NPV, IRR, FMRR, MIRR, CpA – Stirring the Alphabet Soup of Real Estate Investment, Part 1

By Frank Gallinelli

It may seem like a witch’s brew of random letters – but truly, it’s just real estate investing. You can handle it. Any or all of these measures can be useful to you, if you understand what they mean and when to use them.

NPV

NPV is, of course, Net Present Value. NPV is connected to what all good real estate investors and appraisers do, namely discounted cash flow analysis (aka DCF, if you’d like some more initials). Discounted cash flow is a pretty straightforward undertaking. You project the cash flows that you think your investment property will achieve over the next 5, 10, even 20 years. Then you pause and remind yourself that money received in the future is less valuable than money received in the present.  Continue reading-->

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