Investment Analysis
Details
As a property analyst, you are required to carry out an investment analysis report for your client who has an opportunity to purchase income-producing property. You must identify an income-producing commercial property (office, retail or industry) that is still in the market or recently sold (as recent as January 2022 to date) and obtain the information for the property as follows:
- Property Data- purchasing costs-legal fees etc.
- Income Data-vacancy rate, current rent, fixed operating expenses, variable expenses etc.
There are 5 major parts of this report:
Part 1: Introduction You should provide the identification of the property. It includes the description information of the subject property.
Part 2: Property Market You should review the property market in the past 5 years. This would include vacancy rate, price, demand, supply, rental, incentives, investment activity and yields. You should also review key market fundamentals such as the Australian GDP, cash rate or lending rate, population, unemployment level, and inflation.
Part 3: Mortgage Requirements You are also required to obtain information on your client’s mortgage requirements. Identify the amount of loan that is required, term and repayment frequency and interest rate. Based on the information, calculate the loan repayment. Compare offers from at least three lending institutions.
Part 4: Investment Analysis By using the collected data, conduct a detailed investment analysis. The analysis should include:
- A discounted cash flow,
- IRR and NPV on the property,
- The impact of debt financing,
- The optimal financing strategy
Part 5: Conclusion You should summarise the key findings. Recommendations should also be given.
