Academic journal article Journal of the International Academy for Case Studies

Real Estate Investor's Inc

Academic journal article Journal of the International Academy for Case Studies

Real Estate Investor's Inc

Article excerpt

CASE DESCRIPTION

This case can be used to focus on several different types of analysis--financial, management and investor goals, and strategy. The case traces the evolution of a small real estate investment company created by three individuals who meet in an MBA Program. The case also addresses the synergies and conflicts of meshing personal lives with the creation, management, and growth of a small business. This case would be most appropriate for undergraduate courses in small business management and graduate courses as a class discussion. The case is designed to be discussed in one to one and onehalf hours and should take students no more than three hours of outside preparation.

CASE SYNOPSIS

Ryan Mathau is one of three partners in a relatively young and small real estate investment company, which was created in 2004 when capital is easily available. The three partners purchase inexpensive rental buildings in need of significant work, renovate and standardize the buildings, and then manage the rental properties. The partners stopped buying shortly before the 2008 banking crisis and were content to hold their current size until an opportunity presented itself in 2011. At the same time Ryan is experiencing increased time conflicts in his personal life and begins to question the long hours he is putting into this business while also employed full-time as an accountant. The company and Ryan must decide where to go from here.

INTRODUCTION

Ryan Matthau woke up after a short night's rest in the fall of 2011. His back hurts, his shoulders are bruised, and he is badly in need of coffee. He rolls over and is ready to start another day in his real estate adventure. Questioning his own sanity, he stumbles to the kitchen for much needed caffeine; another renovation is in progress which will tie up his entire weekend. Ryan Matthau is a partner in a three-man real estate investing corporation. His partners, Chris Belker and James Daniels, will be waiting for him to arrive at their newest remodeling project in about an hour.

BACKGROUND OF FOUNDERS

Ryan Matthau, Chris Belker, and James Daniels started to invest in real estate together in 2004. As they repaired and remodeled each property, its value increased as did their equity portion in the property. After a new bank appraisal, they then used the newfound equity to fund the acquisition and remodeling cost of the next property to fuel growth. Each had related experience they brought to the table, making the investing, maintaining, and managing of these properties a feasible, and profitable, endeavor.

Chris Belker has an undergraduate degree in Chemical Engineering from Rochester Institute of Technology (RIT). Unlike the typical engineer, Belker realized he was quite the "people person"; so, he earned his real estate license and began working as a Realtor in the Rochester, NY area immediately out of college in 1995. Though he was making a living, with an annual salary of $33,000, his true inspiration was in investments and following Wall Street. To further pursue this love, he began taking prerequisite courses at Babson College in 2001 in pursuit of his Master of Business Administration (MBA). Over time, Chris dabbled in some small real estate investments and other home projects on his own; but, the fear of risk in the real estate market held him back.

James Daniels worked his way through college, eventually earning his Bachelor of Science degree in Business Administration from Boston College in 1997. Having grown up in a construction family, most of his earnings were derived from construction and handyman endeavors. Even though he was a college graduate, he felt most at home on a job site with a hammer on his hip or a circular saw in his hands and spent his entire career in various construction-related positions. He believed that his real-world skills and book knowledge could lead him to great success as a Donald Trump-like developer. …

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