A methodology is presented for making property investment decisions using loss
analysis and the principles of decision analysis. It proposes that the investor choose among
competing investment alternatives on the basis of the certainty equivalent of their net asset value
which depends on the uncertain discounted future net income, uncertain discounted future
earthquake losses, initial equity and the investor’s risk tolerance. The earthquake losses are
modelled using a seismic vulnerability function, the site seismic hazard function, and an
assumption that strong shaking at a site follows a Poisson process. A building-specific
vulnerability approach, called assembly-based vulnerability, or ABV, is used. ABV involves a
simulation approach that includes dynamic structural analyses and damage analyses using
fragility functions and probability distributions on unit repair costs and downtimes for all
vulnerable structural and nonstructural components in a building. The methodology is
demonstrated using some results from a seven-storey reinforced-concrete hotel in Los Angeles
