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Month: September 2016

Become a pro at real estate

Properties can rejoice in the form of housing, workplace, shopping center or in the portfolio. To get rich in real estate must not have hundreds of millions, know how to replace the doors and be able to paint on. It is enough to buy shares.

According to the New York Times is both SimCity and Civilization, games where you win by building, topped the list of the world’s all time most influential computer games. Obviously there is something addictive to build and own. Is there a reason why what makes games and the real estate industry, so interesting? Possibly, but in the end it’s money that rules.

Owning real estate in different ways
One property is in the strict legal sense of an enclosed area where there might be property accessory buildings, fences, trees and wires.But often we think only of buildings. Owning a property can be felt much more difficult than owning part of a company, we are taking the help of Michael Gobitschek, which manages the Skagen Fonder property fund, Skagen m2.

– There are several ways one can own a property. The first thing you think of is secure direct ownership, that is, buy the property on the street, but it’s usually one of the major investment that requires maintenance. In addition, there is a risk from a diversification standpoint. The second way is through a closed fund, but then you usually have a lock-in effect that many were painfully reminded of the recent financial crisis. The third way is through the stock market, either through individual property shares or through a mutual fund that invests in listed property shares.

Michael shows different ways to own a property. If one takes a direct risk to put all your eggs (money) in one basket (the property). With diversification point of view he believes that buying a property then burns up, is difficult to rent out or otherwise severely impaired, so damaged invested capital hard. Should one direktäga properties should therefore be several, perhaps in different fields and industries, to reduce this risk. A closed fund, the second way, is a fund that neither can deposit or withdraw money from until it is decided that the Fund should be dissolved or at a previously set date.

When to make a stock or mutual fund analysis of a property company it can sometimes be difficult to know what exactly to look for. Michael believes that management plays a central role in the analysis.

– A common problem is that management is too focused on the financial side and directs too little focus on building operation and vise versa, a lead that mastered both areas are best.

Key
in property analysis, it is important to understand how companies make their money, partly through property appreciation, and partly revenue through rental. Michael also believes that the quality and geographical location of the assets is also a fundamental part of the analysis. Macro factors such as interest rates, supply / demand, price trends, competition and purchasing power should also be included in the valuation. Mostly you get the feeling that there are similarities to analyze, for example, engineering companies or banks, but at the same time plays many industry-specific factors, a greater role.

The future
When valuing property can be stated that it is important to both accounts and macro factors. An important detail to have with you is that real estate is often highly leveraged, since you used the loan as a source of financing for its expansion. That means a hefty leverage when the economy is doing well and the occupancy rate is high, but it also means that the equity can be quickly wiped down in a recession since the losses, taken out of equity. Therefore it is important to carefully examine how highly leveraged company is, what type of property it owns and where the properties are located.

Like an analysis of any company it is an advantage if you have an idea of ​​the far-reaching trends. How will expanding e-commerce affect the value of retail and warehouse properties? Sweden is one of the countries in the world where urbanization is the fastest, how does it affect the value of residential real estate? The government has loosened up building codes and planning processes in order to speed up the building, how it will affect the value of all properties?