Commercial real estate as an investment object. Real estate as an investment object

Investing in commercial real estate to supplement your asset portfolio is nothing new. However, this area is still a mystery to many investors. Features of investing in commercial real estate:

• Commercial real estate includes apartments, offices, retail space and more.
• Exploitation and resale are two ways to earn commercial real estate. Exploitation is renting out or using it for your commercial needs, and resale is a game on increasing the value of an object over time.
• As a rule, investing in commercial real estate requires more capital, as well as experience and time.

Commercial real estate is a general term for real estate used for profit. Examples of commercial real estate include office buildings, industrial properties, medical centers, hotels, shopping malls, farmland, apartment buildings, and warehouses.

Historically, commercial real estate investing has been used by millions of investors as it is not only a medium to low risk area, but also a way to diversify a portfolio. However, many investors still do not understand how such real estate works as an investment tool.

There are a number of key differences between investing in commercial real estate and traditional investments such as stocks and bonds. Unlike the latter, often bought on the secondary market, real estate is a scarce resource and has intrinsic value as a tangible asset. Most often, shares are acquired for the purpose of resale, and not as a source of permanent income.

The investment strategy in the case of commercial real estate is simple: there is a constant demand for such real estate. Investors acquire an object and earn on it in two ways: leasing property and leasing or reselling. Let's take a closer look at these two paths:

Receiving rent

Different tenants have different needs, and accordingly the agreements will be different. Here are a couple of examples:

• Office. Law firms or start-up projects can act as tenants. As a rule, premises are rented for a period of five to ten years.
• Residential buildings. Multi-family residential buildings are usually rented by private individuals. In most cases - no more than a year or even a few months. However, there are also long-term contracts.
• Industrial objects. Warehouses and factories. A typical tenant is a manufacturing or distribution company. As a rule, such objects are located in remote areas, poorly suited for permanent residence or the opening of commercial facilities like malls. Industrial property leases are typically five years or more.

Rise in value and resale

The second possibility for a potential return on investment is related to the increase in the value of objects during the period during which they are held by the investor. However, real estate can also lose value. And even proven investment strategies are not able to give a 100% guarantee of success.

In general, real estate is a special and almost unique asset class. The reason is limited land space. Especially in the center of a big city. As demand grows, and as the area in which the properties are located develops, there is a high chance that potential tenants will be willing to pay higher rents and buyers will purchase property at a higher price.

Waiting for demand to come is not the only way to increase the value of real estate. Many investors choose more active approach. For example, they make cosmetic repairs or buy new equipment. Both options are valid both for offices with industrial facilities and for apartment buildings. External attractiveness can increase the value of the object several times, and, accordingly, the rent. In addition to the above manipulations, there are more labor-intensive methods that are not related to improving the appearance of the property. For example, these may include redistribution of neighboring land. In the case of a residential building, this would be an expansion of the building in order to build more apartments. Any money spent to refurbish the property has the potential to raise the building's selling price in the future.

Real Case Study: Investing in Apartments

Let's take a look at commercial real estate investment in action. Alexander purchases a not-too-new 40-unit residential building in Philadelphia for $5 million. He expects an annual income of $500,000. As usual, some tenants do not stay longer than one year. Alexander improves the appearance of the vacated apartments and then offers them at higher prices to new tenants who have appeared. Alexander's home improvement manipulations increase his rental income by $50,000 annually for five years. Therefore, by the end of the year of the five-year period, real estate brings him about $ 750,000 a year.

Alexander then decides to sell this building for $16 million. A potential buyer will be ready to pay a higher price than Alexander paid 5 years ago, for two reasons: firstly, the investor renovated the apartments and now they bring 50% more than when he first bought the building. Secondly, the area where the building is located has become more economically developed, as new tenants have appeared, and, accordingly, entertainment venues such as cafes and shopping centers. In general, Alexander did a great job and did a good job.

Summing up

• Unlike stocks, commercial real estate investments often provide stable cash flows in the form of rental income.
• Commercial real estate is a complex asset and also a scarce resource. Such objects always have intrinsic value and increase in value over time.
• The value of commercial real estate is due to the growth of the economy as a whole.

Historically, direct investment in commercial real estate is not available to every investor. This is due to the fact that such projects require significant capital in the millions of dollars, as well as a large stock of knowledge for property management. Therefore, the commercial real estate market is dominated by institutional investors. Nevertheless, some companies allow private investors to invest in such objects, allowing them to diversify their portfolio.

• Purchase of land

Investing in real estate at any time has been a reliable means of maintaining and increasing savings. Such an investment of capital carries much less risk than investing in shares or opening a deposit account. What's the matter? First of all, both residential and commercial real estate in large cities is in constant demand and becomes more expensive year by year. The larger the settlement, the more profitable it is to buy real estate. No one will dispute the fact that the liquidity of space in Moscow is much higher than in the same Tiksi.

Of course, retail and other commercial real estate as an investment object is very attractive, but residential squares are not lost against this background. Apartments and houses are worth less, and their placement can significantly increase liquidity. It is necessary to take into account the degree of trust to the developer, the location of the house and the apartment layout. There is a high demand for 1-room apartments: they sell and rent better. However, let's start at the beginning and break it all down.

Types and methods of investing in real estate

Of the many options that can be used to invest in real estate, almost every resident of Russia can choose the right one for himself. You need to focus on the amount of savings and the expected income in relation to the risks.

Investment in residential real estate with subsequent rental

This option is characterized by the least riskiness and simplicity. The general meaning of the actions is accessible to the understanding of every person who is not related to business: first you need to buy a living space, then rent it out. Of course, there are also features that must be considered even before purchasing an apartment. For example, which area to choose? How good should the layout be? Expensive to make repairs or not? How to furnish and so on. However, there is practically no possibility of making a big mistake and losing all the funds.

The first negative point in this investment option is the need for personal participation, since hiring a professional will be unprofitable. It's not particularly difficult, but you'll have to find tenants, renovate the space, furnish it, accept rent, and so on. Another negative point follows from the positive ones. Large investments in residential real estate will be difficult: you can deal with two or three apartments, and there simply won’t be enough time for more.

One of the types of investments in residential real estate is the registration of a mortgage. This option of acquiring an apartment still retains its attractiveness.

There are two positive points here: a much smaller initial amount will be required, and a verified approach will provide a more significant profit. But at the same time, the investor must be more qualified: you need to choose an apartment, a loan from a bank, a reserve, and so on, which will require some experience. In addition, there are more risks in this investment option; it will not suit someone who does not recognize loans.

Investing in residential real estate requires the following points to be considered:

• More profitable projects with a perspective: having an unusual architecture, successful implementation, infrastructure support. But not only this is appreciated, but the apartment itself: there may be an excellent layout, but an unfortunate view from the window.
• Of course, it is better to invest in facilities located near the metro and other transport routes. This is especially important when you plan to buy an elite class apartment.

Investment in real estate under construction

With this method, you can expect a fairly large income. In practice, this option is implemented as follows: real estate is bought (or taken on credit), after a certain period of time the construction is completed, the price of the apartment rises, and a tangible profit appears. But there are some risky moments here. One of them is the possibility of a crisis situation, as a result of which the construction is not completed, and the other is that the income must wait for a certain time.

The greatest risks of investing in real estate in this way are caused by the possibility of losing funds. Therefore, in order to guarantee a profit from investments, it is necessary to treat the selection of an object with sufficient criticality and attention. First of all, you need to pay attention to the image of the developer company: take into account the period of its existence, the number of facilities built, the downtime in work, and so on.

