Question

Potential investors, in analyzing the profit potential for a distressed property, generally consider a financial framework including the acquisition phase, the holding period phase and the disposition phase.True / False.

Answer 1

Answer:

It is True that potential investors, in analyzing the profit potential for a distressed property, generally consider a financial framework including the acquisition phase, the holding period phase and the disposition phase

Explanation:

Acquisition is the process of gaining ownership or control of a real estate. It is usually sold by brokers to investors.

In the case of distressed property, there is always a holding period

Holding periods are usually targeted at 2-5 years, during which the asset that has been acquired is renovated.

The end of the holding period transitions to the beginning of the disposition phase.

During the disposition phase, the real estate which could be a distressed building is being disposed or handed over to the owners. At this phase, complete documentation is done and handed to both parties to endorse.

A comprehensive financial framework detailing all the expenditure across the acquisition phase, holding period and the disposition phase must be in place in order to get an accurate calculation of expenditure data to used in analyzing the profit potential of a property.