Insight Into The Analysis

It is time to engage in some decomposition, looking behind the equations and the spreadsheet icons into the inner workings of the process. Previously, we referred to the variables as deterministic because we can determine the outcome the net present value by choosing values for particular variables.1 The outcome changes every time the values of the variables change. With any change in the nominal value of a variable, we explicitly cause a change in return, as measured by the net present value....

Threshold Performance Measures for Real Estate Investment

Pluralities non est ponenda sine necessitate (approximately Keep it simple, stupid). This chapter deals with the initial measures used in the field to decide if one wants to collect more information and perform further analysis on a real estate investment opportunity. Even at this threshold stage, the analysis of data can enhance decision making. The availability of plentiful data for privately owned real estate investments is relatively new. As with any new tool, using it to full advantage...

Threshold Performance Measures

They are for the tire kicking'' stage of a search for a suitable property. They give quick-and-dirty answers. As such, they ignore many important aspects of investing. Thus, the answers provided can easily be wrong. However, we must start somewhere. Rules of thumb are important for two reasons. First, real estate information is costly, and the decision to pursue more information on one project precludes devoting more time to another, possibly more profitable,...

Contents

Why Location Matters The Bid Rent Surface and Theory of Rent Determination Example 1 Two Competing Users in the Same Industry 3 Example 2 Several Competing Users in Different Industries 5 Is the Bid Rent Curve Linear 7 An Economic Topographical Map 12 Who Shall Decide The Problem of Externalities 20 Optimization and Comparative Statics 27 A Case Study in Aesthetic Regulation 32 Appendix Comparative Statics for Chapter 2 37 3. The ''Rules of Thumb'' Threshold Performance Measures for Real...