Investment real estate
Study rent, borrowing, sale proceeds, escrow and fund units using synthetic cash flows, with attention to liquidity, costs and the evidence needed for decisions.
Lessons
Rental yield after costs
12 min
Start with scheduled rent and subtract vacancy, management and operating expenses. Distinguish gross rental yield from net operating income, and identify the costs excluded from this simplified example.
Mortgages and equity returns
12 min
Split an annuity payment into interest and principal repayment. Compare the loan payment with cash available to the owner and calculate cash-on-cash return on the equity invested.
Liquidity and vacancy
12 min
Consider six months without a tenant while costs continue. Examine the cash reserve needed to carry an illiquid property and avoid confusing an asking price with immediately available money.
Sale proceeds and tax checks
12 min
Subtract selling costs and outstanding debt from the sale price. Keep proceeds before tax separate from any personal tax calculation, which depends on ownership periods, evidence and current law.
Construction contracts and escrow
12 min
Follow the relationship between the buyer, escrow bank and developer. Distinguish contractual release conditions from deposit-insurance coverage and retain the source edition’s uncertainty about legal changes.
Closed-end property funds
12 min
Distinguish owning a fund unit from directly owning an apartment. Review fund rules, fees, valuation, redemption restrictions and access conditions before comparing a unit with a liquid security.
Comparable scenarios and foreign property
12 min
Compare property, deposits and a bond ladder using the same funding dates and budget. Review currency, documentation and foreign-account issues separately rather than assuming one market’s rules apply everywhere.