Real estate projects can be evaluated by different methods that vary in complexity. Financial experts always advise that it is better to do proper audits and timely evaluation of the expenditures at every stage of development so as to do away with the waste in expenditure. Cost overruns have forced many of the real estate developers to wind up their operations due to decreasing profits. However, the prominent names in the Real Estate Business in India are those who have incorporated better business practices.

Through comparative costing, it will be possible to analyze the project costs at various stages of development. Here a straight comparison is made between the initial capital costs of projects, and these may be the determining factor when funds are limited. Otherwise it suffers from the obvious weakness that it fails to take into account the size and timing of Net Annual Revenues (NARs), since all projects are rated equally.

Analyzing the cut-off period is very important. A developer needs to choose a period within which the initial cost could be recouped. Since the leading financial institutions finance a majority of the real estate projects, the built up spaces must be sold out in record time or else it will be difficult for the real estate developer to stay profitable.

Real estate businesses that are able to keep the pay back period to the shortest possible time gain more profits. Here investment options are ranked according to how long income yields take to recoup the initial outlay. This method can be justified where uncertainty, either as regards future cash returns or obsolescence of equipment, is marked for then a possible quick exit must be borne in mind. But it fails to take into account the differences in the timing of yields earned before the payback date. Yields earned after the payback date will most probably be taken up to pay the interest.

I love this online investment calculator if you're interested in one..

http://militaryfinance.umuc.edu/calculators/InvestmentProperty.html

So, what software or formula do you use to figure all this out?

I feel more than a calculator or a tool for evaluating real estate investment, checking on some basic points would be more reliable. For example the credibility and sound financial of the developer. A realistic assessment of the value of the project and the upfront amount paid. Here the assumptions made are that you are an average investor and not a investment house making bigger commitments.

In my opinion, the industry standard is ARGUS. However, it is very very expensive (thousands of dollars). An inexpensive yet good model can be found at www.cremodel.com

Software my company markets can be pretty useful, especially for buy/hold investors of residential and commercial rental properties: http://www.rentalvaluator.com

I agree with sant36, spreadhsheets are one thing but working with a good REALTOR who is well connected and knows about the developer as well as local building dept and what ideas they are, or are not open to.

Hi,
It is very interesting and exciting to find a group of like minded real estate investment professionals. There are lots of efforts and research involved in order to get a dream team. Log on to:http://www.baltimorereia.com

Thank you @bonhamsurf @VAInvestor @JFremont for sharing the "investor calculators."

As a rental investor, I generally make my decisions based on the theoretical cash flow from my future rental agreement.
Basically, I look for a 50% positive cash flow from my rental properties, and try to target neighborhoods with potential to gentrify.
If you're really feeling it, go for it! The market is ripe.
Cheers,
_________________________
Brian
Rental Agreement

As a client investment representative with investment portfolios ranging from retail to Oil and gas, diversifying into real estate seems daunting.
Am seeking information from experts with investor funds management skills that can provide invaluable advise how to enter into this market while achieving the aim of profiteering.
Any ideas anyone?

The methods of evaluating the real estate investments are very important and essential for the real estate business. You can get the information from the site http://www.lasvegasrelocation.com which gives the information of the Las vegas real estate business and methods.

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Indeed a good informative write-up. We should also consider:
Comparative return period
Alternative use
Possible chances of downtrend in that specific area
Builder associated with the property