It is most profitable to combine methods of investing in real estate: first invest in a house under construction, after completion - rent an apartment, and after a few years (5-15) sell profitably, in accordance with market prices. This option is the most widely used.

Investment in commercial real estate

Investments in commercial real estate are attractive, first of all, by the opportunity delegation of authority in management and hiring specialists for the full or partial management of real estate. This means the possibility of using electricians, plumbers, and so on, and in the case of large and / or several objects, the services of a management company that will fully perform all the functions of maintaining real estate. This will allow, at least partially, to remove the worries of renting out, performing repairs, accepting rent, and so on. Of course, the work of managers will need to be controlled, but this is very different from having to do everything yourself. In addition, investing in commercial real estate brings more income than in residential real estate and you can always buy a ready-made rental business.

The main obstacle in this type of investment is that they require significant investments. Yes, and you need to devote significantly more time than when owning living space. It will be necessary to re-register the electricity supply, install and maintain all types of meters, keep accounts, pay tax fees ... You need to have at least an initial idea of ​​\u200b\u200ball this, even when a team of professionals manages real estate.

Purchase of land

The price of such plots is more affordable, the likelihood of fraudulent activities is minimized, and it is quite difficult to make the site unusable. Features of investing in real estate of this type - it is easier to acquire a piece of land through direct contact with its owner, and re-registration of documents is much easier.

Separate areas depending on the purpose and purpose of operation. Investments in short time, at the same time with lower costs and profits, are carried out in lands that are assigned for private housing construction and are located within the boundaries of administrative territories. In contrast to them, agricultural and commercial land (for the construction of commercial real estate) brings more time, costs and profits. In addition, the taxation of land plots is quite small.

A noticeable negative point is the increase in state control over the exploitation of land, which is not convenient for buying for the purpose of further selling a plot.

Investing in suburban real estate

Resale of country cottages provides significant benefits. The reason is the ever-increasing price of this type of real estate: residents of big cities strive for clean air, tired of the noise and gas pollution of the streets.

The following real estate investment tools are available here: the purchase of an unfinished house, the purchase of a finished house, the purchase of a plot of land for construction. Such investments are simply bound to become profitable over time. On the other hand, not every cottage is able to become profitable. Therefore, it is necessary to take into account its location, remoteness from highways and the nearest city.

In addition, the development of infrastructure and natural objects is of great importance. If there is a kindergarten, school, shops, rivers and forests nearby, then the cost of a cottage can increase significantly.

Other ways to invest in real estate

Investing in parking. This opportunity is relevant for large cities. The cost of parking is quite high, but they are constantly in demand and will continue to be so, since the amount of the fine for parking in a prohibited place is constantly increasing. Although there are still no statistics on the size of profits from such investments.

Partnership in real estate funds. A mutual investment in a fund is implied, which already decides for itself how and in what to invest the common funds. There are two positives here. The first is that real estate is not bought into one's own possession, that is, registration is not made in one's own name. This turns out to be very convenient in some cases. The second is that professional people who have a base of investment objects and high diversification indicators are involved in investing. This in itself is a guarantee of high returns.

Investing in overseas real estate is viewed for the most part as a guaranteed profit opportunity. Residential real estate does not seek to become cheaper - neither Russian nor foreign. In addition, the purchase of a house or apartment in one of the countries of the near abroad is justified both in terms of income in the future, and as a place for permanent residence - in case of moving to this country. So investing in overseas real estate is quite a profitable and promising option.

Features of investing in real estate in Russia

Investments in real estate in small towns are not of particular interest to investors, since residents in them are mostly dependent on wages at large enterprises located in these cities.

Investing in real estate in Russia requires caution due to a possible decrease in its value due to the aggravated crisis situation.

There is no doubt about the profitability of acquiring Moscow, St. Petersburg, Nizhny Novgorod, Kazan, Perm, Omsk, Krasnoyarsk, Samara, Rostov-Don and Krasnodar real estate. Cottages outside the city are profitable in Moscow, Samara, Kazan, Nizhny Novgorod, Krasnodar and Omsk. Experts suggest a slight increase in the cost of housing and rent in these cities.

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• Types of commercial sites

- has long meant investing in a profitable business. The sale of commercial real estate is no exception in this sense and attracts hundreds of millions of rubles annually. It is commercial properties that are able to bring the greatest profit, however, investing in this type of real estate can be more risky than investing in housing.

What is commercial real estate

Investing in today's real estate market can be in a number of categories of objects. The main two areas are the housing market and the commercial real estate market. As for residential real estate, everything is simple here - these are apartments in new buildings and the secondary market, as well as individual houses. Investing in a home is simple, you just need to find the property you want on the market and buy it for resale or rental. The risks in the housing market are minimal and most of them are borne by the developer.

Investments in commercial sites, unlike investments in housing, have a lot of features. Firstly, there are much more commercial types of objects on the market, these are any sites that are used for commercial purposes. Secondly, commercial real estate can bring much more profit, since it often depends on the success of the business, and if the project is in demand, the commercial property brings a correspondingly high income. Thirdly, the market for commercial properties is more risky and, unlike housing, properties tend to quickly rise in price and fall in price, depending on market conditions. In short, investing in real estate is a more difficult way to make money than investing in housing, but with the right approach, it can bring much more profit.

Types of commercial sites

Investments in commercial real estate in Russia can be made in many types of properties. The first type of commercial objects- These are shops and various trading platforms. According to experts, retail real estate in Russia today is one of the most profitable types of assets. If you find a free land plot and build a shopping complex on it, then renting out sites can bring huge profits. The owners of large shopping centers today are among the richest people in Russia. A marketplace with a favorable location and high demand brings in thousands of rubles a month for each square meter, and just think about the area of ​​shopping malls being built today - you can imagine how much the owners of this business receive for rent. Renting out sites only requires the creation of an appropriate area, you don’t even need to worry about its improvement, as is the case with housing, the lease of which requires the purchase of furniture and equipment, repairs, etc.

The second type of commercial real estate These are office spaces. Investments in real estate in this category can also bring huge returns and offices with a favorable location are much more expensive than the corresponding housing. Renting space in office centers brings monthly income, so investment in commercial real estate today attracts a huge number of investors. Office real estate is inferior to commercial real estate in terms of profitability, but in some cases it can bring no less money. The main advantage of retail facilities over office facilities is, first of all, their scale. Of course, it is difficult to imagine an office center of the same area as large shopping malls, but in some cases they do occur and bring super profits to their owners in Russia.

The third type of commercial real estate- industrial facilities. These are warehouses, industrial facilities, sites of large enterprises. In terms of popularity, industrial real estate in Russia is inferior to residential, office and retail real estate, but it is still not difficult to find companies on the market that earn millions of rubles every month on this type of property. Leasing premises for enterprises, factories, and especially warehouses is also a very profitable way to earn money in Russia. Warehouse premises are in high demand today - both large retail chains and online stores are interested in leasing such facilities. Unlike office space, warehouse facilities are easier to prepare and renting out facilities takes less time and requires less investment.

Anton Murygin talks about what kind of this moment commercial real estate situation

Hotels, apartments, cafes, restaurants

In fact, today there are a huge number of types of commercial real estate. Rooms for rent are hotels, apartments with daily rent, cafes, restaurants, fitness clubs, entertainment centers and even social facilities. Even a medical center, swimming pool or airport can rent a room with a favorable location. Therefore, today an extremely popular type of income is the construction of sites for rent. Such sites can be created without preliminary design of the future purpose - if the object is located in the city center, then no matter what area, dimensions and level of arrangement it has, there will definitely be a buyer or tenant for it.

