Q. I plan to buy a rental property as an investment. How do I evaluate its potential return?
A. There are many factors impact the return of your real estate investment. Some are under your control, some are not. Some are upfront decisions, some are future uncertainties. Some are property related, some are tenant-driven.
We have introduced a quasi-quantitative real estate evaluation model before, here we will introduce a truly quantitative real estate investment evaluation model that every investor could use to evaluate if a rental property is a good deal or not.
You just need to fill up the cells colored in yellow color with your estimated data, this model will return the projected NPV and IRR for this investment property. If you have a fairly high IRR, it's a good sign that the opportunity maybe a good deal. If not, pass it and keep looking for the next one.
A. There are many factors impact the return of your real estate investment. Some are under your control, some are not. Some are upfront decisions, some are future uncertainties. Some are property related, some are tenant-driven.
We have introduced a quasi-quantitative real estate evaluation model before, here we will introduce a truly quantitative real estate investment evaluation model that every investor could use to evaluate if a rental property is a good deal or not.
You just need to fill up the cells colored in yellow color with your estimated data, this model will return the projected NPV and IRR for this investment property. If you have a fairly high IRR, it's a good sign that the opportunity maybe a good deal. If not, pass it and keep looking for the next one.
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