What is bid time return?

Bid time return (BTR) is a financial metric that measures the time it takes for an investment to recover its initial cost through cash flows generated by the investment. This metric is commonly used in the real estate industry to evaluate the profitability of a property investment.

To calculate BTR, you divide the initial cost of the investment by the annual cash flow generated by the investment. The result is the number of years it will take for the investment to recover its initial cost.

For example, if an investor purchases a rental property for $200,000 and the property generates $20,000 in annual rental income, the BTR would be 10 years ($200,000 / $20,000 = 10). This means that it will take 10 years for the investor to recoup the initial investment through rental income.

BTR is a useful tool for investors to assess the profitability and risk of an investment. A lower BTR indicates a faster return on investment, while a higher BTR indicates a slower return on investment. Investors can use BTR to compare different investment opportunities and make informed decisions about where to allocate their capital.