You should do an analysis of how the property will perform over time. You want to look at your going in cap rate. You want to look at current cash flows as well as future cash flows and determine an expected internal rate of return (IRR). From there you can determine your capital accumulation (CA) which, after all the percentages and ratios gives you what you really want to know, how much money do you accumulate with the investment over time? You can then compare properties to see which perform the best.
If you would like help with that contact me at firstname.lastname@example.org or 626 485-5163.
Paul Sylvester, CCIM
Apr 13, 2009