Each of the aforementioned commercial applications provides superior advantages over simple manual
calculator point estimates. However, the cost to run such programs is a concern for most students in
undergraduate real estate investment courses. With prices ranging from $350-$3,500 per seat for a
temporary license, an argument can be made that a simple Excel Visual Basic model, vertically aligned
to address real estate valuation, would be more practical and cost efficient. Likewise, the ability to
assess return risk is absent from all the packages. Available real estate software venders are listed in
Appendix A.
Several major themes are apparent from reviewing the available literature. (1) Spread sheet pro forma
analysis and the use of discounted cash flow techniques are widely used in real estate investment
valuations; (2) risk assessment of real estate investments requires both quantitative and qualitative
analysis; (3) quantitative modeling will never fully displace decisions based on sound fundamental, yet
possibly subjective, business rationales; (4) and, a lack of advanced statistical training by real estate
investors, along with heterogeneous real estate markets and minimal modeling tools, makes more
advanced probabilistic risk analysis less viable. Given these documented observations, the model
Each of the aforementioned commercial applications provides superior advantages over simple manualcalculator point estimates. However, the cost to run such programs is a concern for most students inundergraduate real estate investment courses. With prices ranging from $350-$3,500 per seat for atemporary license, an argument can be made that a simple Excel Visual Basic model, vertically alignedto address real estate valuation, would be more practical and cost efficient. Likewise, the ability toassess return risk is absent from all the packages. Available real estate software venders are listed inAppendix A.Several major themes are apparent from reviewing the available literature. (1) Spread sheet pro formaanalysis and the use of discounted cash flow techniques are widely used in real estate investmentvaluations; (2) risk assessment of real estate investments requires both quantitative and qualitativeanalysis; (3) quantitative modeling will never fully displace decisions based on sound fundamental, yetpossibly subjective, business rationales; (4) and, a lack of advanced statistical training by real estateinvestors, along with heterogeneous real estate markets and minimal modeling tools, makes moreadvanced probabilistic risk analysis less viable. Given these documented observations, the model
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