Property valuation model for investment decision: (Special reference to Commercial Mortgage Backed Securities (CMBS))

摘要

The ultimate aim of any investor is to maximize his returns and minimize his risk. In order to achieve this aim diversification of investment is made by investors in various types of securities which may lie at a continuum between highly risky and risk free. Commercial Mortgage Backed Securities (CMBS) is one such type of instrument where people who are willing to take benefit of real estate boom, but are not backed by real estate knowledge, can invest in these pooled and repacked loans on commercial property mortgages. The need for the study is to help the investors in better investment decision while investing in CMBS. The level of risk involved to get an ‘x’ rate of yield could be determined by analyzing the various characteristics in a CMBS pool affecting the yield, thereby finding out the level of relationship between each independent variable (LTV, DSCR, Loan Term, Amortization term, etc.) and the dependent variable (yield). This study gives an investment pattern for the investors which can be applied for property evaluation for investment decisions.