Real Estate Investments
TWR VS IRR
To evaluate real estate, TWR (Time-Weighted Return) is often used instead of IRR (Internal Rate of Return). TWR represents the geometric mean of returns derived from operational income […]
Archive
Category: Real Estate Finance & Investments by William B. Brueggeman; Jeffrey D. Fisher
Real Estate Investments
Real Estate: Diversification & Inflation Hedge
Diversification is often a key factor driving investment in real estate. The charts below illustrate the efficient frontiers of two portfolios for the period 1978-2009. On the vertical […]
Real Estate Investments
Disposition of Real Estate
As with any other income-generating asset, replacing real estate makes sense only if the funds obtained from selling it can be invested in another asset with better returns […]
Real Estate Development
Best Use and Option Analysis of Land Value
To determine the intrinsic value of development land, the Highest and Best Use Analysis technique is employed. Naturally, the intrinsic value of development land is derived from the […]
Real Estate Investments
Risk & Return in Real Estate
Risk Description Example Business Risk Income varies with economic activity and market conditions. High vacancy rates during a recession reduce rental income for office buildings in downtown areas. […]
Real Estate Investments
Positive vs Negative Leverage in Real Estate
Based on the impact of leverage on the return on equity invested, the concepts of positive and negative leverage exist in the real estate sector. Three main parameters […]
Real Estate Investments
Property Value Sensitivity
In this post, I aim to demonstrate how sensitive the long-term value of real estate can be to short-term shocks. By “shocks,” I mean unplanned changes in both […]