P3: Calculate Investment Value & Profitability of Residential Properties (P311S0795)
This course will focus on the due diligence of residential real estate investment, i.e. calculations of profits & risks before buying. This CPD course will also look into the ‘homework’ that needs to be done before investment.
Expected Learning Outcome:
- Ascertain the investment value and profitability of investing in residential properties.
- Conduct due diligence as the salesperson should before making any recommendation on the return on equity of an investment in residential properties.
- Assess the level of financial leverage in order to attain the highest rate of return on any residential property investment.
- Gather evidence of recent transaction prices and current rents for the purpose of calculating the profitability before making informed investment decisions.
- Explain common property investment concepts & terms.
- Work out potential cash flow of the investment.
- Calculate Return on Equity (ROE) – by applying rules of thumb of real estate calculation.
- Ascertain gross operating income, standard operating expenses, net operating income and assume a vacancy allowance etc.
- Show relationship between loan quantum & ROE.