Ways to make money in commercial real estate

Today, there are a large number of opportunities to earn money on commercial facilities. You can invest in the construction of a site, invest in the purchase of a profitable area, buy out a share of a ready-made business, and even implement a more complicated project - build a site and open your own business on it.

The easiest option today is to buy a finished site, improve it and resell it. It can also be a long-term lease of commercial real estate. For the appropriate investment method, you need to find a property with a favorable location, negotiate its purchase, make repairs and redevelopment, if necessary, advertise the site and rent it out or sell it at a bargain price. For example, a large-scale shopping complex opened in a large microdistrict, and the investor discovered that there was an empty site next to it. The specialist understands that the opening of a shopping complex will lead to an increase in demand for sites nearby, because people who come to the main complex will be near this site and can pay attention to it. Here you can open a clothing store, a cafe, a restaurant or even apartments with daily rent. With such an investment, the main thing is to identify an object that can potentially be in high demand and invest money in it.

See a detailed strategy plan on how to make money on mini-offices.
Ivan specializes in commercial real estate, in particular mini-offices.
Also on abandoned sites, garages and others. In general, everything that can bring money 🙂 Ivan Sevostyanov will share his strategy for investing in commercial real estate.

The second type of investment in commercial real estate is the construction of a new site and either selling it or renting it out. This method is more expensive than the first, but more flexible. It allows you to create a site anywhere and clearly plan the area, dimensions of the room and other features of the site in advance. For example, a new residential complex is being built in one of the microdistricts of the city. The investor understands that soon people will move into apartments and there will be a high demand for many types of objects - supermarkets, cafes, restaurants, hairdressers, furniture stores, plumbing, etc. It remains only to build a site and wait until the houses begin to be occupied and the business becomes interested in a vacant site.

Invest right! Which type of commercial real estate is more profitable

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How to make money in real estate from scratch

The third type of investment is the creation of a commercial platform and the opening of a business. This is one of the most difficult ways to make money in real estate, however, and the most profitable. An investor finds a profitable place to open a business, for example, a trading one, buys or builds a site and opens a business. The meaning of such an investment is that you receive money through an active business, but at the same time you can sell the site at any time. If your property is in high demand, then in addition to your own business, the site can accommodate a number of other objects. That is why some investors create large sites on the territory of which several projects can be implemented at once.

And finally, the fourth type of investment in commercial facilities involves investing in a ready-made site, that is, buying out part of the business and making a profit from it. At first glance, this is the easiest type of investment in commercial properties, but in fact, the method has many of its own characteristics. First, the investor must find the most profitable object, for example, a shopping complex that is in high demand and receives a large profit by renting out premises. Secondly, the investor should buy out part of the business, and this requires not only a lot of money, but also the consent of other owners. Of course, no owner will be in a hurry to sell a part of a profitable business to anyone. You will either have to buy out part of the property at an inflated cost, the most beneficial for the owner, or offer some other special conditions. The larger the share of profitable business, the higher the profit. However, it should be noted that the investor must be 100% sure that the business will develop just as successfully. After all, if you invest in money in the site, and it becomes unprofitable, then your money will not bring profit.

Difficulties in investing in properties

According to experts, today in large cities with a high demand for commercial real estate, the cost of objects in 60-70% of cases is overstated. The fact is that no one is in a hurry to part with profitable properties, and therefore you should not be surprised even at fantastic prices for commercial properties, because sometimes owners set exorbitant prices on purpose, because they don’t want to sell the property at all. Usually inflated price tags are in cases where the demand for the site exceeds the supply on the market. This means that in this area, for example, square meters of office real estate, the demand is so high that a queue is built for real estate. This only goes to show that commercial properties are one of the most profitable assets on the market.

Undoubtedly, there are many types of real estate and investing in housing is more popular today, because such an investment is simpler and more understandable. Investments in commercial properties require knowledge of the market, trends, demand, but with all this they can bring in much more money than apartments. Today it is possible to invest in commercial real estate of various categories - these are warehouse, office, retail and many other sites. At the same time, you can invest in the relevant facilities in different ways - buy out a ready site, build a new one or invest in a ready-made business.

• Strategies for investing in new buildings and new housing:
• Investments in commercial real estate
• Hospitality, Aggressive Housing Investment Strategies + Daily Rental Business
• Strategies for investing in land + strategies with your own land
• Strategies with finished real estate (on the secondary market)
• Personal equity real estate investment strategies not listed elsewhere
• All real estate investment strategies in one mind map
• The best real estate investment strategy in 2019

Investing in real estate is perhaps one of the most reliable options for accumulating capital and generating cash flow. Have you ever wondered why there are so many billionaires on the Forbes list who do it?

Investing in real estate is not a game, not Forex and not trading on the stock exchange, rental income is predictable. And thanks to inflation, the cost of buildings is growing, even despite the small drawdowns during the crisis, which always win back.

Strategies for investing in new buildings and new housing:

• new buildings for resale;

• new buildings for rent;

• investments in studios and apartments (a very economical format plus liquid housing);

• other strategies for investing in shared construction (ground floor and transfer to non-residential, etc.);

• investment in townhouses;

• investing in prefabricated modular houses.

Undoubtedly, the most interesting projects are being implemented in Moscow, the Moscow region and in large cities, where the cost of rent is quite high, and there is a constant demand for housing in various segments. This does not prevent investors from other cities from finding objects, partners and co-investors and coming to live meetings. Although, in fairness, it must be said that in the regions we have enough cases with a yield of 50 to 100% per annum.

Investments in commercial real estate

They mean:

• purchase of finished commercial real estate with subsequent leasing;
• construction of commercial real estate for resale and subsequent delivery;
• investing in coworking centers;
• leasing of workplaces, mini-offices and meeting rooms.

Hospitality, Aggressive Housing Investment Strategies + Daily Rental Business

Despite the fact that the rental business is quite simple in terms of organization, especially if it is a long-term deal with the conclusion of contracts with tenants from six months, there are segments that require a lot of inclusion for real estate management. We are talking about aggressive strategies that give the investor the maximum profit per square meter. But at the same time, they assume full inclusion in the process.

If you pass by this method, then the difficulty will increase in proportion to the number of clients with whom you have to deal. Here is a list of the most popular aggressive investment strategies:

1. Rental business: rent monthly, rent by the day (minimum investment)
2. Property management; how to rent an apartment?
3. Hostel and mini-hotel (by the day, by beds, in the center and near tourist places)
4. Organization of an anti-cafe, or how to rent real estate by the minute (the visitor pays for time, not for food)
5. Renting apartments for long-term sublease
6. Organization of hostels for workers
7. Antidormitory (a new format of comfortable housing for workers)
8. capsule hotel

Strategies for investing in land + strategies with your own land

1. Investment in housing construction, with a view to resale
2. Construction of low-rise apartment buildings with subsequent leasing
3. Installation of houses from containers on your own or rented plot
4. new 3 strategies for making money in summer cottages
5. Construction of apartment buildings for the purpose of selling shares (apartments): be careful! Illegal!
6. Land investment, buying shares, allocating the best plot and reselling many times more expensive (buy land, it is no longer produced)
7. Investing in plots from 12 acres, surveying into 3 parts of 3.5-4 acres with further sale, or building a budget house 80-100m2 from SIP panels

Strategies with finished real estate (on the secondary market)

1. Buying an apartment house or townhouse with subsequent leasing (recommended)
2. Buying a ready-made apartment on the secondary market, sawing and renting out
3. Homestaging. Buying a dead apartment, inexpensive, but cool repair using special technology and subsequent sale
4. Buying rooms and renting them by the day
5. Lifetime rent (3-5 apartments with a monthly payment of 10 thousand each and with the transfer of ownership)
6. Lifetime maintenance with a dependent (not recommended, ethical point, plus high risks)
7. Resettlement of communal apartments with the subsequent sale of a large apartment or the creation of a mini-hotel
8. Investing in real estate without money

Personal equity real estate investment strategies not listed elsewhere

1. Purchase of property from mortgage auctions of banks and bailiffs
2. Urgent purchase of apartments at a lower cost (20-30% below the market)
3. Transfer of an apartment on the ground floor to a non-residential fund
4. Investing in garages
5. Investments abroad (US tax certificates, solar energy, etc.)

