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Real Estate Investment Evaluation Challenges and Solutions

Real Estate Investment Evaluation Challenges and Solutions


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What are the challenges for investment in Real Estate?

Investors often become confused with evaluating an investment and the industry acronyms. According to the property and investment goals, metrics could be different. Therefore, monitoring appropriate metrics is essential to track risk and evaluate the investment before investing in a real estate property.

Solutions for Property Investment Evaluation

Checking investment risk and evaluating an investment is equally important. Considering important factors to check investment health may guide the investors for making decisions and taking corrective actions.

Investment Evaluation

Our solution will be able to answer the following question that may help the investor to analyze the risk of investment and take actions accordingly:

  1. What is the investors’ potential return on a property?
  2. What is the project profitability?
  3. How much capital will it take to run a property?
  4. How much money will the property earn after all operating expenses are paid?
  5. What is the estimated return on a property?
  6. What will be the value of investment property?
  7. How much will a property cost you to operate?
  8. How many years will it take for a property to pay back the initial investment amount?
  9. How well has an investment performed?

Figure 1: Investment Evaluation Plan

Figure 2: Investment Evaluation Plan dashboard

User Story

  • As shown in Figure 2, the capitalization rate is very low, which tells us the potential return on a property, so it pays back to the investor very slowly.
  • The IRR(Internal Rate of Return) is also negative, which means it is giving a negative return. It should not be negative; it should be high to get back their investment quickly.
  • Other parameters like Gross rent multiplier and Cash on cash return is also very low. As a result, Property Id “59” investment is very risky. It will not be returning investment with speed to the investor.
  • It also gives the details of Gross operating income and Net operating income.

End Customer Value

It will give an investment’s cap rate, return rate, income, profit, and expenses rate to monitor how much investment is paying back.

Why XenonStack?

XenonStack will provide a complete solution with Demo and several KPIs and metrics to evaluate property investment they have already invested in and evaluate the risk for the properties they will invest in. Investors can compare properties risk and choose the least risky to return their investment and get high revenue. So that accordingly they can make decisions.

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