《Anderson_Street》.pdf

Harvard Business School 9-386-036 Rev. January 22, 1992 Anderson Street In June of 1987, Charlie Leonard began searching for a small income-producing apartment building in which to invest. Leonard had just graduated from Harvard College, and he was working for a manufacturing firm in Newton, Massachusetts. He had grown up in Boston and was attracted to the investment potential of the Back Bay-Beacon Hill area, which he considered the best residential section of downtown Boston. Many of his contemporaries were renting apartments or had purchased homes there, and he and his wife had attended many of their parties. He considered paying rent to someone else a waste of a capital building opportunity, since he was building up someone elses equity. Leonard wanted to gain experience in the real estate field, and build an equity base for future real estate investments. He hoped to increase his return by managing and operating his property on weekends and after normal working hours. Leonard had recently received an inheritance from a great aunt of $25,000, and he wanted to achieve maximum leverage for this equity. Although he had no real estate experience, he had a working knowledge of carpentry from three years of designing and building sets for Harvards Hasty Pudding Show. Beacon Hill Properties Leonard began to spend all his free evenings and weekends becoming familiar with the area. He obtained a copy of the U.S. Census Tract, Boston Standard Metropolitan Statistical Area (SMSA) to check the demographic data on age breakdowns, educati