Macroeconomic Drivers of Property Returns

Excelling in real estate investing requires a good understanding of the macroeconomic drivers of property returns. The 2008 global financial crisis that affected property pricing and investment returns in most property markets around the globe, provides the strongest perhaps evidence of the overwhelming effect that macroeconomic variables can have on property markets and investment performance... Continue Reading →

Discount Rate, IRR and NPV in Property Investing

Real estate investors are often bombarded by different measures of real estate investment performance: Internal Rate of Return (IRR), Net Present Value (NPV), income return, capital return, cash-on-cash return, unleveraged return, etc. All these can be confusing to someone that does not have a full understanding of how they are calculated. The discount rate is... Continue Reading →

Present Value (PV) and Property Investment

The present value (PV) is the estimated value today of all cash flows associated with a property investment (excluding investment cost, CF0) over its holding period discounted at the investor's required rate of return.  It is an indirect measure of investment performance as it provides the maximum price that the investor can pay in order to... Continue Reading →

Required Return for Property Investment

When considering the acquisition of a property, investors need to determine a minimum required return, which then can be used in the analysis of the expected cash flows of the property as the discount rate for estimating the maximum acquisition price that would allow the investor to achieve that minimum required return. In more technical terms,... Continue Reading →

Invest Smart: Target Under-supplied Property Markets and Sub-markets

Why Investors Should Target Under-supplied Property Markets Investors have better chances of achieving double-digit returns by targeting under-supplied property markets because such markets are more likely to produce strong capital growth.  Appreciation or capital growth is one of the most important, if not the most important source of return for real estate investments.  Capital growth is... Continue Reading →

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