With the above qualitative understanding, the next most important consideration in real estate investment is what price to pay or what would be the rate of return for a given price paid or offered.
To determine the price or to calculate the rate of return, when the price is given, three basic elements are involved:
(1) Research: Collecting information needed to obtain correct input data (e.g. Marcus and Millichap market research data and rental data from apartment managers),
(2) Input date management: Analyzing collect information on input data (e.g. Argus Lease By Lease software and Microsoft Excel), and
(3) Valuation: translating the input data into a price or the rate of return, when the price is known (e.g. the Infinite Spreadsheet described at http://www.post-science.com/ispatent.pdf and http://www.infinitespreadsheet.com, NOT market comparison of prices or Discounted Cash Flow Method, which are fatally flawed http://www.postscience.com/fatal.htm).
In practice, the combination of the three products can create a Dream Team For Commercial Real Estate Brokerage are: (1) Research from Marcus and Millichap, (2) Lease By Lease software from Argus, and (3) Infinite Spreadsheet from Post-Science Institute. However, (1) and (2) above can be replaced, respectively, by, for example, property management companies and spreadsheets.
The Infinite Spreadsheet (3) can determines a price without assuming a resale price with ALL the inputs obtainable from market comparison.