Hello , could you please help me with this, Thank you so much Guys !!!! Real Est

Question

Hello , could you please help me with this,

Thank you so much Guys !!!!

Real Estate or Stocks? Junhee Chang, a senior research analyst in Austin, Texas, has bought and sold high-technology stocks profitably for years. Lately some of her stock investments have done poorly, including one company that went bankrupt. Emily, a longtime friend at work, has suggested that the two of them invest in real estate together because property values in some neighborhoods have been rising. Emily has looked at three small office buildings and some residential duplexes as possible investments. Contrast the wisdom of investing in commercial office buildings versus the attraction of investing in residential properties. List three of the advantages associated with real estate investments. List three things that can go wrong for real estate investors.

Explanation / Answer

(Ans A)

Commercial office building needs time to build it, It also requires heavy initial cash outlay and The value of commercial building highly dependent upon the area in which it is built. Though another factor is that it fetches more revenue to the owner since generally it is leased out for the longer period thus creating an income for longer period. Rents are higher in commercial, On contrast Residential building does not take that much of time in construction as compare to commercial office building also its rates basically depends upon residential area wise and it does not fetches long lease option as compare to commercial and rent are lower as compare to commercial.

(Ans B) 1) High return on investment - It has been tasted result that real estate investment fetches good returns mostly 2) It acts as an hedger against the inflataion - The impact of inflation hit the real estate inversely opposite that means it is proportionate to the inflation rates 3) you can take easily any loan on real estate keeping that as mortagaged.

Ans C) 1) It is not that liquid investment because it does not get sold overnight it takes time 2) It has huge operational/ transactional costs associated with it such as real estate tax, brokerage etc. 3) It is expensive since it reuires some one to look after it hence time consuming & expensive at the same time

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