VISTA LAND & LIFESCAPES, INC. I. Background of the Com an!

Vista Land is the Philippine's largest homebuilder.

It was incorporated on 28

February 2007 and was listed on the Philippine toc! "#change on 2$ %une 2007. It is the mar!et leader by &ar in terms o& total number o& houses built' ha(ing constructed more than 200'000 homes in )* pro(inces' and +7 cities and municipalities in Lu,on' Visayas and -indanao. .he /ompany currently ran!s among the top listed property &irms in the country in terms o& total assets' earnings and mar!et capitali,ation. 0ith well1!nown and distinct brands 1 2rittany' /rown 3sia' /amella' Lessandra and Vista 4esidences' and through its pro(incial mar!eting subsidiary /ommunities Philippines 1 Vista Land caters to all income segments in the di&&erent pro(inces o& the country. .he range o& product o&&ering starts at Php 7$0'000 5appro#imately 6 7 87'8009 up to Php *8'000'000 5appro#imately 6 7 8'800'0009.Vista Land has demonstrated its continued con&idence in the Filipino mar!et through its plans &or &urther e#pansion into new areas in the country. 0ith the widest geographic reach among all property de(elopers in the Philippines' the /ompany continues to solidi&y the status o& :/amella: as a truly national brand.

II.

"#$ect%&e'

.his paper aims to gain a deeper understanding o& the real estate industry through the determination o& the -ichael Porter;s Fi(e Forces< substitute goods' bargaining power o& suppliers' industry competitors' purchasing power o& buyers and the threat o& new entrants. .he researchers also aim to pro(ide a Priority -atri#' P" .L" 5Political' "conomical' ocio1cultural' .echnological' Legal and "n(ironmental9 and 0=. 3nalysis to be used as e(idence &or &ormulating strategies to impro(e Vista Land > Li&escape' Inc.;s position in this industry.

III.

(at%ona)e #eh%nd En&%ronmenta) Scann%ng and Indu'tr! Ana)!'%' 4eal "state industry pro(ides an opportunity &or people to ha(e a better li&e by

construction o& houses' gi(ing out employment and through entertainment as well. It is an integral part o& the nation;s de(elopment to create commercial and residential homes &or business and society. It is the industry that ma!es these things possible. In the real estate industry' there are commercial and residential or mi#ed1use de(elopments. 3 commercial area consists largely o& business entities li!e &inancial institutions' 2usiness Process =utsourcing' malls' corporate buildings and the li!es. 4esidential de(elopment' on the other hand' creates places conduci(e &or people to reside in and suitable to raise a &amily. .here are some real estate de(elopers that combine commercial and residential concept in one pro?ect hence calling it a mi#1use de(elopment. .he real estate industry is a competiti(e industry to in(est in. People' who are planning to ha(e their own real estate company' will ha(e a di&&icult time building their reputation because they will start &rom scratch. @a(ing an e#cellent trac! record in this industry is something that cannot be done o(ernight. Aou also ha(e to need a large amount o& capital &or you to start this !ind o& business. Aou will ha(e to in?ect a lot o& money in a real estate company. I& you are the type o& person whose ban! account is li!e the 3yala;s then you might ha(e a chance to compete with other real estate de(elopers in the country.

IV. A.

PESTLE ANAL*SIS

Po)%t%ca) Factor 6npredictable and unstable political structure in the Philippines. .he go(ernment policies such as e#pansionary and contractionary policies are &actors a&&ecting the decision ma!ing o& consumers. "#pansionary policies are those subsidies gi(en by the go(ernment to increase the money supply' while contractionary policies are those that decrease money supply. -oney supply could in&luence Vista Land through /entral 2an! o& the Philippines. 3ccording to the Buantity .heory o& -oney' there is a direct relation with money supply growth and the long term in&lation or what we call hyperin&lation. .he go(ernment policies' acts' regulation' bills' and laws' a&&ect the businesses as well. In terms o& ta#ation' staturory reports to the di&&erent agencies within the go(ernment.

B.

Econom%ca) Factor -acro and -icro economic &actors that a&&ect the demand and supply o& the goods and ser(ices pro(ided. "#amples o& these are in&lation' interest rates' &oreign e#change rates and personal sa(ings o& the consumer. In&lation is the o(erall increase in the prices o& goodsC hence it is a &actor a&&ecting the price' as well as the interest rates. .he prices o& goods a&&ect the demand o& the commodity' depending on its elasticity. In this case' these &actors in&luence the consumer to buy properties being sold by Vista Land. Interest 4ates and Foreign e#change rates ha(e an e&&ect on the &air mar!et (alue' thus when interest and &oreign e#change rate are high' and so are the prices and (ice (ersa. In addition' income o& consumer is also one economic &actor that can a&&ect their decision ma!ing in buying or leasing a property.

