IMPACT OF DEPRESSED ECONOMY ON REAL ESTATE FINANCE
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IMPACT OF DEPRESSED ECONOMY ON REAL ESTATE FINANCE
CHAPITRE ONE
INTRODUCTION (1.0)
1.1 BACKGROUND OF THE STUDY
Most people associate “financing” with the strange exchange of pieces of paper involving something called “interest” that takes occur anyplace.
Those that pursue their interest in finance quickly discover that you don’t have to go that far before engaging in a financial transaction. Most communities have branches of the main brokerage firms.
There are also commercial banks and savings institutions, as well as microfinance banks and numerous communities of all sizes. Financial transactions can be conducted practically anywhere; there is no need to visit a commercial bank. You only need two or more people.
According to Chika E Udechwuku (2008), real estate financing is the process of gaining funds or capital for development in order to gain ownership over the property or assets. There are two classifications of estate financing that tend to overlap.
1. Whether the financing is provided internally or outside by the real estate owners or developers.
2. The first two are dependent on the third, which is the term of the estate in question.
According to Sherman J. Maise (1987), real estate finance is primarily concerned with the decisions that raise large sums of money for the goal of owning or developing real estate. Although all decisions are sometimes made by a single individual, two or three distinct parties are frequently involved in a financing transaction.
Furthermore, the majority of the funds are borrowed from financial institutions such as mortgage banks. Furthermore, real estate financing or real estate finance entails assessing the situation, postponing the transaction, and deciding on the optimum way of real estate financing given the risk and certainty of the scenario.
Given the numerous ways in which funding can be arranged, professionals must grasp how the alternatives differ in their ability to increase prospective rewards while also increasing or decreasing the risk of failure.
Traditional mortgage lending has been affected by new forces in recent years; formerly, the majority of mortgage funds came from local lenders. Each loan was handled uniquely, and loans were held until the debt was paid off. Mortgages are now traded on a nationwide level. Sherman J. Maise also remarked in 1987 that:
1. A user of capital, developers, and owners of real estate must get funding in order to build and operate their own properties. Very different financial analysis, i.e. behind the decisions made by the greatest group of customers, those who want to own a home, compared to the judgements made in purchasing income properties or land.
2. Funds are provided by a range of persons. Companies, institutions, and the government. Some of these establishments will be discussed. Governments and its agencies, as well as international investors, have become more major sources of money.
However, the significance of serious groups has grown. Mortgage and real estate agents assist in locating funds and advising customers on the finest sources of cash.
1.2 AIM
The primary goal is to do research on the influence of the poor economy on real estate financing.
1.3 MAIN OBJECTIVES
1. To investigate the influence of the current economic downturn on real estate financing.
2. To examine how finance can be obtained and the various types of financing available for real estate development.
3. To investigate the instrument utilised in real estate financing and the procedures to follow in sourcing real estate funding.
1. STATEMENT OF THE PROBLEM
Financing of real estate has many challenges that specific investors in Real Estate finance face, whether it is a home owner seeking a loan, someone planning to sell or invest in real property,
an employee of a financial institution active in lending and building a mortgage portfolio, or a mortgage or investment banker developing new ways to raise money on securities require certain basic knowledge to function well.
In accordance with this, this study will investigate what factors influence interest rate levels, who lends on mortgages, and how home purchasers can receive reasonable financing even when the economy is struggling.
1.5 RESEARCH METHODOLOGY
Primary and secondary sources of information were used in the process of selecting information and data for the study.
Primary sources of information include interviews, personal observations, and the use of questionnaires.
Secondary sources of information included the usage of textbooks on real estate finance in Nigeria. We also consulted organisations and made references to journals, conference papers, and other pertinent published material.
1.6 SCOPE OF THE STUDY
The study will look into real estate financing, with a focus on Osun state. In order to carry out this research, it is necessary to explore alternative financing theories and how they affect real estate efficiency.
This study also looks at the government’s housing finance initiatives. This dissertation was restricted to those located in Osogbo.
1.7 JUSTIFICATION FOR THE STUDY
Financing real estate, particularly in a down economy, is a difficult undertaking for individual investors, governments, and cooperative entities. However, it is critical to conduct research on this topic in order to alleviate the anxiety felt by real estate investors during a moment of economic downturn.
The study will also highlight numerous challenges and problems that may arise while financing real estate in a down economy, so one should be prepared and take precautions for such entilalitie. Furthermore, numerous sources of funding for real estate will be made available to people during the course of the study.
1.8 LIMITATIONS OF THE STUDY
Some problems were encountered over the course of the investigation, which limited the scope of the study. These problems are as follows: money constraints and time constraints.
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