Even if you master terms like “cap rate” and “IRR” there is an old-fashioned way of analyzing property listings that may be better suited to the current Covid-19 advocacy market. And that’s what I call “worst case / best case / realistic scenario”. It’s a formula that will keep you in trouble by making sure you don’t miss any opportunities. So how does it work?

The worst scenario

In that case, make your estimate of the operation based on the worst-case scenario. Suppose vacancies are high and costs rise. Take your worst fears and write them down – and don’t hold them back. It’s all about figuring out how things can go wrong when you’re unlucky in American history. So see if you can financially handle this event. For example, suppose you want to buy an RV park. They say, “For the past three years, sales have averaged $ 100,000 a year, but with Covid-19 I want to be on the safe side and expect $ 80,000 (20% reduction).” And then in the expense category, you say, “This property is not adequately insured and property taxes are adjusted when you buy it, so I want to add $ 10,000 a year to the cost.” Then run the numbers with these assumptions and see if you can still make the mortgage payment. And or not, you can personally manage the negative cash flow until you make a difference.

At best

You are now moving from your greatest worries to your most obvious hopes. For example, when you come back to the RV park you say, “This property has almost no online visibility and a bad website so I know I can increase sales in property by 30% in the first year.” or “I have a way to improve the clubhouse’s energy efficiency and it will save $ 5,000 a year in a property.” If you do this more optimistic analysis, you will see how much money could be made if everything went perfectly. This shows you why you are risking the worst. case by case. the best to be great!

Realistic living

In this analysis, you are somewhere between the worst decisions and the best scenarios: the chances of landing. This job should provide you with an easy way to get mortgage protection and an attractive cash return (the amount you make from the advance payment). And the realistic scenario shouldn’t be too tight, it should allow you to stick to your schedule and achieve your goals on a rainy day and without much stress.

Put it all together

Thats how it works. If you can survive the worst case scenario and like the best scenario – and are 100% satisfied and satisfied with the realistic scenario – then you should move on with the measure. If you can’t survive the worst case scenario, find the best scenario and enjoy the real life story, then don’t buy it. This type of analysis also takes away a lot of your worries because it provides a scientific basis for your fears and allows you to quantify them objectively, not just through myths and legends.

overall

The “Worst Case / Best Case / Realistic Case” analysis can tell you a lot about your company and whether it suits you as a buyer. It’s an outdated method, but it’s even better as a tool than many online spreadsheet concepts. If you can survive the worst, love the best, and settle for the realistic, you will have a lucrative, low-stress experience

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