C.

Soc%o+cu)tura) Factor

.he Philippines is now composed o& D7'70*'000 people according to the 0orld Population tatistics. Eenerally this dictates a bigger mar!et &or the real estate industry. "(en so' Vista Land also has to understand that not all o& the appro#imately D8 million people are going to buy' or ha(e the capability to. .here is what we call classi&ication in

terms o& demographics that pertains to the classi&ication o& population 5age' gender' and the li!es9 -oderni,ation changes the li&estyle and pre&erences o& consumers< the needs and wants' which di&&er &rom a &amily to another relating to their status in the society. 0e do ha(e the upper class' middle class and the lower class. 6pper class is basically those people who are capable o& buying all !inds products &rom housing to condominium units not ?ust a home but also an in(estment. -iddle class is the group o& people who can get what they want i& they would sa(e up &or it. 3nd &inally the lower class' which ta!e up most o& the population. =nly the go(ernment and &oundation can cater to their housing needs. 0hyF Vista Land is a business and businesses are &or pro&it not &or gi(ing out to the poor. =n the other hand' Vista Land is part o& the &ormer senator' -anuel Villar who is acti(ely gi(ing through sponsoring game shows which is a good thing and that is what we call /oporate ocial 4esponsibility. .he business would not only ha(e to &ocus on own bene&its. It is proper that they gi(e to the society as well. D. Techno)og%ca) Factor' .rac!ing down history' establishing houses and in&rastructures was (ery hard and too! hundreds o& years' ?ust li!e the Pyramids in "gypt' hundreds o& people died building and carrying tons weighing bloc!s. Gow through industriali,ation' we ha(e technical inno(ation is an integral part o& putting up a business. In terms o& real estate' technology is use&ul to be able to &inish pro?ects on time or as early as possible it is because time is eHui(alent to cost. .he more time it ta!es' the more labor and raw materials are being utili,ed. 0e are not tal!ing about a &ew numbers o& employees and supplies here. It is mass production. 3nd it would really be help&ul to Vista Land to acHuire technological ad(ancements to cut cost' e(en when the acHuisition o& these technologies is &or a huge amount. In the long run' they could still ma!e use o& them &or all the pro?ects Vista Land would (enture into.

E.

Lega) Factor
4

Vista Land as a corporation in the business o& one o& the most ha,ardous and ris!y occupations' and so it is being go(erned by the 7epartment o& Public 0or!s and @ighways 57P0E9' the 7epartment o& Interior and Local Eo(ernment 57ILE9' the 7epartment o& .rade and Industry 57.I9' the 7epartment o& Labor and "mployment 57=L"9' and the Pro&essional 4egulation /ommission 5P4/9 signed a -emorandum o& 3greement last -ay *' 2088 to strengthen the campaign to minimi,e accidents in construction acti(ities. .his -=3 aims to Ipromote the wel&are o& construction wor!ers and pre(ent the recurrence o& construction1related incidents' notably the ones that recently !illed or se(erely in?ured wor!ers early 2082. 3lso' this -=3 is an o&&1shoot o& 7=L" 7epartment =rder Go. 8) 5which pro(ides the Euidelines Eo(erning =ccupational policies and programs set &orth in 7.=. Go. 8) a&ety and @ealth in the in construction sitesJ. /onstruction Industry9 and aims to intensi&y the holistic and e#tensi(e e#ecution o& the

.he /hamber o& 4eal "state and 2uildersK3ssociation or /4"23 has !ey housing agencies through which they are able to tie up with (arious go(ernment sectors and then' aids /4"23 to establish and implement the said rules and regulations towards the real estate companies. .hese !ey housing agencies would include @ousing and 6rban 7e(elopment /oordinating /ouncil' @ome 7e(elopment -utual Fund' Gational @ome -ortgage Finance /orporation' @ome Euaranty /orporation' and Gational @ousing 3uthority' @ousing and Land 6se 4egulatory board and ocial @ousing Finance /orporation. 3ll these agencies help protect the wel&are o& the company and the labor wor!ers and o& course the consumers &rom di&&erent class in the society. F. En&%ronmenta) Factor .he real estate industry in the Philippines is currently leaning toward ecological &riendly materials due to the global campaign to sa(e the en(ironment. .he materials that are a(ailable range &rom pre &abricated walls and bloc!s to bric!s that is considered to be the oldest building material used. .he pre1&abricated walls and bloc!s use polystyrene as an aggregate that is added to the concrete mi#ture to produce a lighter and insulating product. 4ein&orced &ire bric!s are also one o& the common construction materials that are used in construction o& homes. 4ein&orced bric!s are made o& industrial wastes such as rice hull' coal ash' silt' mud and clay.

