How fast and safe of your decision making in real estate deals?

      In some cases, we can use payback period method (simple to compute and easy to understand:  cost of project divided by annual cash inflows) to get a quick idea of what kind of investment we deal with, and then consider whether to go ahead or not (with detailed  Net Present Value approach later). For instance, in a fast moving market, such as in commercial and investment property markets, investors can use payback period method to find out how long, or which one has the shorter payback period. The reason behind this is that "the shorter the payback period, the greater the liquidity, and the less risky the project" (Payback period, 2009, p.1). However, it must be very carefully (with good investment experience and have good real estate broker and lawyer to draft and present your buy and sale agreements) when make use of this approach.

Reference

Payback period. (2009). Dictionary of accounting terms. Retrieved March 02, 2009,

     from, http://www.answers.com/topic/payback-period.