The return on investment in income property is tied to two basic economic components: the annual net income it produces, plus the proceeds of refinancing or sale. Therefore the total return on a real property asset is a combination of annual returns and the final payoff from sale of the asset. The first step in the process is a CMA; the second is a property characteristic analysis. Scrutiny of past performance and the rent roll is important, but so are the lease expirations, projected renewal rates, and cost of re-leasing. Also is estimating future rent increases and the projected cost of maintaining and improving the property. Next in Part 2: Understanding Present Value.