In general' there is the ambide#terity between the sustainability the en(ironment and building in&rastructures. 3nd Vista Land has to address to that specially now that we are losing our trees due to e#pansions and de(elopments o& the cities' and it is ob(ious that the world is reacting to the change.

V.

Pr%or%t! ,atr%-

Strateg%e' to Addre'' the Fo))o.%ng I''ue'/ Aggre''%&ene'' of 'u#'t%tute roducer' @IE@ -"7I6L=0

Su @IE@

)%er

contr%#ut%on to #u!er0' 1ua)%t!

Im ortance of our roduct' 1ua)%t! to #u!er'

Brand )o!a)t!

-"7I6-

Degree of Product D%fferent%at%on

Aggre''%&ene'' of 'u#'t%tute roducer'

Num#er of f%rm' roduc%ng 'u#'t%tute'

L=0

Natura) D%'a'ter

Num#er of 'u#'t%tute'

S.%tch%ng Co't

3mong the dominant real estate companies' all o& them are seen to be aggressi(e producers. .hey are considered as aggressi(e because one' all o& them has readily a(ailable resources such as &unding and people. .wo' all o& them are highly ad(ertised ma!ing themsel(es and their products !nown to the mar!et. Lastly' the real estate companiesK worth' based on their stoc! prices do not di&&er &rom each other. 3lso' among these dominant real estate companies' their product lines are within range &rom each other. .his could pro(ide an assumption that they donKt want to be outdone by other players in the industryC which then ma!es it un&a(orable &or all o& them since there is a rigorous competition in their business and in the industry. @owe(er' i& we are to Huali&y whether the go(ernment' the &irm producing the
7

substitute o& the good' is an aggressi(e producer or not' then they would &all as a non1 aggressi(e producer. .his is again due to the &act that they' the go(ernment' ha(e limited resources' &unding and capacity to be at range with the established real estate companies.

Num#er of Su

)%er'

Ei(en that the proponents would be gi(en a chance to enter the industry' granted that there would be a multitude o& suppliers who will pro(ide &or us' the producers. @owe(er' there are only a &ew suppliers who could pro(ide the adeHuate amount o& supplies needed by any real estate company since real estate businesses would reHuire a huge amount o& (olume o& supplies &or a pro?ect to be completed. @a(ing said that' supplies would then be considered as a critical success &actor o& a real estate business. It is a critical success &actor because as mentioned' any real estate pro?ect would need a huge amount o& (olume o& supply and would reHuire numerous indi(iduals to control and manage these supplies. I& e(er a real estate company would choose to outsource their supplies &rom di&&erent suppliers as compared to what is accustomed L getting their supplies &rom one supplier' then it would be more e#pensi(e and would reHuire more time to &inish each pro?ect. 0ith that' the number o& suppliers would then be in a state o& scarcity and is critical to the business. Su )%er contr%#ut%on to #u!er0' 1ua)%t! It is incontro(ertible that supplies being acHuired by producers play a big role in the edi&ices that real estate companies build. .his is because the raw materials that real estate companies acHuire will be used &or production' which will later on probably be a determinant o& their standing in terms o& sales and credibility. For a new entrant' it is essential that they consider the Huality o& their supplies due to the established real estate companiesK pro(en success and Huality o& production. =nce Huality is assured' the new entrants could then gain competence as to compete in the industry. @owe(er' a &irm must not be too dependent on the materials that their supplier pro(ides them withC they too shall conduct Huality control management so to assure Huality and practice the companyKs e&&iciency and e&&ecti(eness.

S.%tch%ng co't

3s discussed' there are only a number o& suppliers who could pro(ide the adeHuate amount o& supplies that one real estate company needs. Ei(en that' it would be di&&icult &or a real estate company' most especially a new entrant' to switch suppliers. In connection to this' it would also then be di&&icult &or a real estate company to manage costs since it is the supplier who controls the price o& the raw materials being pro(ided. In this case' the real estate companies has a neutral stand regarding this matter because then again' it is the suppliers who control prices and thus' ma!es it &a(orable andMor un&a(orable to the real estate companies. Degree of d%fferent%at%on It is in the location and the amount o& property that ma!es each o& the de(elopers uniHue. .here are properties &or people who ha(e big ban! accounts and others are &or middle1class people. 2ut all the de(elopers ha(e one goal and that is to pro(ide e(eryone a better li&e by building them houses. Brand )o!a)t! .here is no customer loyalty in this industry because it all depends on how much the person is willing to spend and the place where they want their house to be located. Im ortance of our roduct' 1ua)%t! to #u!er' .he satis&action o& buyers is the number one priority in this business. 7e(elopers wor!ed hard to reach a reputation that is not Huestionable by anyone. .hey do not want their reputation to be ruined because in this line o& business' reputation is e(erything.

