Real Estate
Analysis of the current economic climate and future expectations based on
empirical data, state of the property market for the identified residential properties, financing alternatives,
recommendations, and any identified risk in transaction.. For this assignment, market data (i.e. rental
increase/decrease and any home price appreciation) should be carefully selected to build a case for the
proposed recommendations. You are expected to summarize and synthesize all relevant data into a few key
points supporting your recommendation on the project. The analysis shall include two (2) graphs of economic
and market indicators using at least two primary data sources for each graph.Please explain how these
indicators, individually and collectively, support your final recommendations for the transaction. NOTE: You are
required to create the graphs from the primarydata -Do not copy and paste any pre-existing graph/s
You are living in Shippensburg, Pennsylvania and you just got a new job which pays $40,000 peryear, per
areavibes.com this is just a bit higher than the median income in Shippensburg. You plan to live on your own
and you plan to live in your Shippensburg’s home for only five years. You also just won the Pennsylvania
Lottery which will net you $30,000 which you will immediately place in a bank saving’s account which is
currently paying one percent interest annually. Instead of sitting in a low rate savings, you could use all or a
portion of this amount towards your down payment and closing costs on the purchase of a new home. Any
amount used towards the purchase of your home would reduce your balance in your savings and thus will
reduce your interest income. Keep this in mind when doing your calculations. The first step in this research
project is to find the average rental rate for a two-bedroom home (house or apartment your choice) and the
median house price for a two-bedroom home (this can be a single-family detached or attached home such as a
townhome, rowhouse, or duplex). Once you determine those prices, which will be included in your paper, you
will need to find an actual rental home currently available online, as well as a home listed online for sale which
fits in your research price ranges. These homes will also be included in your paper, notonly the link and brief
description, but what do you know about the real estate?Keep in mind, the cost for monthly principle and
interest payments do not include annual taxes, insurance, electric and other utility costs, homeowner
association (HOA) fees, nor any maintenance and repair fees. The annual tax rate will need to be researched
to calculate the estimated costs in the municipality in which the home is located if not provided in the home
listing. For insurance costs, you can assume $25 per month, utilities assume $125 per month, and
maintenance/repairs assume $100 per month. If the listing of the house you choose shows an HOA fee, this
must be included as provided. For rentals, some include utilities in the rental fees. If utilities are not included
assume $100 a month. Again, these costs must be included in the calculations provided in your paper.As a
reminder, you will only live in these properties for five years, so after five years, if you rent you simply pack up
and move. If you purchase your home, you will need to sell it. The broker fee will be six percent plus additional
closing costs of one-half percent. You will need to determine through research the anticipated
appreciation/value year over year for the home you purchase. This information will be needed in your
paper.When purchasing the home, you will need to include closing and loan costs. You can assume closing
costs are one percent of the purchase price and loan fees will vary based on the loan you select. To decide if
purchasing a home is ideal, you will need to select which type of loan will provide the best value over five
years, a 30-year fixed or an ARM. Your credit score is only 650 which is needed to calculate your loan interest
rate. Your average monthly expenses (credit cards, phone, food, entertainment, clothing, car loan, fuel, student
loan, etc.) is $1100.For rental rates, you will need to assume an annual rate increase year over year based on
trends in the Shippensburg area. This information must be included in your report and used in your
calculations.Your final recommendations should justify whether buying or renting is the most financially
lucrative way to go.