This 46-page E-book, entitled
Real Estate Investment Mathematics, by P. Sivitanides, Ph.D., presents and discusses a comprehensive collection of the mathematical formulas that investors, analysts and real estate professionals can use to estimate several measures of one-period and multi-period real estate investment performance, including the Internal Rate of Return (IRR) and the Modified IRR (MIRR)/Financial Management Rate of Return (FMRR). The book includes comprehensive presentation of all formulas needed with numerical examples so that the reader can have a complete understanding of how the formulas are applied.
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The following FORMULAS are presented and discussed in this book:
The three Formulas for Modified IRR (MIRR)/Financial Management Rate of Return (FMRR)
Potential Gross Income Multiplier< (PGIM)
Potential Gross Income (PGI)
Effective Gross Income Multiplier< (EGIM)
Effective Gross Income (EGI)
Net Income Multiplier (NIM)
Net Operating Income (NOI)
Overall Capitalization Rate/Income Return
Capitalization Factor
Band-of-Investment Formula for Estimating a Market/Required Capitalization Rate
Theoretical-Approach Formula for Estimating a Market/Required Capitalization Rate
Appreciation Return
Total Return
Return on Total Capital (ROR)
Return on Equity (ROE)/Cash-on-Cash Return/Equity Dividend Rate
Before Tax Equity Cash Flow (BTECF)
Equity Investment
Loan Amount
Debt Service
Mortgage Constant
Payback Period
Breakeven Occupancy
After Tax Cash Flow (ATCF)
Taxable Income
Internal Rate of Return(IRR)
One-Period IRR
Income Tax Payment in Association with Income Producing Property
Capital Gains
Formula for Cash Flow for Last Period of Analysis
Future Resale Price
Annual Rental Income of Occupied Multi-Tenant Property
Multi-Period Lease Rate Growth Formula with Intertemporally Variable CPI Forecast
Multi-period Lease Rate Growth Formula with Constant CPI Forecast
Present Value (PV)
Net Present Value (NPV)
Profitability Index
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About the Author
Dr. Petros Sivitanides has a Ph.D. from M.I.T. with specialization in urban and real estate economics, and 14 years of experience in real estate investment consulting and forecasting with CBRE. Dr. Sivitanides has been quoted in the Wall Street Journal for his forecasts regarding the lodging industry. He has authored and co-authored numerous articles that have been published in major academic and professional journals in the fields of real estate and urban economics. Besides the Wall Street Journal, he has been quoted in several industry publications such as the Institutional Real Estate Letter, Commercial Property News, Multi-Housing News, etc. He is also the author of the book
Profitable Real Estate Investing.