Num#er of f%rm' roduc%ng 'u#'t%tute' 3s a whole' there are innumerable amount o& players in the industry. @owe(er' i& considering the prominent established real estate companies only )0N o& the total players are dominant players and thus' 70N o& the total players are indirect competitors and is still considered as substitute. .hese dominant players are the producers who could pro(ide the
9

abundant amount o& products, which other low1end real estate companies couldnKt. 3lso' these dominant players pro(ide products that cater to both high1end consumers and low1end consumers. .his o&&ering is then' their competiti(e ad(antage and thus' &a(orable to the established real estate companies ma!ing it possible to gain a notable share o& the mar!et. =n the other hand' the only dominant firm that is producing a substitute o& the good o& the real estate companies would be the go(ernment. 0ith that' it is &a(orable &or the part o& the real estate companies since the go(ernment only has limited resources and capacity.

Natura) D%'a'ter' Gatural disasters are (ery rare in occurrence but ha(e high impact to the business li!e Vista Land. .he Philippines is located in the Paci&ic 4ing o& Fire and the trend is that we normally e#perience earthHua!e &rom time to time. 0e also e#perience &ire and some other disasters that are uncontrollable by the company in nature' maybe acts o& Eod or acts o& man. 0hene(er such things happen' Vista Land has to ha(e 2usiness /ontinuity Plan. .hese Huestions maybe address in order to ma!e arrangements in case &ire' earthHua!e' &lood and etc. occurs< 0here will all the people goF 0hat are they going to do in each scenarioF hould they lea(e the premiseF 3re there marshals assigned to lead people so to a(oid panicF .his 2usiness /ontinuity Plan is the best use&ul tool to pre(ent bigger problems once natural disasters occur.

Num#er of 'u#'t%tute trictly spea!ing' it would be di&&icult &or real estate companies to &ind a substitute not only &or their suppliers but the (ery supplies as well. It would be di&&icult &or real estate companies to replace their current suppliers. =ne' there had been stable ties and terms that are already established. I& e(er any real estate company would decide to change their current supplier' then it would reHuire added money' time and e&&ort to conduct outsourcing' Huali&ying and training as opposed to !eeping the established ties and using the money' time and e&&ort &or &urther in(estments. It is also di&&icult to &ind a substitute &or the supplies due to the &act that the current supplies are the trusted and pro(en supplies &or this certain business which is why these raw materials are considered to be the essentials &or the real estate business. .he possible substitutes &or the current supplies are yet to be researched and
10

pro(en as sa&e and trusted supplies to construct the pro?ect. 3nother &actor why it would be di&&icult &or any established real estate company to replace its current supplies would be the &act that i& they replace their supplies' then it would imply that they are ris!ing their e#pected sales andMor income &or again' the Huality o& the materials to be used would re&lect the Huality o& the wor! being produced

VI.

S2"T Ana)!'%' Illustration 8.

Strength' People 1 .he single most important strength o& the Vista Land is its people. ince it is in a real estate industry the ser(ices that their people render will ha(e a proportionate income in their sales. Buality o& Li&e 1 0hile the economic indicators show high po(erty rates' these numbers do not tell the story about Huality o& li&e as measured by time with &amilyC sa&etyC not much pollution' crime' and tra&&icC easy access to the outdoors and solitudeC and close1!nit communities. .hese are things many people see! in retirement while most in the Vista Land ha(e them right out their bac! door.

11

"n(ironment 1 .he scenic beauty and natural surroundings o& the Vista Land are truly remar!able' and are ob(ious economic and community assets. =thers include clean air and waterC (ast e#panses o& public lands and open spaces. .hese are Hualities that certainly bring in tourists but the locals en?oy as well.

Local Planning Initiati(es 1 0or!ing on locally1targeted economic and community de(elopment pro?ects' these groups are helping to impro(e the outloo! o& the region as a whole.

