Pinckney Street Solutions

UGBA 180

Case Study: Pinckney Street

Samantha Lewin

---------------------------------------------------------------------------------------------------------------------

1.

To search for an ideal property, Lee utilized multiple channels. His research methods ranged from collecting information online to visiting properties in person. He also studied real estate sections of newspapers to find real estate brokers to act as middlemen.

Lee used a broad selection of resources to gather various information needed. He started with regional data from the 2010 me Census Tract, Boston Standard Metropolitan Statistical Area to get an understanding of the age breakdowns, education, employment, marital status, length of stay, and ethnic background of current Beacon Hill residents. He used maps to figure out the distances from Beacon Hill to urban amenities. Then, he was able to obtain the majority of his information from websites. He used websites such as Trulia.com, Zillow.com, and Realtor.com to look up listings and recent transactions in the neighborhood of interest; he checked mortgage rates on a variety of different mortgage products on Bankrate.com. Also, he accessed the Multiple Listing Service on Boston.com to a range of similar properties in the area. He got in contact with real estate brokers through newspaper advertisements, who could provide him with income statements, expense statements, and show him offerings that could potentially meet his needs. Last but not least, he got information from his in-person experiences and interactions. He “spent all his free evenings and weekends becoming familiar with the area”, and also visited existing tenants and owners.

There are numerous factors that Lee took into account in his search of properties. First, there were factors that affected the overall real estate market of the specific region. Among these, the location, demographic, and socioeconomic composition made the neighborhood desirable in Lee’s eyes: Beacon Hill is in close vicinity to the Charles River, the financial district, Boston Public Gardens, shopping areas, and other urban amenities, with a large population of single or newly-married, well-educated professionals. Local and city policies might also affect the real estate value: the recent establishment of the entire Beacon Hill area as a historic district would put a limit on the remodeling of existing properties and the building of new ones, thus creating a ceiling for the local housing availability. Recent market activities also provided necessary information, such as recent sales of comparable units/homes in the surrounding area, the price range of different types of properties available, and rates of mortgage products offered. Then, Lee considered the factors that might affect each specific property and his own purchasing decision. This included conditions of perspective buildings, returns on cash investment of nearby properties, vacancy rates, management expenses of prospective building, and potential market decline. He also needed to figure out whether there were any opportunities to increase rent or reduce expenses, given the information on what landlords had previously charged for rental and what agreements had been made with previous tenants. Moreover, there were some factors that needed Lee’s personal judgment. For example, whether or not there would be further growth in the area: if investors from the lower section of the Hill would begin to buy on the north slope. All the above factors needed to be taken into account during Lee’s search.