back to school development of off-campus resedential project Case Study Solution
Slater and Lenard are considering to invest in the real estate in order to maximize their wealth, both the equity partners have long-standing friendship and both the friends have same kind of interest and hobbies. After completing their training from university of Purdue, Slater and Lenard moved to different areas due to employment but their friendship has not deteriorated due to this distance. Slater had moved to Florida, along with her employment, Slater actively invest her savings in the real estate. Slater was enthusiastic about her career in the real estate sector and invest heavy funds in developing her own project which proves to be quite beneficial for herself.
On the other hand, Lenard has shifted to Wisconsin after his exit from the Air force, Lenard was also interested in the real estate business and to pursue his career, Lenard enrolled in the MBA degree from Kellogg school of management. After the completion of his studies Lenard also wants to invest in the real estate sector, for this purpose both the old friends reunite and starts to identify the opportunities. Due to the shortage of housing scheme for the students of University of Wisconsin. They both decided to develop the housing scheme for the university’s students similar to the previous project of Salter.
It can be said that this project appears to be very profitable due to continuously increasing population of the Madison. The population is increasing because of many reasons, there is a tremendous job opportunities for qualified and less qualified individuals in the city because of increasing investment in the technological industry. Thus, increasing the likelihood of the project been successful. (Weiss, 2009)
Although Slater have relevant experience in developing this king of project and Lenard have relevant professional degree in the real estate field, it is highly likely that they both have to face sever complex issues in the construction of the off campus residence for the students. It is also very difficult to find suitable area for the construction of the residence due to the landscape of the city. There were two lakes in the city center which makes it difficult to find appropriate area. Furthermore, the projections regarding the occupancy rates and current rates and facilities are also very subjective which can impact the outcomes of the project both favorably and negatively.
Root Cause Analysis:
Root cause analysis is a systematic way of identifying the main problems and issues which will lead to the events unfavorable for the entity. In the case of development of off campus residence for students of University of Wisconsin there are many issues which might result in the unfavorable outcomes of the project. The main problem that lies with the project is the limited experience of both the parents, although Lenard have relevant professional qualification but the practical implications might be very different from the theoretical knowledge of the industry.
Another problem that lies with the project is the limited financial resources available for the development of the project, both the partners have limited financial resources which might be not enough for the development and construction of the residence. In order to cope with this issue they have to obtain additional finance from outside sources which might adversely impact the profitability of the project. In addition to this the duration of the construction is also not known until now, it is possible that the project takes substantial time to develop which will ultimately increases the costs associated with the construction of the project.
It can be said that the landscape of the Madison city is quite complex, the presence of the lakes makes it very difficult for the developer to construct the residence in the city and the existence of lake is the main barrier towards the development of off campus residence in the area. Some unexpected delays and costs might arise due to this lakes and complex landscape of the area which might makes the project unfeasible on both the parameters i.e. financially and operationally.
The data regarding the rents, preferences and choices of students is also currently not available, this might have very negative consequences on the development of the project. If the building doesn’t have facilities which the student wants, this might make the project less attractive in the eyes of students which ultimately reduces the profitability of the project. Same is the case for prices, charging prices which are not align with the current market rates may makes the residence unattractive for the students as well……………….
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