2eakne''e' .ransportation cloggingL most o& the (ista land pro?ects are &or high end and middle class which shows that most o& their pro?ects are not easy to reach (ia public utility (ehicles. For security purposes their pro?ect location regulates public (ehicles to enter. " ortun%t%e' 4ecreational Facilities + "#panding or building (arious recreational &acilities in each community was seen as a needed amenity &or (ista land residents. Giche -ar!ets L it is an opportunity &or the company to di&&erentiate their pro?ects. 3 concrete e#ample is entering the mar!et o& selling house and lots to condominium units. .ourism L the en(ironment that each pro?ect o& (ista land has can attract tourists to in(est more. Labor12ased Potentials L (ista land could bring some new ?obs to the region' but would reHuire studies o& both industry demand and e#isting s!ill le(els. Threat'

12

6ncontrolled Erowth 1 3 lac! o& planning &or growth is percei(ed as a threat to managing it. 3s growth increases it lessens the &ocus o& the company to impro(e their ser(ices because o& increasing channels. Illustration 2. Fi(e Forces

VII. I.

,%chae) Porter0' F%&e Force'

Su#'t%tute'

13

3 broad industry such as real estate would ha(e close substitute in terms o& residential section L condominiums' town houses' apartments' subdi(isions and (illages. ubstitutes would come &rom the go(ernment sectors such as Pagibig @ousing programs and the /aritas Foundation. For commercial section L 4esorts' -alls' =&&ices' Erowth /enters and @otels' the closest substitutes are those recreational par!s and lands owned by the go(ernment such as -useums' Ooos' theaters and other places. II. Su )%er'

In real estate business' the raw materials could be produced by the company itsel& or they can ?ust outsource it &rom manu&acturers to cut cost o& e#penses that could be incurred &rom production o& such. In addition' there are many suppliers who can su&&ice construction. @owe(er' there are only a &ew suppliers who could really meet the reHuired number o& supplies needed by a real estate company since real estate would need Huite a (olume o& materials &or a pro?ect to be completed. .he industry does not tie up with the suppliers themsel(es but through a so1called contractor. .he contractor is the middle man that would ensure whether the materials are su&&icient enough or whether the materials are o& Huality. Buality o& raw materials is important because it would re&lect the Huality o& wor! done. III. Threat of Ne. Entrant' "ntrants in the real estate industry will ha(e to ha(e capital reHuirements o& at least thousands and that is only &or the small1scale real estate de(elopers. For medium to big1scale real estate de(elopers' the capital reHuirements will be millions and e(en billions. .here will be concerns such as land' land titles' contractors' sub1contractors' suppliers' and the li!e.

IV. Com et%tor' 3ccording to .heresa Padillo o& the @ousingInteracti(e Inc.' .he top 82 in the real estate industry in 208) are as &ollows< 3yala Land' Inc.' - Land' Inc.' -ega0orld /orporation' 4obinsons Land /orporation' 4oc!well Land Inc.' Federal Land Inc.' "ton Properties Philippines' Inc.' /entury Properties Eroup' Inc.' hang Properties' Vista Land > Li&escapes' Inc.' 7-/I @omes' and Filin(est Land' Inc. In 2007' Vista was actually in the
14

top $' but it was not able to !eep its place in the mar!et share due to emergence o& these other competitors. V. Bu!er' 2uyers in the real estate housing were classi&ied by %ohn 2urns 4eal "state /onsulting /"=' %ohn 2urns in his inter(iew last %anuary 8' 208) through 2loomberg .V the &ollowing !inds o& buyers< In(estors' -o(e17own 2uyers' 2oomerang' -o(e16p 2uyers' and the "ntry1le(el buyers. In(estors would want to buy properties &or long1term pro&it. -o(e17own 2uyers are those buyers who would want to ha(e a smaller home because &amily members mo(ed out already. 2oomerang buyers are those buyers o& properties &oreclosed. .he -o(e1 up buyers are basically the opposite o& -o(e1down buyersC they buy a bigger house' unit or property. Last are the entry1le(el who are &irst time buyers.

VIII. F%nanc%a) (at%o Ana)!'%'

Financial 4atios /urrent ratio 7ebt1to1eHuity ratio Income be&ore interest

3456354734 8.8$ < 8 0.70< 8 28.8N

3456354733 2.$)< 8 0.++< 8 27N

15

e#pense 4eturn on assets 4eturn on eHuity

$.DN 80N

$.2N 8.7N

III. Financial tatement 3nalysis 3. /urrent 4atio< .his ratio is obtained by di(iding the /urrent 3ssets o& the /ompany by its /urrent liabilities. .his ratio is used as a test o& the /ompany;s liHuidity.