All real estate investment strategies in one mind map

Click on the picture to go to the map: 35 examples of real estate investing

The best real estate investment strategy in 2019

Of course, each investor will find his own investment strategy. There are many options, as you can see. A the second most popular strategy was the daily rental of real estate, because does not require large investments to start, besides, it is easy to implement. In 2019, the majority of investors in our project chose investing in tenement houses, since this strategy has shown ultra-high profitability, plus in some cases it can be implemented even without your own money.

Introduction

1. Real estate

1.1. Market and investment value of real estate

1.2. Material, market and organizational and legal features of real estate as a potential investment object

1.3. Main investment characteristics of real estate

1.4. Features of the real estate market

2. Factors determining the investment value of real estate

2.1.Basic principles for assessing the value of real estate for investment purposes

2.2. Real estate appraisal process

2.3. Basic approaches and methods for assessing the value of real estate

2.4. Determining the value of a property based on the income approach

2.5. Determining the value of a property in the market (comparative) approach

2.6. Determining the value of a property based on the cost approach

3. Features and sources of risks of investing in real estate

3.1. Reimbursement of capital invested in real estate

3.2. Accounting for depreciation in the valuation of real estate based on the cost approach

3.3. Use of financial leverage in mortgage lending of real estate transactions

Conclusion

Bibliography

INTRODUCTION

The formation and development of market relations in the Russian economy is associated to a large extent with real estate objects that act as means of production (land, industrial, warehouse, retail, administrative and other buildings, premises and structures).

In addition, real estate objects are land plots, residential buildings, cottages, apartments, garages, which act as commodities.

Real estate objects, acting as the basis of social production, are the basis of economic activity, development of enterprises and organizations of all forms of ownership. Real estate has the characteristics of a commodity that is bought and sold, i.e. circulates on the market.

The privatization of state enterprises and organizations that took place in the country and the emergence of various organizational and legal forms of ownership led to a qualitative change in the investment and construction sector and to the allocation of an independent segment - the real estate market.

The transition to market relations, associated with the emergence of real owners of the means of production, is unthinkable without the development of the real estate market.

The modern structure of society requires all its members to constantly solve the problem of the most efficient use of the resources at their disposal, both material and intangible.

But, the real estate market, being part of the investment market, has unique features. It is a sphere of capital investment in real estate and a system of economic relations that arise with expanded production. These relationships appear between builders and investors when buying - selling real estate, mortgages, rents, etc.

The purpose of the work, first of all, is to identify the features of the analysis of the real estate market in modern Russia, to define the very concept of real estate, the organizational and legal features of real estate as an investment object, to affect the effectiveness of investment projects. The paper analyzes the methods and directions of analysis of investments in real estate.

When writing the work, the regulatory legal acts of the Russian Federation were used, as well as information from the websites of firms working in the field of investment analysis.

The success of a business in a market economy is largely determined by the quality of information on the basis of which responsible financial decisions are made. That is why the collection and analytical processing of information, including market information, is today both a subject separate study from a scientific and methodological point of view, and the subject of independent business.

But still, when building a plan for this work, I will proceed from the fact that when researching the real estate market, first of all, it is necessary to monitor mainly those parameters that are necessary when justifying the adoption of specific investment decisions.

1. THE PROPERTY

According to the Civil Code of the Russian Federation, real estate as an object of property (property) includes land plots, subsoil plots, isolated water bodies and everything that is firmly connected with land, i.e. objects, the movement of which is impossible without commensurate damage to their value, including forests, perennial plantations, buildings and structures.

Real estate also includes state registration air and sea vessels, inland navigation vessels and space objects. Other property can also be classified as immovable property, the essential feature of which from a legal point of view is the mandatory registration of rights, regardless of what they may be: ownership, lifelong possession, economic management or permanent use, mortgage, easement and other rights provided by the Civil Code of the Russian Federation. one

Things not related to real estate, including money and securities, are recognized as movable property.

1 Civil Code Russian Federation Chapter 5. General provisions Subsection 3. "Objects of civil rights" art. 132 "Enterprise":

1. An enterprise as an object of rights is recognized as a property complex used for entrepreneurial activities.

The enterprise as a whole as a property complex is recognized as real estate.

2. The enterprise as a whole or part of it may be the object of sale, pledge, lease and other transactions related to the establishment, change and termination of rights in rem.

The structure of the enterprise as a property complex includes all types of property intended for its activities, including land plots, buildings, structures, equipment, inventory, raw materials, products, rights of claim, debts, as well as rights to designations that individualize the enterprise, its products, work and services (company name, trademarks, service marks), and other exclusive rights, unless otherwise provided by law or contract.

1.1. MARKET AND INVESTMENT VALUE OF REAL ESTATE

The market and investment value of real estate depends on the value of the property, which, in turn, is determined by the ability and ability of the property to satisfy certain needs and provide the rights and benefits of the owner as a result of owning this property. The combination of these factors, taking into account the costs of creating or acquiring an object of property, determines the value of this object. In the theory of property (property) valuation, there is the following brief definition of the market value of an object: the market value of an object is a measure of how much a hypothetically typical buyer is willing to pay for the property being valued.

In the theory of real estate appraisal, the concepts of value and price are distinguished. The price is understood as the amount actually paid for the acquired objects in past transactions; in addition, the price is understood as the amount of money that the seller wants to receive for the property put up for the current sale.

Market value of the property - the basic, supporting concept of the theory (and practice) of real estate valuation, which is understood as the most likely estimated price at which a property can pass from the hands of a seller who wants to sell it to a buyer who wants to buy it, when one of them is not forced to sell object, and the other to compulsion to buy.

Investment value of the property - this is the specific value of the property being valued for a particular investor, based on his preferences and personal investment ideas. There are many reasons for the discrepancy between the investment value of an object and the market value: differences in estimates by different investors of the future profitability of a property; discrepancy in their assessments of risk levels, etc.

1.2. REAL ESTATE AS A POTENTIAL INVESTMENT OBJECT

Real estate as a potential investment object has specific characteristics that an investor must take into account when making decisions about investing in real estate. Compared to investments in other objects, such as financial assets, investments in real estate have significant features. These features of real estate as a potential investment object can be divided into three groups:

1. The first group is formed by fundamental features:

immobility . Since any real estate object is associated with a specific and geographical fixed area of ​​the earth's surface, it is physically immovable, non-movable.

Uniqueness . Each piece of land has its own unique, characteristic characteristics only for it - location, shape, environment; physical, chemical, climatic and other parameters. Since absolutely identical land plots, as well as absolutely identical buildings and structures located on them, do not exist, each property is the only one, unique, inimitable.

Scarcity . The relative shortage of land, and hence real estate in general, is due to an increase in population and the finiteness of land resources.

Durability, stability . The terms of creation (construction) of buildings and structures can reach several years, in addition, in terms of service life, buildings and structures are the most durable objects created by man.

