[eyeC]

I m working on a property investment model to help IC members answer questions like the following:

1-what is the fair market price of the property
2- The risk involved with the investment
As you know investment decisions are made based on rate of return and risk
The higher the returns usually can be obtained only at the price of greater risk
Usually investors and ppl in general they can only calculate to a certain accuracy the return on the investment without knowing much about the risk involved.
We see most property advertisements showing only rate of return and based on that number ppl make their decisions to invest or not to invest
3-When to start investing
4-When to sell for Optimum profit staying too long invested in a property could result in loss or less profit

Since the mathematical model will be based on Probability and future estimates it will not help much to make very complicated model where you could add unlimited factors that can affect the outcome

A model based on predictions will only give predictions at the end

So we start with a simple model that can be improved if desired

A key measurement of investors’ success is the rate at which their funds have grown during the investment period

The HOLDING PERIOD RETURN =HPR
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HPR = (selling price- buying price + cash income)/buying price
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We need to know what HPR are possible and how likely are they
We need to devise a list of possible outcomes or scenarios and specify both the probability of each scenario and the HPR the property will realize in that scenario this is called scenario analysis.

End of part one