2082< )$'0*0'**8')82.00M 88'D8)'D27' 828P 8.8$ 2088< )2' 28)'227'+$*M 82'7*+'77+'$8*P 2.$) /urrent ratio as o& 7ecember )8' 2082 decreased &rom that o& 7ecember )8' 2088 due to the increase in the current notes payable during the period. 2. 7ebt1to1eHuity ratio< .his ratio is obtained by di(iding the /ompany;s .otal Liabilities by its .otal "Huity. .he ratio re(eals the proportion o& debt and eHuity a company is using to &inance its business. It also measures a company;s borrowing capacity

2082< )0'+D+'D8)'+00M *)'+)*'$8+'008 P 0.70 2088< 2+'88*'0$+'D)7M *0'+88'$88'80+ P 0.++

7ebt1to1eHuity ratio increased due to the increase in the total liabilities brought by the issuance o& *.8 billion domestic corporate note in 3pril 2082 o&&set by the repurchase o& Q22.0 million 6. . dollar note in %une 2082

/. Interest e#penseMIncome be&ore interest e#pense< .his ratio is obtained by di(iding interest e#pense &or the period by its income be&ore interest e#pense. .his ratio shows whether a company is earning enough pro&its be&ore interest to pay its interest cost com&ortably

16

Interest e#pense as a percentage o& income be&ore interest e#pense decreased in the year ended 7ecember )8' 2082 compared to the ratio &or the year ended 7ecember )8' 2088 due to a decrease in interest and &inancing charges &or the year.

7. 4eturn on assets< .his ratio is obtained by di(iding the /ompany;s net income by its total assets. .his measures the /ompany;s earnings in relation to all o& the resources it had at its disposal.

2082< *')7$'+02'+$8M 7*'))8'*2D'+08P $.D 2088< )'$27'D8*'027M +7'$72'$+8'7*)P $.2 4eturn on asset impro(ed &or 7ecember )8' 2082 compared to that on 7ecember )8' 2088 due primarily to the higher net income reported. ". 4eturn on eHuity< .his ratio is obtained by di(iding the /ompany;s net income by its total eHuity. .his measures the rate o& return on the ownership interest o& the /ompany;s stoc!holders.

2082< *')7$'+02'+$8M *)'+)*'$8+'008 P 80N 2088< )'$27'D8*'027M *0'+88'$88'80+ P 8.7N

4eturn on eHuity increased due to a higher net income reported &or the year ended 7ecember )8' 2082.

2ased on the en(ironmental scanning we ha(e conducted' we ha(e come up with strategies that will &ill the companies; gap between their (ision and ob?ecti(es in terms o& mar!eting' operations and &inancial aspects.
17

ST(ATE8IES T" ADD(ESS FINANCIAL, "PE(ATI"NS AND ,A(9ETIN8 ISS:ES "F T;E C",PAN* 2ased on Vista Land and Li&escapes Financial tatement 3nalysis there is an increase in the current notes payable &rom the pre(ious year to the current year. 2eing said that' the company must establish a 7ebt -anagement Plan a&terwards i& the entire decisionLma!ers o& the company appro(e it then it will be the time to implement it. 3 debt management plan is a &ormal agreement between a debtor and creditor. 7ebt -anagement Plans help reduce outstanding' unsecured debts at a reduced le(el o(er a &i#ed period o& time to help regain control o& &inances. 7ebt -anagement Plans are indi(idually tailored based on what can be realistically a&&orded on a monthly basis. .o achie(e an accurate &igure' an income and e#penditure test will establish what monies are coming into the household and what is being paid out. Income and e#penditure includes e(erything' such as rentMmortgage' secured loans and utility bills. =nce the income and e#penditure is completed' the le&to(er amount is your disposable income which is di(ided amongst creditors through a 7ebt -anagement company. .he /ash &low o& the company speci&ically the operating acti(ities o& Vista Land must be monitored to assure that the company is capable o& paying their obligations and ma!e this debt management plan a success. 3s indicated in the statement o& cash &low the total cash and cash eHui(alents o& the year 2082 is P@P 8'D$8'72D'+22. 3n assessment on how much must be paid each month in a year to be able to pay &ully the &ace (alue in each note payable. In a real estate business' they always use large debt contracts to &inance new de(elopments. .hat is why it is not li&eli!e to ?ust pay e(erything on a cash basis.

2ased on the &inancial statement analysis the net income is doing good a matter o& strategi,ing on how to maintain the good per&ormance. .he ma#imum 4eturn o& In(estment ' you need to employ the best real estate mar!eting means in order to generate greater and better real estate leads. Aou need to be sure on how to go about real estate It
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means that you need to chec! out ways such as Pay Per /lic! 5PP/9 and 4 imple techniHue to generate increased numbers o& real estate leads.