2. The second group includes the following features of the property as a proper market object - goods:

The specifics of the turnover (through the turnover of rights) . The physical immobility of real estate is one of the most important reasons why real estate objects are not traded on the real estate market, but only ownership rights to them, both full and incomplete, partial.

Life cycle specifics . The duration of the creation and service life of real estate objects determines their long life cycle and, as a result, uneven and complex structured cash flows generated by profitable real estate objects.

Mismatch of trends in the value of real estate components - land and its improvements (buildings and structures) . The tendency to increase the cost of land against the background of some decrease in the cost of buildings and structures prevails. It should be noted that the tendency to reduce the value of a particular property due to wear and tear is opposed by a counter trend - the trend of increasing value due to inflation.

Exposure of the market and investment value of real estate to the influence of financing in various forms It is manifested in the fact that income-generating real estate is characterized by financing in several levels (the main ones are financing at the expense of own and borrowed funds). In addition, financing can be organized in various ways - by equity participation, by time of implementation. The most common method of financing is mortgage lending, i.е. financing at the expense of own and borrowed funds secured by real estate. All this significantly affects the level of usefulness and investment attractiveness of real estate and, ultimately, its market and investment value.

Low liquidity 2. Real estate (capital construction projects) have significantly less liquidity than, for example, financial assets. This, in particular, is due to the significant period required for the implementation of the object on the market.

Slight elasticity of supply real estate. The change in the supply of real estate in comparison with the demand for it can be significantly greater than in other segments of the property market.

3. The third group includes organizational and legal features of real estate objects:

Separation (divisibility) of rights to real estate . The rights to real estate can be divided by the type of rights, by the elements of the object and by the time of their implementation. There is also the possibility of encumbrances of rights to real estate in the form of a pledge, easement 3 , restrictions on the rights of use arising from a contract, etc.

Features of taxation of real estate objects associated with the following. Investments in real estate in practice provide an opportunity for an investor company to obtain tax benefits - the amount of tax on real estate of an enterprise reduces the taxable base for income tax, since in accordance with the Tax Code of the Russian Federation, the tax on real estate of an organization is included in other expenses related to production and sales products.

The need for professional management due to the fact that all processes require professional management of real estate objects, at any stage of construction, arrangement, sale, etc.

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2 Liquidity- the ability of the assets of the enterprise to a certain date and without loss, to turn into monetary terms.

3 easement called a limited right to use someone else's property (for example, for laying and operating communications, power lines, passage or passage through a land plot, etc.)

1.3. MAIN INVESTMENT CHARACTERISTICS OF REAL ESTATE

To the main investment characteristics of real estate, to such features of real estate that are most important for the investor and require analysis and accounting are:

Real estate is inherent relative stability of the income stream from real estate transactions - from the operation or sale - compared with income streams from other types of activities (for example, production or trading in securities). In addition, the effect of stable income generation from real estate is usually complemented by higher rates of return.

Significant dependence of real estate characteristics on the effectiveness of investment management is also a property of real estate that the investor must consider. The need for effective investment management is due to the fact that real estate is a complex object to manage, investments in real estate require significant management costs. This applies in particular to investments in construction projects based on subcontracting relationships. In addition, in the case when investments in real estate are of a long-term nature, it is necessary to ensure the efficient and rational operation of the property.

Anti-inflationary stability real estate. Real estate has a significant degree of resistance to inflation. Due to this feature, real estate investments are considered an effective way to protect the investor from inflation and diversify investment portfolios (with an optimal combination of profitability and risk). Moreover, with regard to protection against inflation, it should be noted that real estate (and to a greater extent - profitable real estate) can serve as the best insurance against inflation compared, for example, with securities.

Increased level of risk . Real estate investments are subject to more uncertainty than most financial assets. The high degree of uncertainty is explained by the longer terms of capital investments, as well as the lack (often even the absence) of complete and reliable information on the market about real estate transactions (unlike exchange transactions), the complexity of access to market information. Besides. The level of risk is elevated due to the immobility of real estate and its lack of liquidity. The risk of changes in the characteristics of the external environment in relation to real estate is often of decisive importance when making decisions about investing in real estate.

Negative correlation of income from investments in real estate and investments in financial assets . The cyclical functioning of the real estate market does not coincide with the cyclical nature of industrial production at the macroeconomic level. This discrepancy is manifested in the fact that the investment attractiveness of income-producing real estate increases during periods of industrial crisis and during periods of high inflation, while the real rates of return of financial assets usually fall during the same periods.

1.4. FEATURES OF THE REAL ESTATE MARKET

The main features of the real estate market are as follows:

Real estate market transactions affect the property rights of property owners in a wide range, which may vary depending on the specific property; each real estate transaction includes a significant number of legal formalities and, accordingly, a significant amount of related documents;

The financing of real estate transactions can severely restrict the free competitive functioning of the real estate market;

Information about the state of the real estate market is characterized by a lack of reliability and timeliness, incomplete volume, which significantly increases the risks of investors and causes a decrease in their activity;

Real estate, unlike another market object, is practically impossible to correctly standardize (unify), sort and, as a result, buy and sell according to samples;

Operations in the real estate market are associated with significant transaction costs.

The development of the real estate market mainly depends on the following factors:

Economic growth (recession) or the expectation of such growth (recession);

Financial opportunities for the acquisition of real estate, which, in turn, depend on the degree and stage of economic development of the region (crisis, stagnation, intensive development), the availability of jobs and the employment structure;

The relationship between the value of real estate and the economic prospects of a particular region.

2. FACTORS DETERMINING THE INVESTMENT VALUE OF REAL ESTATE

There are four main groups of factors that determine the investment value of real estate objects: social, economic, environmental factors and state legal regulation. All of them together determine the value of any real estate, and each affects it both upward and downward.

Social factors mainly represented by the characteristics of the population of the region. This includes the demographic structure, the number of marriages and divorces, the average number of children in a family, and so on. These factors are related to the potential demand for real estate and its structure.

Economic forces suggest the need to analyze the relationship between supply and demand at the moment, followed by a forecast of future changes, as well as the purchasing power of the population. The economic factors that determine demand include employment, average wages, their distribution, the degree of economic development of the region, the possibilities and conditions of credit, etc.

Factors of state regulation at all levels (federal, regional, local) have a great influence on the value of property, sometimes able to prevail in some areas over such economic factors as the ratio of supply and demand. The factors of state regulation include:

Regulation (restriction) of real estate turnover and land use methods;

The cost of utilities and public transport;

Policy of the tax authorities;

Special legal norms (regulatory establishment of rental rates, restriction of property rights, environmental protection, organization of public investments, etc.).

Environmental factors when evaluating real estate - a combination of natural and natural-anthropogenic factors that have a direct impact on the usefulness of the property and the efficiency of its use. When evaluating a property, environmental factors should be considered as its environment, which significantly affect the value of the property. In turn, the value of this environment, converted into a cost (monetary) form, determines the contribution of environmental factors to the value of the property. Moreover, this contribution can be both positive and negative.

Negative environmental factors include:

Deterioration of electromagnetic, radiation characteristics of the natural and anthropogenic environment;

Thermal pollution;

Deterioration of natural illumination of the property;

Increasing the intensity of noise above the natural natural level;

Deterioration of the chemical properties of atmospheric air, soil, water.

During the environmental impact assessment of real estate, along with the analysis of negative environmental factors, favorable environmental factors are also identified that create a positive environmental and psychosocial effect that can significantly affect the market and investment value of the property (for example, the availability of environmentally friendly natural objects for property owners - rivers , lakes, forests, forest parks, nature reserves, etc.)

