Why You Need to Calculate Future Value in Real Estate
In a hurry:
Apply it today:
In real estate, typically used to estimate how much loan balance is remaining at some point in time in the future
=FV() function in Excel or financial calculator
By the end of this episode you’ll learn:
What is it?
How is it calculated?
The =FV() function
How is it applied?
Have a few minutes:
Commercial real estate investing requires you to make estimates of the future. How would you feel if you could tell the future with accuracy?
Thankfully, with the help of some time value of money math, you can, at least in certain circumstances.
While the most common application is trying to estimate the remaining, unpaid loan balance at some point in the future, Future Value calculations are also used to estimate future collections (like rental payments) and future distributions (like partnership splits and payments).
In this episode we’ll explore the most common application of Future Value calculation, the remaining loan balance. We’ll discuss why its important, how its applied, the long- and short-hand formulas along with some common errors and solutions to remember.