54eally

yndication9 and /ost per Lead as well as blog mar!eting as your chosen

earch engine optimi,ation &or real estate helps you generate greater numbers o& leads because your real estate online business gets more (isibility whene(er the search engine results come in' which will grow your real estate business considerably. @owe(er' there are other methods too that you can use in order to increase your real estate leads and among them is using teaching seminars' and in &act' once you get it right' you can e(en earn some e#tra money ?ust &or generating leads. .hus' by choosing teaching seminars that deals with topics such as real estate in(esting' and also &inancial planning as too estate planning you can generate more real estate leads and do so in a (ery natural manner as well. =ther use&ul options that will help you increase your real estate leads are to build lists and so' by capturing email addresses and names o& one and all' you can de(elop many possible leads &or your real estate business. Aou can also use a simple and e&&ecti(e method by using content mar!eting as a means to generate more leads and you should reali,e that the most success&ul lead generating online businesses are those that pro(ide a whole lot o& in&ormation that is di(erse and also abundant. Finally' the company should also ensure that they don;t put all your leads in a single bas!et and instead' di(ersi&y your strategies pertaining to lead generation to be on the sa&e side.

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APPPENDICES

4eal estate in(esting in(ol(es the purchase' ownership' management' rental andMor sale o& real estate &or pro&it.4eal "state has traditionally outper&ormed 0all treet eHuity mar!et. 3 street by street !nowledge o& the mar!et ma!e it per&ect &or small sa((y in(estors. Large institutions lag behind trends.Impro(ement o& realty property as part o& a real estate in(estment strategy is generally considered to be a sub1specialty o& real estate in(esting called real estate de(elopment. 4eal estate is an asset &orm with limited liHuidity relati(e to other in(estments' it is also capital intensi(e 5although capital may be gained through mortgage le(erage9 and is highly cash &low dependent. I& these &actors are not well understood and managed by the in(estor' real estate becomes a ris!y in(estment. .he primary cause o& in(estment &ailure &or real estate is that the in(estor goes into negati(e cash &low &or a period o& time that is not sustainable' o&ten &orcing them to resell the property at a loss or go into insol(ency. 3 similar practice !nown as &lipping is another reason &or &ailure as the nature o& the in(estment is o&ten associated with short term pro&it with less e&&ort.

4eal estate mar!ets in most countries are not as organi,ed or e&&icient as mar!ets &or other' more liHuid in(estment instruments. Indi(idual properties are uniHue to themsel(es and not directly interchangeable' which presents a ma?or challenge to an in(estor see!ing to e(aluate prices and in(estment opportunities. For this reason' locating properties in which to in(est can in(ol(e substantial wor! and competition among in(estors to purchase indi(idual properties may be highly (ariable depending on !nowledge o& a(ailability. In&ormation asymmetries are commonplace in real estate mar!ets. .his increases transactional ris!' but also pro(ides many opportunities &or in(estors to obtain properties at bargain prices. 4eal estate entrepreneurs typically use a (ariety o& appraisal techniHues to determine the (alue o& properties prior to purchase.

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T! %ca) 'ource' of %n&e'tment ro ert%e' %nc)ude/ -ar!et listings 5through a -ultiple Listing "#change9 4eal estate agents and 4eal estate bro!ers 2an!s 5such as ban! real estate owned departments &or 4"='s and short sales9 Eo(ernment entities 5such as Fannie -ae' Freddie -ac and other go(ernment agencies9 Public auction 5&oreclosure sales' estate sales' etc.9 Pri(ate sales 5o&&1mar!et transactions &or sale by owner For sale by owner9 4eal estate wholesalers and in(estors 5&lipping9 er(ice or /ommercial In&ormation

=nce an in(estment property has been located' and preliminary due diligence 5in(estigation and (eri&ication o& the condition and status o& the property9 completed' the in(estor will ha(e to negotiate a sale price and sale terms with the seller' then e#ecute a contract &or sale. -ost in(estors employ real estate agents and real estate attorneys to assist with the acHuisition process' as it can be Huite comple# and improperly e#ecuted transactions can be (ery costly. 7uring the acHuisition o& a property' an in(estor will typically ma!e a &ormal o&&er to buy including payment o& :earnest money: to the seller at the start o& negotiation to reser(e the in(estor's rights to complete the transaction i& price and terms can be satis&actorily negotiated. .his earnest money may or may not be re&undable' and is considered to be a signal o& the seriousness o& the in(estor's intent to purchase. .he terms o& the o&&er will also usually include a number o& contingencies which allow the in(estor time to complete due diligence' inspect the property and obtain &inancing among other reHuirements prior to &inal purchase. 0ithin the contingency period' the in(estor usually has the right to rescind the o&&er with no penalty and obtain a re&und o& earnest money deposits. =nce contingencies ha(e e#pired' rescinding the o&&er will usually reHuire &or&eiture o& the earnest money deposits and may in(ol(e other penalties as well.

