Simply stated, an opportunity cost is
the cost of a missed opportunity. Applied to
a real estate
decision, opportunity cost might refer to
the profit a company or
an individual investor could have
earned from its capital, equipment, and real
estate if these assets had been used in a
different way. The concept of opportunity
cost may be applied to many different
situations. It should be considered whenever
circumstances are such that scarcity
necessitates the election of one option over
another. Opportunity cost is usually defined
in terms of money, but it may also be
considered in terms of time, person-hours,
mechanical output, or any other finite,
limited resource.
Any decision to make
and investment has an associated cost, i.e.
the opportunity lost n another comparable
real estate investment. An investor is
required to have reliable information to
make the best decision regarding the
potential acquisition.
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