Foundations of Real Estate
Here we clarify concepts from the course, discuss interviewing preparation, and more.
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Two Identical Buildings with Different Values?
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Two Identical Buildings with Different Values?
During an interview, I was asked the following question: If two identical office buildings were built side by side in the year 2000, what could lead to them having different values in the current market?
My answer was mostly focused around one building being renovated, but I was wondering if there are any other topics that I could have tied into my answer to make it more complete.
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2 Replies
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I think mentioning a renovation in one of the buildings is a sufficient response, as the renovation should lead to a higher valuation for the newly renovated building.
To make your answer more comprehensive, you could have tied in lease timelines, tenant quality and credit, ground leases on the property, views from the building (maybe one building’s view has been blocked by a newer development project), or tenant mix (having 5 strong credit tenants would be preferable over having 1 strong credit tenant to mitigate the risk associated with a tenant declaring bankruptcy.
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Well said @CityBuilder
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