As a real estate investment analysis, which return do you lean must heavily upon?
There are a number of measurements that affect an investment property decision ranging from capitalization rate to cash flow after tax. Which have found to be the most meaningful?
Speaking as a lender, the most important parameters are cash flow (availability of slightly more cash than the payment amount each month, from the earnings of the property), and loan-to-value (ensuring that borrower has some equity in the property, and that it will be possible to resell the property should something unfortunate happen along the way.)
The investor might use different measures for his/her analysis, typically rate of return on cash invested.
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