderson is relying on his skills as a set builder in comparison to being a carpenter in a housing complex. The lack of knowledge could prolong improvements. The cost could be more over time than estimated, making the investment stall on cash flow. This could cause payments on a mortgage to fall behind leaving him with no option but to try to sell the property at a loss or at the same value as purchased. He is unaware of any other conditions or situations that may arise as he begins the renovations that would cause an additional need for capital injections. Mr. Anderson has the mindset of total self-management is obtainable. This can be effective if your knowledge base of the investment is very high and your skills match the level of knowledge needed to take on the entire task. He does not possess all the needed skills and although he can produce a financial statement showing adequate cash flow, he lacks the "what-if" function of items that may persist and cause for delays and issues with turning the property over and finding the renters needed to fulfil the statements.


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