What is the term for a method used to determine the viability of a real estate investment?

Feasibility analysis is the term used to determine the viability of a real estate investment. This method involves assessing various factors, such as market conditions, location, potential return on investment, costs, and regulatory considerations, to evaluate whether a project is practical and likely to succeed. This comprehensive approach provides investors with critical insights into whether the investment aligns with their financial goals and risk tolerance.

By conducting a feasibility analysis, investors can identify potential challenges and opportunities before committing resources to a project. It serves as a foundational step in the investment decision-making process, ensuring that investors make informed choices based on thorough evaluations of both the financial and physical aspects of the investment.

The other options, while related to investment evaluation, do not specifically encompass the broader spectrum of factors considered in feasibility analysis. For instance, break-even analysis specifically focuses on identifying the point at which revenues equal costs, showing how much sales volume is needed to avoid losses, but it doesn’t encompass the full range of viability assessments. Investment analysis typically refers to the act of evaluating different investment opportunities but lacks the focused context of practicality. Lastly, profitability analysis is aimed more at measuring how much profit an investment can generate rather than assessing its overall feasibility.