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This time, it was distributed on CONSPIRIT's official channel on YOUTUBE.
Episode 15: Boost your quality of life with real estate management!I would like to send you the contents.

Well, this time we will be looking at
"Time Value of Money"This is the story.

You may be wondering, "What does that have to do with real estate management?"
Understanding the "time value of money" is very important when making real estate investment decisions.

It's a very simple story,
The value of 1 million yen you receive today is different from the value of 1 million yen you receive a year from now..
In sensory terms,
Some people might choose to receive 1 million yen today over 100 million yen 100 years from now.

Let's think about it more specifically.
If the annual interest rate is 5%,
1 million yen today will be worth 1.05 million yen in a year.

That means,
1 million yen today is worth more than 1 million yen a year from now.
You can think of it as being worth 50,000 yen more.
This difference is the "time value of money."

If we apply this thinking to real estate management, the same thing can be said about rental income.
Assuming rental income continues to come in in the future,
By dividing it back into its present value,
You will begin to see the "time value" of the property.
You can also use it to decide whether or not you should invest in that property.

Now.
When comparing caches with different timescales,
You have to adjust the value of that time.

How much future cash is worth today?
It can be calculated by dividing by the interest rate.

Using the previous example, we calculate

Present value 1 million yen x 1.05 (= 1 + 5%) = 1.05 million yen

So, 1 million yen today is worth 1.05 million yen one year from now.
That's what it means.

So, what happens when you want to convert the value of money you will receive in the future into its present value?

What happens if you convert the 1 million yen you will receive in one year into present value?

This is the opposite of the previous calculation,

Future value 1 million yen ÷ 1.05 (= 1 + 5%) = 952,380 yen

It becomes.
The 1 million yen you will receive in one year is
That means it's worth the same as 952,380 yen as of today.

The percentage to calculate future value from present value is "Expected rate of return",
The percentage used to divide the present value by the future value is "Discount rate"and,
are called respectively.
By the way, "discount rate" is a word that comes up when making various judgments and calculations.
Please remember this as basic knowledge.

If we apply this "expected rate of return" and "discount rate" to real estate management,
I think it's okay to assume a percentage return.

Also, this is not a story from a year later,
If we consider five years from now, the calculation becomes "squared," "cubed," etc.

For example, 1 million yen in five years,
Converting it to present value using a discount rate of 5%,

Future value 1 million yen ÷ 1.05^5 (^ = power) = 783,526 yen

It is expressed by the calculation:
The 1 million yen you will get in 5 years is
The idea is that it is worth the same as the current value of 783,526 yen.

By being able to think in this way,
Is it okay to invest in that property?
This makes it possible to perform quantitative calculations.

To measure this,
"NPV = Net Present Value)
This is an investment decision indicator.
Regarding "NPV",
I would like to explain this on another occasion.

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