2.1. MAIN PRINCIPLES OF APPRAISING THE VALUE OF REAL ESTATE FOR INVESTMENT PURPOSES

The real estate objects are significantly different from each other and are located in different environments. Future income from real estate, along with other factors that determine the value of an object, is characterized by a significant degree of uncertainty. The consequence of this is that it is not possible to develop a universal recipe for how to value different properties; There is no universal formula by which the value of real estate could be calculated. Along with the tes, there are general principles for real estate valuation.

Valuation principles are an interpretation of general economic laws from the standpoint of real estate market entities and, if applied correctly, lead to reliable conclusions about the value of property.

As a result of many years of practice and theoretical research in the field of real estate valuation, three groups of valuation principles have been formed. The first of them is related to the owner's ideas about real estate; the principles of the second group are due to the operation of real estate and are related to the ideas of producers about real estate, and the third group includes principles due to the market environment. Separate, not included in these groups of principles, is the principle of the best (most efficient) use of real estate.

An investor, when solving the problem of determining the value of real estate, can and should put himself in the place of a potential owner operating a real estate object, and taking into account the influence of the market environment.

The first group of principles related to the owner's ideas about property includes the following principles:

The principle of utility;

The principle of substitution;

The principle of expectation.

The second group, the principles of which are determined by the operation of real estate and are related to the ideas of producers about real estate, combines the following principles:

The principle of contribution;

The principle of residual productivity of the land;

The principle of balance;

The principle of increasing or decreasing returns (principle of marginal profitability).

The third group, which includes principles determined by the market environment, includes:

The principle of supply and demand;

The principle of conformity; the principle of competition;

The principle of change.

Best (most efficient) use principle real estate is an essential component of the concept best use- a fundamental concept in real estate valuation, which takes into account the optimal combination of real estate characteristics and current market conditions - and is based on the following premise: the upper limit of the price that the buyer is willing to pay is determined by his opinion regarding the most beneficial use of the purchased property.

Thus, the use of both non-developed and built-up land plots corresponds to the following trend: the owner exploits them in accordance with his best use case. At the same time, the current use of the property is not necessarily the best, so what the appraiser reports on the valuation of the property may not match the current use.

When determining the best (most efficient) use of an object, the following are taken into account:

Market conditions (primarily the prevailing land use in the vicinity of the property being valued);

Existing zoning regulations;

Expected changes in the real estate market;

The current use of the real estate.

The best use of a property is the most probable and legally permitted use of this property (if the property is a piece of land, then free or with improvements), which is physically possible, economically justified and leads to the highest value of the property being valued.

In the evaluation report, both one specific use case and a successive change of its various ways (options) of use are recognized as the best. The range of land use options may be limited by the improvements available on it, either for a site that is vacant and ready for development in accordance with the best use, or for a built-up site with improvements already in place.

For example, a warehouse located in the industrial zone of the city corresponds to the best use of the land on which it is located. However, the location of such an object in the central part of the city does not correspond to the principle of the best use of the land occupied by this warehouse, which is more consistent with the use of this land for the construction of an office building, entertainment facility, restaurant or shopping center.

The best use may change over time (for example, if a major highway is built in the immediate vicinity of the land), then the best use of the site may be the construction of a motel, gas station or roadside cafe.

The principle of utility lies in the fact that when evaluating real estate, one should proceed from the fact that real estate only has value if it can be useful to a real or potential owner, if it can satisfy his needs (in housing, recreation, etc.) or generate income . utility is key cost criterion any real estate object. All real estate objects, despite their diversity, are comparable in their ability to satisfy certain needs of the owner or bring him income. It should be borne in mind that the utility for each owner is individual, as well as the idea of ​​​​it. The general thing is the following - the greater the utility of the object, the higher its cost. So, the principle of utility is that the estimated value of a real estate object is the higher, the more it is able to satisfy the needs of a potential owner.

substitution principle states that an informed buyer (consumer) on the open market will not pay a price for a property that exceeds the cost of acquiring a property that is equally attractive to the buyer, i.e. with equivalent utility.

In accordance with the principle of substitution, it is assumed that the buyer will consider all alternative options for transactions available to him and will rationally approach the decision of the issue of choice, having sufficient time for this. Among the alternative behaviors of the buyer may be: the purchase of another, similar property; the reproduction of similar improvements on another piece of land; an investment that provides income comparable in terms of its characteristics.

The principle of substitution means that a prudent sensible buyer will not pay for a given object more than the lowest price requested in this market segment for a similar object with the same degree of utility. Thus, the principle of substitution allows you to set the upper limit of the value of the property being valued. This principle underlies the application of the comparative approach.

Waiting principle is as follows. The value of real estate, first of all, does not depend on the past sales prices of similar objects or on their replacement cost, but on the benefits that market participants intend and can receive in the future from the acquisition and use of real estate. The value of a property is determined by the benefits (or advantages) that the property is expected to bring to the owner.

Expectations can be either positive or negative. Economic recession, unemployment, tense social environment, government restrictions on development can negatively affect the value of the property.

The development of land adjacent to the site can significantly change its value. If, at the time of the assessment, facilities in the surrounding area are at the planning and design stage, their potential impacts should be taken into account during the analysis and subsequent assessment. Thus, the value of the object and property depends on the expectations of the owner.

Contribution principle - the value of each element of real estate is determined by the contribution of this element to the total value of the entire property. In other words, the value of each element is equal to the amount by which the total value of the property will decrease in the absence of this element, or the amount by which the total value of the property will increase in the presence of this element.

The cost of a property item is not necessarily equal to the cost of creating it. For example, building a tennis court on a summer cottage will not necessarily increase the total value of the property by the amount of the costs incurred. The value of a court's contribution is measured by utility from the point of view of the average buyer. This contribution can be valued either above or below construction costs.

The principle of residual productivity of the land . The process of estimating the market value of a land plot is similar to the valuation of other real estate objects. However, there is a significant difference in that the market value of a land plot is the basic component of the market value of the entire aggregate property, although in the practice of land valuation, its market value is calculated as the remainder of the total value of the property, minus improvements. This shows the operation of the principle of residual productivity of the land.

It should be noted that one of the consequences of the implementation of this principle is the method of land balance technique - a universal method for estimating the value of a land plot, especially effective in the absence of information on sales of similar plots, but with information on the profitability of the entire property - a land plot with improvements. Residual productivity is defined as the net income attributable to improvements.

Balance principle , sometimes called the principle of balance (proportionality), lies in the fact that the value of a property is determined by the degree of balance between its paired elements. For most properties, the most important pair of elements is land and improvements. This principle establishes that the maximum value of real estate is achieved with an optimal (equilibrium) ratio between land and improvements, i.e. when, with additional (in relation to the equilibrium state) capital investments, there is no longer a relative increase in the value of property.

This principle is closely related to the principle of marginal profitability.

Marginal return principle states that the successive addition of improvements is accompanied by an increase in the value of real estate. At a certain stage, the costs of creating additional improvements will no longer be fully offset by an increase in the value of the object. The effect associated with a non-linear increase in property value as improvements are added is the saturation effect. This principle is applied in the methods of the cost approach, in particular in the analysis of removable physical and obsolescence.

The principle of supply and demand . Under offer refers to all real estate of a given type offered for sale or rent at a given time in a given market segment. Under demand refers to all real estate of a given type that market participants are willing to acquire during a given period of time.

The change in the price (value) of the property directly depends on the change in the magnitude of supply and demand in the real estate market, on their interaction.

