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Is the property priced correctly? - Coggle Diagram
Is the property priced correctly?
Investment Value and Worth
They are the simply the present value of future cashflows Discounted at your target Rate of Return
Target Rate of Return
Risk Free Rate + Risk Premium
Risk Premium/ growth are dependent on:
Which can be analysed by looking at these variables
Catchment Profile = Area that is serves
(Nominal) Risk Free Rate = Real Risk Free Rate (how much you want to make on the money in a year) + Inflation Expectation
Best estimated using long medium dated Gilts
Discount rate:
Basic Pricing Model
Cap Rate/ Initial Yield
Target Rate of Return - expected Growth per annum
Risk Free Rate + Risk Premium - Growth
Set this against Market Value (Price)
See if its accurate cheap, expensive.
