Showing posts with label Yields on real estate. Show all posts
Showing posts with label Yields on real estate. Show all posts

Saturday 24 August 2013

Real Estate and Value Investing

1.  Most people purchasing real estate seem to believe it is possible to get a "good deal."

2.  By this they embrace the possibility that price and value are different things, suggesting that when it comes to home ownership, people intuit the core quality of value investors.

3.  By staking a modest down payment (often 10 to 20 percent), much of the population exploits the leverage afforded by putting more assets to work for them.

4.  Except for speculative fever in select times and places, real property values rise reliably, making such an investment a reasonable vehicle to increase net worth.

5.  Owners have been able to tap the increased equity value in primary residences in recent decades by using home equity vehicles dotting the market.

6.  Low-interest-rate-environments spur refinancing transactions that, by lowering debt service obligations, free up cash flow as well.

7.  Buying secondary homes for use as vacation getaways or rental properties has also become more attractive to many families, no longer the preserve of the upper echelons.

8.  Particularly in periods of low interest rates and sagging stock market returns, these markets offer attractive value investments.

9. Apart from the additional concerns of family needs and psychic rewards, the basic principles of valuation apply to these vehicles.

10.  Paying a price reasonably below estimated value remains important.

11.  Avoiding excessive leverage is akin to avoiding margin trading on equities.

12.  Patience is likewise valuable.

13.  Another advantage to home ownership is that the owner is the manager - he runs the home, maintains it, determines required reinvestment to maintain and improve its value, and so on.

14.  Value-minded investors are sure they can do these tasks, or else turn the reigns over to someone who can.

15.  These points go doubly for vacation or rental properties that might present logistical problems.

Sunday 8 November 2009

Commercial property values prompt fears of a bubble

Commercial property values prompt fears of a bubble
Concerns that the UK property market is entering a bubble have been exacerbated after new data showed yields have returned to 2006 levels after seeing their biggest monthly decline since 1993 in October.

By Graham Ruddick, City Reporter (Automotive, Healthcare, Property)
Published: 7:56PM GMT 06 Nov 2009

Yields, which measure rental returns against the value of a property and are a useful barometer of risk appetite, fell below 5pc for prime retail properties in October, below 6pc for offices, and 7pc for industrial property, according to BNP Paribas Real Estate. An overall fall of 35 basis points was the biggest since 1993, Cushman & Wakefield said.

There are fears that property values are recovering too quickly because of a lack of supply and strong overseas demand.

Segro, the warehouse owner, on Friday sold its Great Western Industrial Park in Southall, West London for £110.4m to the Universities Superannuation Scheme at a yield of 6.9pc.