The principle of supply and demand in valuation is a consequence law of supply and demand- an economic pattern that connects the volumes of supply and demand with the prices of goods on the market.

For given values ​​of supply and demand, by combining the corresponding "supply-price" and "demand-price" dependencies, a market equilibrium point is determined, at which the market price of the goods is such that the volumes of demand and supply coincide. At the equilibrium price of a good, the equilibrium quantity supplied is the same as the equilibrium quantity demanded.

The principle of competition is closely related to the principle of supply and demand.

The principle of competition . Competition in the real estate market arises among buyers, sellers, tenants and landlords seeking to conclude a deal or lease for the sale of real estate. In addition, each object competes with all other similar objects.

In the long run, competition evens out unusually high or excess profits. Possible profit-making breeds competition, but the possibility of making super-high profits breeds destructive competition.

Conformity principle - the value of a real estate object depends on the degree of homogeneity of the surrounding development in the area, which keeps the values ​​​​of the value of real estate at a certain level and guarantees that the value of any object does not fall below this level (provided that the object is maintained in a normal condition) or significantly exceed this level .

If the maintenance of conformity in the area contributes to the preservation of values ​​of value at the same level, then its violation affects them negatively. Violation of the conformity principle can be observed in holiday villages, where plots were sold to owners of different categories at different times. The location of expensive and cheap real estate in the neighborhood leads to a decrease in the market value of more expensive real estate.

The principle of change. Changing market conditions is an inevitable and constant process, occurring gradually and often hidden. The more active the market segment, the faster it changes. Changes in legislation, the construction of new facilities, the closure of industrial enterprises, as well as force majeure in the form of hostilities, natural disasters, etc. lead to the most dramatic shifts in the real estate market.

The value of real estate is constantly influenced both positively and negatively by many factors: social, economic, environmental, as well as factors of state regulation.

2.2. PROPERTY APPRAISAL PROCESS

The process of assessing the value of a property is a sequence of actions performed by an appraiser in the course of determining the value.

At the beginning of the appraisal process, it is necessary to collect and process information regarding not only the appraised object itself, but also its immediate environment, taking into account all factors affecting the appraised value of the property.

Sources of information can be periodicals, specialized databases, state and municipal authorities that register real estate rights, and other appraisers. Most professional appraisers have their own databases. To obtain all the necessary information, consultations of various specialists may be required, in addition - business trips to other regions, marketing, technological, sociological and other studies. As a result, there may be associated costs.

Particular attention should be paid to checking the completeness and reliability of the information collected. The collected information is analyzed, necessary and justified adjustments are made to clarify and supplement the data.

At the stage of determining the option for the best use of the property, the appraiser determines the direction of use of the property that is legally permitted, technically possible, economically feasible and provides the owner with the maximum value of the property being valued. This option is considered if the market value of real estate (or derivatives from it - investment value) is assessed.

The main stage of the real estate appraisal process is the appraisal itself - the appraisal of the value of an object based on three classical appraisal approaches, which include comparative (market), cost and income approaches.

Market Approach is based on a comparison (comparison) of the property being valued and properties similar to it in their properties, relatively recently sold on the market.

V cost approach the appraised value is determined on the basis of the costs of reproduction or replacement of the appraised object, taking into account wear and tear - a decrease in value as a result of the negative impact of various internal and external factors.

At the core income approach lies the idea of ​​the value of the object as the current equivalent of all the expected net income that the object being valued, with rational use, can bring in the future. This takes into account not only the size, but also the time of receipt of income, as well as the level of risk associated with their receipt.

The final stage of the valuation process is the coordination of the valuation results (taking into account weighting factors) - the reduction of the appraised values ​​obtained using the three valuation approaches into one value - into a single conclusion on the appraised value of the object being appraised.

2.3. BASIC APPROACHES AND METHODS FOR ASSESSING THE COST OF REAL ESTATE

Real estate appraisal has some features:

Valuation of real estate, unlike other assets, is associated with a long investment period, since the capital invested in real estate is capital “locked” in a low-liquid asset;

Difficulty in determining the expected period of ownership of an asset, as well as determining the price of an object in case of its possible sale in the future, at the end of the term of ownership of this object;

A relatively long period (compared, for example, with securities) of asset ownership, including several cycles of development of the real estate market;

The difficulty of obtaining reliable and up-to-date information about transactions in the real estate market.

The value of real estate, like any other property, is assessed by valuation methods based on three classical approaches:

1) an income approach based on discounting cash flows or capitalization of expected income from real estate;

2) a market (comparative) approach, which provides for a comparative analysis of market transactions for the sale and purchase of real estate;

3) the cost (property) approach based on determining the value of real estate by calculating the costs required to restore or replace the buildings and structures being assessed, taking into account the depreciation of all types and the market value of the land.

2.4. DETERMINING THE COST OF A REAL ESTATE BASED ON THE INCOME APPROACH

The income approach in real estate valuation allows for a direct assessment of the value of a property depending on the expected future income generated by this property. The value of poor income reduced to the current moment, i.e. their discounted value serves as a guideline of how much a potential investor is willing to pay for the property being valued.

The application of this approach implies the need to calculate the amount of income received from the ownership of real estate, both in the previous and current time, and in the future. Therefore, one of the first steps in real estate appraisal is the determination of received and the calculation and forecasting of future income.

Real estate income forecasting is based on the following. By investing in real estate for its use in production, commercial or other activities, the investor expects to receive certain material, financial or other benefits as a result. A significant part of these benefits can be expressed in terms of financial results, which include:

Cash flow (current cash receipts):

Tax Savings:

Future rental income:

Income from the resale of real estate:

Reducing mortgage debt.

The task of the analyst is to calculate the present value of all future income and financial benefits, based on them to determine the current value of the property that brings these incomes. When studying an object of profitable real estate, the analyst takes into account the most important parameters for him - the cost of buildings, structures, infrastructure and land, long-term loans (mortgage loans).

Having established the amount of income for previous periods, it is necessary to determine the trend of their development in the future and calculate their forecast values. It is the forecast values ​​of income that serve as the basis for the valuation of real estate using the income approach.

When using the income approach to value real estate, the accuracy of the valuation depends to a large extent on the accuracy of the projected returns. The amount of income is influenced by many factors: the state of the real estate market at the time of the assessment and the trend of its development in the future; the location of the land plot and the quality of the structures on it; availability of infrastructure, including communications linking the property with the environment, etc. Accounting and evaluation of these factors should form the basis of the forecast. The main calculated value for the appraiser is the net operating income from real estate.

To determine the net operating income, it is necessary, first of all, to establish the degree of stability of income received from real estate. A stable income is understood to be the income normally received from the use of the property being valued during a typical year in the forecast period, adjusted to the time of the valuation. When calculating a stable income, expenses that are one-time in nature are excluded from expenses, i.e. atypical in the daily operation of the facility. Sources of information for determining income and stability of income can be: the owner of the property; data collected on the real estate market; information received from tenants and property managers.

When calculating net operating income, it is necessary to take into account the expenses intended for the replacement of property elements with short lives. These expenses (replacement reserve), along with current operating expenses, must be deducted from the actual gross income. The replacement reserve is forecast based on the time of acquisition and the estimated service life of the elements to be replaced.

Determining the value of a property based on the income approach is possible in two ways: and . Determining the value of a property discounted cash flow method is made by forecasting the future returns that could potentially be generated by the property, and then bringing them to the current value at a discount rate (required by investors rate of return on investment), chosen taking into account the risk of investing in this property.

