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REALITIES IN REAL-ESTATE

Nation's business, 1974-05, Vol.62 (5), p.28

Copyright Chamber of Commerce of the United States MAY 1974 ;ISSN: 0028-047X ;EISSN: 2169-8155 ;CODEN: NBUSAY

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  • Title:
    REALITIES IN REAL-ESTATE
  • Author: Carson, James B
  • Subjects: Financial leverage ; Real estate
  • Is Part Of: Nation's business, 1974-05, Vol.62 (5), p.28
  • Description: THE CURRENT CLIMATE OF ECONOMIC AND POLITICAL UNCERTAINTY COMPLICATES BUSINESS DECISIONS FOR ALL INDUSTRIES. THESE UNCERTAINTIES ARE PARTICULARLY DISQUIETING FOR THE INVESTOR-DEVELOPER OF INCOME PROPERTIES. LEVERAGE IS THE NAME OF THE GAME FOR THE REAL-ESTATE DEVELOPER. A DEVELOPER WHO IS SUCCESSFUL IN BORROWING 100% OF THE TOTAL COST OF HIS PROJECT IS GENERALLY CONSIDERED TO HAVE DONE A BETTER JOB THAN ONE WHO IS ABLE TO BORROW 80%. BUT THE LARGE BURDEN OF FIXED DEBT SERVICE WHICH HIGHLY LEVERAGED PROJECTS MUST BEAR CAUSES THE EQUITY INVESTOR IN SUCH PROJECTS TO BE EXTREMELY VULNERABLE TO CHANGES IN MARKET CONDITIONS. A SLIGHT REDUCTION IN OCCUPANCY OR A SLIGHT INCREASE IN OPERATING EXPENSES CAN TURN A PROJECT'S CASH- FLOW FROM POSITIVE TO NEGATIVE.
  • Publisher: Washington: Chamber of Commerce of the United States
  • Language: English
  • Identifier: ISSN: 0028-047X
    EISSN: 2169-8155
    CODEN: NBUSAY
  • Source: Alma/SFX Local Collection
    ProQuest Central
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