ABSTRACT
Real estate is real property. The visualization of real estate is a commercial building (office, retail, warehouse, condominium, multifamily), residential home, or farm. However, when considering the financial aspects, the "picture" of real estate is quite different. Real estate is tangible, it can be seen, touched, felt, and at times of distress, kicked. There are myriad methods to value real estate. A real estate asset can be valued as a single income source or as a plethora of sources, e.g. tenant leases. In the case of an office project where multiple tenants occupy the asset, the value can be determined as the portfolio of leases rather than as a single project, i.e. office asset. Internal Rate of Return (IRR) is the discount rate calculated by setting the Net Present Value (NPV) equation to zero for a series of cash flows. It is the premier Western method for evaluating real estate projects.
