Investment approach
Total return and risk in residential property
Price appreciation is only one component. Total return includes rent, vacancy, CAPEX, taxes, finance and exit.
A sales deck may highlight appreciation or gross yield. Housing research uses a fuller view: income during ownership, change in value, costs and risk through time.
Eichholtz studies total returns over long series. Melser examines return, risk and diversification. A market index provides context but does not remove technical, contractual and liquidity risk from one home.
Build the model
Start with collections net of vacancy and arrears. Deduct community charges, insurance, tax, management, maintenance and CAPEX. Add purchase and sale costs. With debt, separate asset performance from equity cash flow.
Document the full budget and exit range. In the calculator, move duration, renovation, rent and exit together.
Sources
Historical results are not a promise of future return.
Questions and answers
What is total return?
Income, value change and all costs over time.
Is one home diversified?
No. It concentrates address, building, contract and liquidity.
What needs sensitivity testing?
Duration, CAPEX, rent, vacancy, finance and exit.
