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Harvard business review case revere street essay

Hire Writer To bring this project to fruition and realize the gains projected, the following processes need to occur without incident: After this, the construction needs to be essentially error free and at an expedited pace to be complete by the four month timeframe set- and this is without a professional general contractor.

If, however, the project is completed within the four allotted months, and without going over budget, the next phase is filling vacancies, which Alexander is also planning to have accomplished by the end of the fourth month.

This means that during the construction process, Alexander must also be actively marketing vacancies, searching for, interviewing, and selecting tenants, and securing leases.

  • Since it is already included in the budget, I would hire outside management at least for the duration of construction to help find tenants;
  • However, this is a best-case scenario, and given the major caveats discussed in the aforementioned, I believe that Alexander will actually not break even in the first year, and be looking at a significantly lower rate of return in years to come.

Though possible, it is incredibly hard to imagine that the stars would align so perfectly that all the aforementioned conditions are met as forecasted and result in triumph. For example, a delay in the closing process would delay construction, delaying when tenants can move in and therefore when income can start being generated, and so on.

The plan is contingent upon virtually incident-free operation that is somehow achieved under the direction of an amateur- this is fundamentally flawed.

  • For example, hiring a general contractor would ensure that the building is constructed to code, would be more efficient because the GC would know how to best handle subcontractors and manage the overall project, both of which would help expedite the process and give Alexander time to do other value-added functions;
  • This means that during the construction process, Alexander must also be actively marketing vacancies, searching for, interviewing, and selecting tenants, and securing leases.

By not outsourcing responsibilities to experts, he may be avoiding the explicit employment costs, but he is likely to pay more for doing the job himself later.

For example, hiring a general contractor would ensure that the building is constructed to code, would be more efficient because the GC would know how to best handle subcontractors and manage the overall project, both of which would help expedite the process and give Alexander time to do other value-added functions.

If not, Alexander risks serious code-violation liabilities, will probably manage less effectively, and the project could therefore take much longer than anticipated, which has the same rippling effect as in the aforementioned.

  1. This means that during the construction process, Alexander must also be actively marketing vacancies, searching for, interviewing, and selecting tenants, and securing leases.
  2. For example, hiring a general contractor would ensure that the building is constructed to code, would be more efficient because the GC would know how to best handle subcontractors and manage the overall project, both of which would help expedite the process and give Alexander time to do other value-added functions. Though possible, it is incredibly hard to imagine that the stars would align so perfectly that all the aforementioned conditions are met as forecasted and result in triumph.
  3. By exclusively using the figures as set forth in the proposal, and excluding the additional costs I outlined above but were overlooked by Alexander, I determined the ceiling for profit potential.
  4. The plan is contingent upon virtually incident-free operation that is somehow achieved under the direction of an amateur- this is fundamentally flawed. By following these steps, I believe he will be able to successfully gain the experience and equity base in real estate that he was seeking.

Additionally, Alexander may have seriously underestimated how demanding the project will be, and did not consider anywhere in his proposal how this may compromise his current full time job. Even with a general contractor hired, he will still be tasked to find tenants to fill the vacancies, while juggling the rest of the logistics, and it seems like a tall order.

Since it is already included in the budget, I would hire outside management at least for the duration of construction to help find tenants. One of the major issues being an amateur in this field is determining good tenants from bad, and the costs associated with bad tenants could be significant, and again are something that Alexander did not include in his projected costs.

  1. After this, the construction needs to be essentially error free and at an expedited pace to be complete by the four month timeframe set- and this is without a professional general contractor. The plan is contingent upon virtually incident-free operation that is somehow achieved under the direction of an amateur- this is fundamentally flawed.
  2. If, however, the project is completed within the four allotted months, and without going over budget, the next phase is filling vacancies, which Alexander is also planning to have accomplished by the end of the fourth month.
  3. With so much uncertainty, and not a big return, the risk is just too great to justify pursuit of the reward. Though the risks are significant and abundant, the potential for profit is always worth considering before dismissing an opportunity.
  4. By not outsourcing responsibilities to experts, he may be avoiding the explicit employment costs, but he is likely to pay more for doing the job himself later. The plan is contingent upon virtually incident-free operation that is somehow achieved under the direction of an amateur- this is fundamentally flawed.
  5. One of the biggest conditions that must be met is that he base his projections and make his plans off of expert opinions- he should invest in help and recognize that as an amateur, he is neither qualified nor capable of making the best decisions, and would benefit from seeking expert advice. Similarly, he should place more emphasis on the value of outsourcing to professionals, and less on blind trust in his own capabilities.

Management would be instrumental in mitigating this risk, as they are usually well versed in landlord-tenant laws that Alexander may not be aware of, and also add more time for Alexander to focus on other important responsibilities. He also risks compromise to performance at his current job, general welfare, and all of his time.

By outsourcing some of the responsibilities, many of these issues could be avoided. But, if problems do arise, is it worth the consequences? Though the risks are significant and abundant, the potential for profit is always worth considering before dismissing an opportunity.

By exclusively using the figures as set forth in the proposal, and excluding the additional costs I outlined above but were overlooked by Alexander, I determined the ceiling for profit potential.

However, this is a best-case scenario, and given the major caveats discussed in the aforementioned, I believe that Alexander will actually not break even in the first year, and be looking at a significantly lower rate of return in years to come.

Harvard Business Review Case- Revere Street Essay

With so much uncertainty, and not a big return, the risk is just too great to justify pursuit of the reward. However, I do agree that pursuing a real estate investment opportunity is wise, but under certain conditions.

  • However, this is a best-case scenario, and given the major caveats discussed in the aforementioned, I believe that Alexander will actually not break even in the first year, and be looking at a significantly lower rate of return in years to come;
  • Management would be instrumental in mitigating this risk, as they are usually well versed in landlord-tenant laws that Alexander may not be aware of, and also add more time for Alexander to focus on other important responsibilities;
  • However, I do agree that pursuing a real estate investment opportunity is wise, but under certain conditions;
  • This will also help to see the inherent value in outsourcing as the opportunity cost of not doing so might eventually end up being greater;
  • By following these steps, I believe he will be able to successfully gain the experience and equity base in real estate that he was seeking;
  • Even with a general contractor hired, he will still be tasked to find tenants to fill the vacancies, while juggling the rest of the logistics, and it seems like a tall order.

One of the biggest conditions that must be met is that he base his projections and make his plans off of expert opinions- he should invest in help and recognize that as an amateur, he is neither qualified nor capable of making the best decisions, and would benefit from seeking expert advice. Similarly, he should place more emphasis on the value of outsourcing to professionals, and less on blind trust in his own capabilities.

This will also help to see the inherent value in outsourcing as the opportunity cost of not doing so might eventually end up being greater. By following these steps, I believe he will be able to successfully gain the experience and equity base in real estate that he was seeking. How to cite this page Choose cite format: