Author: Justin

Module 8: Final Exam

Review:

  • Module 7

Presentation:

  • Video Lecture
  • Please ignore any references to the “Data Science for Business” assignment you may have seen. It’s not required.

Final Exam:

  • I will be sharing a final exam in Google Sheets format on Bb.
  • The Google Sheets file will contain materials and instructions for completing the final exam.
  • Once you have attempted all the exam questions you need to create a video presentation, as described below.
  • Video Presentation Instructions:
    • Each student will create a video in one of 2 formats
      • Zoom style screen recording (like my lectures), or
      • Homemade video (use your phone)
    • Provide a “tour” of your final exam answers with the Google Sheets file displayed.
      • Explain how you approached each question and how you arrived at each answer.
      • Be honest and direct about what you do and don’t understand.
    • Your video should be approximately 5 minutes in length.
      • Speak clearly! If I can’t follow your commentary it may negatively impact your grade.
      • Don’t rush through it. Take time to explain yourself.
      • Don’t make the video unnecessarily long but don’t worry if you go a little over.
    • Post your video on YouTube (yes, only YouTube is acceptable, to keep grading manageable).
    • Post your YouTube link in Bb.
    • Post the link only! Please do not try to actually upload the video to Bb.
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Module 8: Final Project

Instructions for the final project:

1. Improve your Pitch Deck and ROI Analysis

  • Revise/Edit/Improve your Pitch Deck slides
  • Revise/Edit/Improve the accompanying ROI Analysis
  • Grading standards will be higher for your presentation materials and ROI analysis
  • Tighten up all your slides and then double + triple check your ROI for accuracy, consistency and clarity
  • Your deal needs to make sense.
  • If your numbers aren’t attractive, then find the lowest purchase price that makes them reasonably attractive.

2. Create a video.

  • Each student will create a video in one of two (2) formats
    • Zoom style screen recording (like my lectures), or
    • Homemade video (simply use your phone)
  • In your video you will
    • Present your revised Pitch Deck.
    • Explain your ROI Analysis
  • I want to see your face during the video. Don’t record audio only. This will help me better understand what you know and what you don’t know.
  • Don’t read from a script, make it conversational, like answering questions in a job interview. Use your own words.

3. Your video should be approximately 5 minutes in length.

  • Speak clearly! If I can’t follow your commentary it may negatively impact your grade.
  • Don’t rush through it. Take time to explain yourself.
  • Don’t make the video unnecessarily long but don’t worry if you go a little over.

4. Provide a YouTube link.

  • Post your video on YouTube (yes, only YouTube is acceptable, to keep grading manageable).
  • Post your link in Bb.
  • Post the link only! Please do not try to actually upload the video to Bb or send via email.
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Module 7: Simulation Part 2

Review:

Presentation:

  • Video Lecture (38 min)
  • Random Variables
    • Discrete Random Variables
      • Probability distribution table
      • Dice Simulation
    • Continuous Random Variables
      • Stock Market simulation next week

Assignment:

  • Stock Market Simulation in Sheets
    • Use Annual Stock Market Return data as a starting point
    • Assumptions
      • stock market returns are normally distributed
      • mean = 11.88%
      • standard deviation = 19.76%
  • Modifications Part 1
    • Generate a 40-year simulation (instead of 30)
    • Modify the simulation to add $1,000 to the balance each year
    • Make a histogram of your ending balances
  • Modifications Part 2
    • Add a “fixed income” (bonds) component to your simulation
    • Assumptions
      • bond market returns are normally distributed
      • mean = 7.88%
      • standard deviation = 6.86%
  • Your “portfolio” should be 60% stocks and 40% bonds
    • How does the distribution of ending balances change?
  • Submit your Sheets link or Excel file here
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Module 7: REITs

Review:

  • 2008 Mortgage and Housing Crisis

Presentation:

Assignment:

  1. Read: investing in REITs
  2. Identify two (2) REITs from the REIT Directory you might consider for investment.
  3. Write a 2-page paper about each of the REITs. (2 papers, 4 pages total)
    1. Review the recent market performance of each REIT
    2. Answer the following:
      1. Why did you select the REIT, and/or
      2. Why do you expect your selected REIT to outperform the market
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Module 6: Simulation Part 1

Review:

  • Module 5

Presentation:

  • Video Lecture
  • Probability
    • Topic worthy of its own course
  • Simulation
    • Random phenomenon
      • Individual outcomes are uncertain
      • Regular distribution of outcomes in large number of trials
    • Random number generation and stochastic processes
  • Coin Toss Simulation
  • Dice Roll Simulation

Assignment:

  • Replicate the Coin Toss simulation
    • 200 coin tosses (instead of 32)
    • reproduce the graph (showing 200 tosses)
  • Replicate the “Lucky 7” simulation
    • 100 rolls (instead of 32)
    • Experiment with different Payoff Odds values (in cell K2)
    • What payoff odds would you suggest the Casino owner use to maximize revenue?
  • Simulate Chuck-a-luck where the player rolls 3 dice
    • Here are the rules
    • Apply the following simplifying assumptions
      • If sum of 3 dice >10, player wins the “Big” (1 to 1 odds)
      • If the roll is three of a kind, player wins “Any Triple” (30 to 1 odds)
      • All other outcomes, player loses the bet
    • Will the “House” win money over time with these rules? Explain.
  • Upload to this Google Form
    • If Google Sheets, provide a Shared link
    • If MS Excel, upload your .xlsx file
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Module 6: 2008 Mortgage and Housing Crisis

Review:

  • Real Estate Investment Pitch Deck

Presentation:

Assignment:

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Module 5: Regression Modeling Part 2

Review:

  • Regression Modeling Part 1
  • MLB
  • East Side Real Estate

Presentation:

  • Video Lecture
  • Variable Creation
    • Demonstrate with Sample Real Estate data
    • Multicollinearity
    • Interaction Variables
      • combine separate variables mathematically
      • add, multiply, etc
      • another way to avoid problems with multicollinearity
    • Dummy Variables
      • incorporate categorical variables
      • binary – value is either 1 or 0
      • if 0, then the coefficient has no effect on y-hat
      • if 1, then the coefficient is added

Assignment:

  • Multiple Regression Analysis
    • Select the worksheet corresponding to the last digit of your PID from this file: PuebloRealEstate_Exam2Data_ByPID
    • Save a copy of the data and convert to .xlsx format
    • Use Excel with the Analysis Toolpak Add-in
    • Build a regression model to estimate selling price
      • You must use 1 interaction variable
      • You must use 1 or more Dummy variables
      • Experiment with multiple combinations of variables to find the best model, maximizing and balancing R^2 and the F Statistic
    • Generate selling price forecasts for the following 4 Pueblo properties (with neighborhood location)
      • 4 bed, 3 ba, 2,931 sqft (Belmont)
      • 2 bed, 1 ba, 1,650 sqft (Central High School)
      • 3 bed, 2 ba, 1391 sqft (Northside/Avenues)
      • 5 bed, 3 ba, 3070 sqft (Regency and Meadows)
    • Submit your Excel spreadsheet (.xlsx) here.
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Module 5: Investment Proposal

Review:

  • ROI Analysis

Presentation:

  • Video Lecture
  • Funding your real estate investment
  • Think of it as a business startup … because that’s what it is.
  • Prepare a “pitch” for potential investors
  • Feel free to use materials found elsewhere

Assignment:

Create an Investment Proposal “Pitch Deck”

  1. Use the apartment building identified in Module 3.
  2. Calculate valuation metrics (should already be complete)
    1. Price per unit
    2. Gross Rent Multiplier
    3. Cap Rate
  3. Complete an ROI Analysis
  4. Prepare a PowerPoint (or Google Slides) “pitch deck” for potential investors.
    1. Include the valuation estimate
    2. Include the ROI analysis
    3. What is “the ask”, i.e., how much money do you need?
    4. Include a slide about yourself
      1. Why you are the right person to lead the investment?
      2. How will you participate and how will you be compensated?
  5. Submit your pitch deck as a PDF
    1. Download/Save your Google Slides file or your PowerPoint Presentation file (.pptx) in PDF format.
    2. Upload your PDF file to Bb.
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Module 4: Regression Modeling Part 1

Review:

  • Time Series Analysis

Presentation:

Assignment:

  • Build a Regression Model to predict Real Estate prices
    1. Use East Pueblo RE Sales 2014-2016
    2. Test all variables and select the best combination
    3. Produce a Final Model, aiming to maximize R^2 and F-Statistic
  • Build a Regression Model to estimate MLB winning percentage
    • Use 2013 MLB Team statistics
    • Test all variables and select the best combination
    • Produce a Final Model, aiming to maximize R^2 and F-Statistic
  • Submit Your Assignment
    • Put your final models on two separate worksheets (maybe label one tab “Real Estate” and the other “MLB”) within *one* single Microsoft Excel file (.xlsx).
    • Bb is sort of a disaster when it comes to Excel uploads so please submit using the link below.
    • Upload your Excel file here
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Module 4: ROI Analysis

Review:

  • Multifamily Valuation

Presentation:

  • Video Lecture
  • Pro Forma ROI Analysis
    • ROI worksheet
    • Begin with Valuation – what’s the property worth?
    • Estimate rental income – fair market rent?
    • Estimate expenses
      • Property taxes
      • Insurance
      • Maintenance
      • Repairs
      • Management
      • Utilities
    • Use an amortization schedule
      • Calculate interest payments
      • Calculate principal payments
    • Estimate tax benefits
      • Depreciation
      • Tax shelter
      • Tax savings
    • Appreciation?
    • Estimate ROI
      • Total
      • Annualized

Assignment:

  • Use the 4-plex identified in Assignment 3.
  • Watch the video above and follow instructions for completing an ROI Analysis.
  • Submit your ROI analysis spreadsheet
    • Share a link to your Google Sheets file in Bb, OR
    • Upload your Excel file (.xlsx) in Bb.
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