Back to school case study refers to a real estate is a joint venture between Kimberly Slater and her longtime friend, Christopher Lenard. The two partners have both ventured into real estate at an individual level. However, the case study refers to a partnership venture between them. They intend to construct off-campus student housing in Madison, Wisconsin. This is the home of the University of Wisconsin’s flagship campus.
Strengths and Weaknesses
The partnership brings together two friends that both have a vast knowledge of real estate. Kimberly slater has previously been involved in renovations and design in real estate. Additionally, he has largely invested in real estate in the past. On the other hand, Leonard is experienced in real estate analysis, in addition to being knowledgeable in real estate acquisitions. Leonard also brings on board knowledge of Wisconsin area and a saved capital amounting to over $750,000. On the other hand, Kimberly also has substantial capital having previously saved up to $2,000,000 and substantially investing in real estate. They also have an existing plan, thanks to Kimberly. This would substantially lower their investment costs.
The venture has limited capital in the form of individual savings. Additionally, being a new market player, it still lacks a succinct understanding of market dynamics. Their knowledge is limited to the few real estate ventures they have previously made.
Opportunities and threats
There is an identified need for quality housing off the University of Wisconsin’s flagship campus. This is an opportunity that real estate developers can enjoy. Additionally, the existing off-campus accommodation facilities are of low quality while there is a high demand for quality off-campus accommodation. Out of the over 40000 students enrolling at the University of Wisconsin’s flagship campus, just slightly over 6000 students are accompanied on the campus. This leaves a potential market of over 30,000. However, some providers have partnered with the university under the Private Housing Connection Program. These pose serious competition to new unaffiliated ventures. There also existing traditional apartment buildings that are already part of the market. Student ability to rent vis-à-vis the quality of housing is also a concern. Investing so much into the quality that it becomes too expensive to rent can push away viable tenants or lead to incommensurate rental costs that will broaden the period of return. They may also have to acquire land further away from the consumer due to unavailable land near-campus. This can limit succinct market access.
The venture is largely viable, thanks to the ready market. However, it will be an uphill task to acquire a viable piece of land near campus. Competition is also a concern, not only presently but also in the future. It is inconceivable that the university intake will keep pace with increased supply as more and more investors venture into the market.
Business and Corporate-Level Strategy
The company will primarily focus on the development of affordable quality housing to students, off-campus. The basic idea is to create a balance between quality and affordability to ensure sustainability.
Implementations and Recommendations
It is worth noting that several issues may arise. Gainesville market may differ from Wisconsin yet they have opted for the same design, additionally, the maintenance cost for luxury apartments may cut deep into returns. Market sustainability as more players join is also questionable in the long-run. Considering the situation, it would be recommended that they opt for purchasing and renovating existing apartments rather than opting for the construction of new apartments.