Source' of %n&e'tment ca %ta) and )e&erage

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4eal estate assets are typically (ery e#pensi(e in comparison to other widely a(ailable in(estment instruments 5such as stoc!s or bonds9. =nly rarely will real estate in(estors pay the entire amount o& the purchase price o& a property in cash. 6sually' a large portion o& the purchase price will be &inanced using some sort o& &inancial instrument or debt' such as a mortgage loan collaterali,ed by the property itsel&. .he amount o& the purchase price &inanced by debt is re&erred to as le(erage. .he amount &inanced by the in(estor's own capital' through cash or other asset trans&ers' is re&erred to as eHuity. .he ratio o& le(erage to total appraised (alue 5o&ten re&erred to as :L.V:' or loan to (alue &or a con(entional mortgage9 is one mathematical measure o& the ris! an in(estor is ta!ing by using le(erage to &inance the purchase o& a property. In(estors usually see! to decrease their eHuity reHuirements and increase their le(erage' so that their return on in(estment 54=I9 is ma#imi,ed. Lenders and other &inancial institutions usually ha(e minimum eHuity reHuirements &or real estate in(estments they are being as!ed to &inance' typically on the order o& 20N o& appraised (alue. In(estors see!ing low eHuity reHuirements may e#plore alternate &inancing arrangements as part o& the purchase o& a property 5&or instance' seller &inancing' seller subordination' pri(ate eHuity sources' etc.9 I& the property reHuires substantial repair' traditional lenders li!e ban!s will o&ten not lend on a property and the in(estor may be reHuired to borrow &rom a pri(ate lender utili,ing a short term bridge loan li!e a @ard money loan &rom a @ard money lender. @ard money loans are usually short term loans where the lender charges a much higher interest rate because o& the higher ris! nature o& the loan. @ard money loans are typically at a much lower Loan1to1(alue ratio than con(entional mortgages. ome real estate in(estment organi,ations' such as real estate in(estment trusts 54"I.s9 and some pension &unds and @edge &unds' ha(e large enough capital reser(es and in(estment strategies to allow 800N eHuity in the properties that they purchase. .his minimi,es the ris! which comes &rom le(erage' but also limits potential 4=I. 2y le(eraging the purchase o& an in(estment property' the reHuired periodic payments to ser(ice the debt create an ongoing 5and sometimes large9 negati(e cash &low beginning &rom the time o& purchase. .his is sometimes re&erred to as the carry cost or :carry: o& the in(estment. .o be success&ul' real estate in(estors must manage their cash &lows to create enough positi(e income &rom the property to at least o&&set the carry costs.

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Get operating income' or G=I' is the sum o& all positi(e cash &lows &rom rents and other sources o& ordinary income generated by a property' minus the sum o& ongoing e#penses' such as maintenance' utilities' &ees' ta#es' and other items o& that nature 5debt ser(ice is not &actored into the G=I9. .he ratio o& G=I to the asset purchase price' e#pressed as a percentage' is called the capitali,ation rate' or /3P rate' and is a common measure o& the per&ormance o& an in(estment property. .a# shelter o&&sets occur in one o& three ways< depreciation 5which may sometimes be accelerated9' ta# credits' and carryo(er losses which reduce ta# liability charged against income &rom other sources. ome ta# shelter bene&its can be trans&erable' depending on the laws go(erning ta# liability in the ?urisdiction where the property is located. .hese can be sold to others &or a cash return or other bene&it. "Huity build1up is the increase in the in(estor's eHuity ratio as the portion o& debt ser(ice payments de(oted to principal accrue o(er time. "Huity build1up counts as a positi(e cash &low &rom the asset where the debt ser(ice payment is made out o& income &rom the property' rather than &rom independent income sources. /apital appreciation is the increase in mar!et (alue o& the asset o(er time' reali,ed as a cash &low when the property is sold. /apital appreciation can be (ery unpredictable unless it is part o& a de(elopment and impro(ement strategy. Purchase o& a property &or which the ma?ority o& the pro?ected cash &lows are e#pected &rom capital appreciation 5prices going up9 rather than other sources is considered speculation rather than in(estment.

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