Investment Factors

Risk:  The uncertainty associated with the performance of an investment.

• Quantity – How Much?
• Quality – How Good?
• Durability – How Long?

Liquidity: The ability to convert an investment to cash with little or no loss to value.

Marketability: The ability to dispose an investment at a reasonable price and in a reasonable period of time in an established procedure.

Factors that affect marketability:

• Available financing
• Economy
• Supply & demand
• Easily accessible marketplace

Manageability: The ease to which an investment is managed during operation as well as acquisition and disposition.

• Degree
• “CPM” Certified Property Manager
• Self

Taxability: The extent to which an investment is taxed.  Taxability falls into different categories: tax deferred, ordinary taxation, and long term capital gains.

Cash Flow: The actual cash thrown off by the investment during the holding period.

• Operation
• Disposition
• Refinancing

Leverage: The use of borrowed funds to finance an investment.

Return: A measurement of the yield of an investment.  It is commonly made up of return on and return of investment.

Appreciation:

• Fixed Supply
• Geographical Features
• Population Trends