How to Determine Your Subjective Capitalization Rate?
Determining your subjective capitalization rate involves a self-assessment of various factors:
1. Risk Tolerance: Evaluate how much risk you're willing to take. Are you conservative, moderate, or aggressive in your investment approach? 2. Return Expectations: What rate of return do you expect from your investment? This could be influenced by your financial goals and timelines. 3. Market Knowledge: How well do you understand the market in which you are investing? Greater knowledge can reduce perceived risk. 4. Historical Performance: Consider your past experiences and the performance of similar ventures. 5. Economic Conditions: Current and projected economic conditions can influence your expectations and risk assessment.