Suburban Homes, like any other real estate company, has many strategic directions to pursue to expand the company operation and increase revenue and profits. To explore and pursue various investment opportunities that would eventually translate into projects, the company developed strategic directions to successfully invest in real estate. It identified six options for portfolio project management. They are investments in purchasing land for future development, communities for single-family homes, multifamily properties, small-scale apartment buildings, large- scale apartment complexes, and commercial investments.
1. Purchasing land in areas that have potential for future growth makes sense, as the cost of land tends to be substantially cheaper 10 20 years before it is turned into a developed suburban area. At an appropriate opportunity, the land can be improved to add value, or it can be leased or rented to create cash flow. Further, the land can be divided and parts of it can be sold for a profit. However, this option requires a vision for future growth and development and consequently, risks are also associated with this strategic direction.
2. Building single-family homes in suburban areas is one of the best and most popular strategic directions for growth for companies like Suburban Homes. Most of the clients who are interested in a quality life and view their home as an investment prefer buying single-family homes. Clients realize that it is easy to rent, sell, and finance.
3. Small multifamily properties usually consist of two to four units. They also present similar advantages that are associated with a single-family home such as easy financing and being a wise investment option for clients while providing a good residence for their family.
4. Small apartment buildings usually consist of 5 to 50 units for clients to reside in. They are more popular among those who prefer urban areas and a busy social life.
Clients are usually unmarried or married with no children. These properties can be more difficult to finance because they rely on commercial lending standards. For this investment option, Suburban Homes must look for investment opportunities closer to densely populated areas, and the investor must provide parking areas.
5. Large apartment complexes require that you include pools, a gym, tennis courts, and parking facilities, in addition to other attractions that lure people to choose the complex as a residence. Such a complex requires full-time staff to manage the property, provide safety and security, and provide good customer service. These properties can be very expensive to purchase. However, this investment option provides steady revenue flow.
6. Commercial investment, in its truest sense, is an investment for growth and diversity in a portfolio. The aim of this investment is to lease the property for business. Size, style, and purpose also vary. Clients could range from small business owners to large malls and mega office complexes. This investment option offers a consistent cash flow. However, occupancy would depend largely on the local economy and could prove to be risky. Further, investments are of higher magnitude and Suburban Homes is seriously considering this option after establishing steady growth in the residential market and improving their financial stability and growth.
Question.