DCF method

Reliable information and also its targeted analysis are prerequisites for sound investment decisions concerning the management of existing buildings. After all, the result of an investment calculation can only be as valid as the underlying data. For a holistic picture, both information on the structural condition of the real estate and also economic key figures are required. But how does a multitude of different data lead to the return-oriented planning of measures? The so-called DCF method, also known as the net present value method, helps.

Optimize return with the DCF method

It is a method of dynamic investment calculation that focuses in particular on the returns expected in the context of an investment. And on their present value. For this purpose, the so-called discounted cash flow (DCF) or net present value is calculated. This represents the discounted total of all cash flows in the relevant period. The calculation interest rate is used to estimate the expected return on investment, including a risk premium.

The goal of the method is usually to determine the DCF (net present value) of all deposits and also payouts. As it indicates the benefits of the investment, it can therefore be either positive or negative. In the case of a negative DCF, the investment is not recommended, as the desired minimum return cannot be achieved. A positive DCF means that the minimum return is exceeded.

IT-supported analysis of the DCF

In AiBATROS®, the module “Investment” enables customer-specific calculation logics to be used to determine the return on an investment using the DCF method. The amount of the planned investments as well as the running costs can be taken over directly from the software. So-called cost dividers, which are also set up to suit individual customers, also integrate the forecast rental increases for residential properties caused by modernization measures.