Finance formulas to compare the best value of a house

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SUMMARY

This discussion focuses on evaluating the value of two houses, priced at $350,000 and $250,000, by incorporating various financial and social variables over a 10-year span. Key financial formulas mentioned include the Compound Interest Formula (A=P(1+i)) and the Annuity Formula (S=R((1+i)^n-1)/i). The user seeks to assess how factors such as crime rate, proximity to a mall, and school quality affect property values. The conversation highlights the need for a structured approach to integrate these variables into a comprehensive financial analysis.

PREREQUISITES
  • Understanding of Compound Interest and Present Value formulas
  • Familiarity with Annuity calculations
  • Knowledge of real estate valuation factors
  • Basic grasp of economic indicators affecting property prices
NEXT STEPS
  • Research how to apply the Compound Interest Formula in real estate scenarios
  • Learn about integrating social variables into property valuation models
  • Explore advanced financial modeling techniques for real estate investments
  • Investigate the impact of crime rates on property depreciation and appreciation
USEFUL FOR

Real estate investors, financial analysts, and anyone involved in property valuation and investment decision-making will benefit from this discussion.

Niaboc67
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Homework Statement


House one is going for say 350.000 and House two is going for 250.000, both have the same bed and bath. Yet i want to add variables for instance house one has a decline in crime rate variable also a newly build mall. House two has new schools and crime is on the rise. So my question is how would i set this up using the formulas, and which one(s). Also i want to add the variables of both houses with crime, mall, school. All this within a 10 year span. So i am looking for the best house deal, where down the line one of two houses would be the best deal. The crime variable(s) would a depreciation for the first and increasing for the second. The mall would be a increase value variable. And schools would a increase variable. Please help, and any additions or edits you'd like to make to the variables or anything please go right ahead

Thank you!

Homework Equations


I am doing a project using finance formulas such as: Compound interest formula of a future value A=P(1+i) or Present Value P=A/(1+i)^n. As well as Annuity Formula of future value S=R((1+i)^n-1)/i or Present Value P=R((1-(1+i)^-n)/i


The Attempt at a Solution



not entirely sure how to do so.
 
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Why aren't the additional variables already captured in the price?
 

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