Real estate

CFA Level II
#21

I said hotel for depreciation due to some of the hints inthe table. If I remember correctly from the readings, warehouses depreciate very little because they are easy to construct and usually in industrial areas. For the one about leverage, I said BOI method (weight debt x cost)…etc. I got totally f*cked in this section where if should’ve been easy “gimme” points.

#22

It was band of investment as it looks for mortgages and leverage. Built up is sum of various discount rates.

#23

BOI cool. Still, I am getting owned here today. I hope we are just reviewing the tough q’s and the rest we got 90% right. I thought the depreciation q wording asked: which property is expected to depreciate, not which had the highest depr expense. If I buy a hotel in NYC and sell it 10 years from now I hope it appreciates. With a warehouse, they can build em quickly and with specs to meet specific needs, the one I purchased might not be desirable 10 years down the road so it is likely to depreciate. Return in warehouse is income, in a hotel it is cap apprec. **grasp**

#24

sales and gross income? I said no and no. Dont you need MV and NOI for market extraction?

#25

It has to be hotel for depr – I mean there didn’t seem any use of the given Risk premium data otherwise… and yes it was BOI for debt qt…

#26
  1. warehouse depre most; 2. ?? 3. ?? 4. tax higher overestimates MV-GIM: Y Y 5. band-of-inv. 6. mkt extr: Y N can someone remember #2 and #3?
#27

I put hotel too as most depriciative assets - Higher beta too- Property 4

#28

I put hotel too as most depriciative assets - Highest beta too- Property 4

#29

number two was calculating the MV of warehouse using the cap rate. 5.3MM i think it came out to. number three was calculating MV of property 2 giving GIM and sales price of property 1 don’t remember the number.

#30

I put hotel. I also work in real estate and my manager says he’d put hotel given the info…

#31

It was simple MV/R0

#32

I picked property 4 as depreciating the most. It’s market value was discounted the most. I guess that is a -1

#33

def warehouse - remember income is not expected from cap appreciation with with warehouse which can only mean one thing

#34

Any takers to check CFAI materials to look for the answer - warehouse or hotel? I went for warehouse. Too lazy to read through CFAI text now.

#35

misslee Wrote: ------------------------------------------------------- > number two was calculating the MV of warehouse > using the cap rate. > > 5.3MM i think it came out to. > > > number three was calculating MV of property 2 > giving GIM and sales price of property 1 > > don’t remember the number. think it was 7.2 million or something like that…

#36

yep 2 was 5.2, 3 was 7.2 and 1 was WAREHOUSE!

#37

7.2mm sounds right. i want to say warehouse as well. or HOPING it’s warehouse. R=r-g… the only instance g is negative is warehouse.

#38

i said Yes and Yes to if sales/gross income OVERSTATED value

#39

what was the actual question?

#40

I chose warehouse as well - you construct a warehouse and theres no income or capital appreciation. However, I can see how Hotel could be right as well.