Real Estate Valuation: NPV & IRR Analysis

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NPV and IRR analysis can be applied to real estate valuation.

The standard decision rules apply, in that an NPV greater than zero or an IRR above the required rate of return indicates that the real estate investment should be undertaken.

IRR Challenges for Real Estate Valuation:

  • IRR cannot properly value real estate investments where cash flows begin positive and become negative for a period.

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