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Real Estate Investment Analysis: New Developments in Traditional Leverage Concepts
Author(s) -
Bible Douglas S.,
Celec Stephen E.
Publication year - 1980
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00212
Subject(s) - leverage (statistics) , real estate , economics , financial economics , real estate investment trust , business , finance , computer science , machine learning
The advantages of utilizing leverage in real estate investments has received much attention in the past, but little guidance has been offered that shows the investor the most opportune leverage position for a given investment alternative. Traditional leverage concepts are explored in this article, prior to developing a financial indifference point model and a continuous‐function degree of financial leverage (DFL) formula. The indifference point and DFL as shown here are relatively simple to calculate and provide additional insights into risk, return and leverage concepts for real estate investments.