Analysis of the above mentioned factors matters a lot in any real estate
investment model. For instance, if you conduct a research and you get
to know that the property you are planning to buy has had a bad rental
history in the past or its value has not been appreciated over many
years, you will deem it as a high risk property. However, there are
several other factors worth considering, if you want to determine this.
Your real estate model must have other information as well, for
instance, data from every cash flow determinant is as important as any
other detail.
Make sure that information related to one or all property operating expenses has been taken in consideration by you, including expenses that you can recover from tenants or occupancy rates, capital expenditures and every other cost associated with the property. When you include all the gathered information your financial investment model can be produced. Don't forget to mention the economy, market history and any predicted future changes that might affect the property's valuation.
Source: http://www.youtube.com/watch?v=_-dhGyYbi-w
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