Optimal Holding Period Analysis: Much Ado About Not Much

  • June 21, 1979
  • • Written by: Austin J. Jaffe 

Summer 1979, Vol 4, No 1

Abstract: During the past decade, real estate investment analysis has openly embraced the capital budgeting and valuation framework of modern financial management. This orientation has enabled real estate analysts to make much better use of financial information and data when analyzing investment opportunities and when making investment decisions. One of the areas of interest is the analysis of the optimal holding period for income-producing property. This paper reviews some oif the work in this area, including the Financial Management Rate of Return (FMRR), and provides some new results about the importance of the determination of the optimal holding period. A major implication is that little information can be gained by an extensive examination of the optimal holding period.