Net operating income is used as a stream of income - the actual gross income from the property minus current operating expenses and a replacement reserve, i.e. considers the flow of income before deducting interest on debt servicing and taxes. The use of net operating income in calculations allows not to take into account the differences between different properties in the capital structure and tax payments, which makes the assessment of the value of different properties more comparable. Since money, even in the conditions of complete certainty of the future, has a variable value, the flow of income received in the future must be discounted (brought to today), summed up and, in addition, take into account the value of the object during reversion - possible resale in the future.

The second method of real estate valuation within the framework of the income approach is the determination of the value of a real estate object direct income capitalization method using a capitalization ratio, subject to obtaining a stable income in the long term (direct capitalization).

The value of the capitalization ratio can be calculated in three ways:

1) by the cumulative method based on the summation of the risk-free rate of return with components that take into account the amount of risk characteristic of investing in this property;

2) based on the analysis of market data, i.e. dividing the net income brought by comparable real estate objects by the price of their actual sale, followed by adequate averaging;

3) based on the required rate of return (which can be taken as the discount rate) minus the growth rate of the income stream.

An important feature of calculating the capitalization ratio in real estate valuation is the need to take into account the residual value of the object at the time of its resale in the future. If the probability of a decrease in the value of an object in the future is high, then when calculating the capitalization ratio, it is necessary to take into account the rate of return of the principal amount of the invested capital. In addition, the choice of capitalization ratio should be carefully justified, taking into account various kinds of risks.

2.5. DETERMINATION OF THE VALUE OF A REAL ESTATE IN THE MARKET (COMPARATIVE) APPROACH

Determining the value of a property in the market (comparative) approach based on the method comparative analysis sales are made in the following order:

1) the market situation is analyzed and recent transactions for the sale of comparable real estate objects are identified (those that are close in their main properties and usefulness to the object being valued; at the same time, there should be at least five or seven analogue objects);

2) information on transactions is carefully checked;

3) the appropriate units for comparing objects are selected (for example, a square meter of total area, a cubic meter (for warehouses), a hectare or weave (for plots of land), an apartment, an office;

4) elements of comparison adequate to the given case of an estimation come to light;

5) adjustments are made to the sales prices of comparable objects for differences between them and the object being evaluated by units and elements of comparison;

6) the adjusted values ​​of the cost of comparable (similar) objects are reduced to one value - to the value of the object being assessed.

For the analysis of comparable sales of real estate objects, depending on the specific situation, on a specific real estate object, it is advisable to use a unit of total area as units of comparison; unit of area suitable for rent, sale; unit of volume; real estate unit.

The choice by the appraiser of specific units of comparison should be carefully justified, taking into account the specifics of the valued and comparable objects.

When evaluating real estate, it is necessary to take into account those characteristics of objects that have a direct and significant impact on their value. The most important among them and subject to mandatory consideration in the assessment are:

1) property rights transferred in a possible transaction;

2) conditions for financing the transaction (accounting for borrowed and attracted capital);

3) conditions and time of sale (including the legal purity of the transaction);

4) the location of the object;

5) physical (technical) parameters of the object;

6) economic parameters of the object and environment;

7) environmental parameters of the object and environment;

8) nature, intensity of use;

9) the presence of cost factors that are not directly related to real estate.

Adjustments for units and elements of comparison can be made to the prices of comparable objects either directly in monetary units or as a percentage with subsequent conversion into monetary units.

In the final determination of the value of the object being valued, a simple determination of the arithmetic average of the adjusted prices of comparable objects is unacceptable. Determining the value of the property being valued should be built taking into account weighting factors, the highest value of which is given by the appraiser for those comparable properties that are most consistent in their characteristics with the property being valued.

The use of this method of comparative analysis is possible only if there are a sufficient number of comparable objects that can be reasonably corrected for differences with the object being evaluated.

2.6. VALUATION OF REAL ESTATE BASED ON THE COST APPROACH

Determining the value of a property based on the cost approach is carried out in the following sequence:

1) the market value of a plot of land is determined;

2) the value of the replacement cost of the construction of a real estate object (building or structure) is calculated;

3) the amount of cumulative depreciation is estimated, i.e. wear of all three types;

4) the final determination of the value is made as the sum of the value of the land plot and the replacement cost, minus the cumulative depreciation.

When applying the cost approach, a piece of land is valued as if it were free in the variant of its best (most efficient) use. In the absence of a full right to land, it is permissible to find the value of a plot of land as the value of a long-term lease right. Determination of the replacement cost (value of costs) can be done in three ways:

Based on data on the replacement cost of the object as of the date of the last revaluation with subsequent recalculation to the current value (on the scale of current prices);

By calculating the weighted average of the actual estimated cost of construction of a similar facility (according to contractor construction organizations);

Based on the analysis of consolidated cost items for the construction of a new facility.

When determining the cost of new construction, direct and indirect costs are taken into account, as well as entrepreneurial profit (profit of the developer).

TO direct costs include the costs directly for construction (the cost of building materials and their delivery, the wages of builders, the cost of using machines and mechanisms, transport and storage costs, the cost of temporary structures, the cost of compliance with safety regulations and other standard costs, as well as the profit and overhead costs of the construction contractor ).

TO indirect costs include costs that are not directly included in the cost of construction and installation works (expenses for design, technical supervision, geodetic control, payment for legal, accounting, auditing and appraisal services; advertising costs, administrative and other expenses of the developer).

Entrepreneurial profit (profit of the developer) the appraiser can calculate as a share of the total amount of direct and indirect costs, based on the average rates of entrepreneurial profit for a given region, which are a sufficient incentive to invest in the construction of real estate in this region.

3. FEATURES AND SOURCES OF RISKS OF INVESTING IN REAL ESTATE

Investments in real estate, like investments in securities, are subject to risks inherent in the financial market: interest rate risk, currency, credit risks, business risk. At the same time, investments in real estate, due to the peculiarities of the functioning of the real estate market, are characterized by additional specific risks that may need to be taken into account when assessing real estate.

The risks inherent in the real estate market can be divided into three groups: systematic, non-systematic and random risks.

Systematic risks are determined by factors such as low liquidity of the asset, instability of tax legislation, changes in the level of competition in the real estate and capital markets, the duration of the business cycle in the real estate market, demographic characteristics (and trends in their changes) in the country as a whole and by regions, employment trends , inflation, change in interest rates in the capital market. Systematic risk cannot be diversified and reflects the relationship between the risk level of investments in real estate and the average market level of risk.

Unsystematic risks– risks specific to different types of real estate and different regions. This type of risk can be diversified through the formation of a real estate portfolio, i.e. due to the distribution of capital between different types of profitable real estate objects, differences in the location of objects and in the structure of borrowed and attracted capital.

Random risks associated with possible unpredictable and social phenomena and, in addition, may be associated with inefficient management of real estate.

TO sources of risk relate;

1) type of real estate(possible changes in the conditions of supply and demand for this type of property, regardless of the location of the object, for example, an excess supply of office buildings and premises);

2) the possibility of changing the ratio of supply and demand(due to the cyclical nature of the real estate market, there may be an increase or decrease in demand for real estate in the short term, when the supply of real estate is inelastic);

3) inflation (real cash flows from rental or sale income may be lower than those provided for in the contract due to inflation, in particular, the longer the lease term, the greater this risk);

4) object location(conditions of the regional market, prospects for the socio-economic development of the region; factors due to which real estate within the regional market may become less attractive);

5) terms of the lease(lease risk is related to the fact that the tenant may not pay the entire rent stipulated by the lease agreement);

6) credit conditions(credit risk is due to the property owner's ability to service debt obligations);

7) physical wear, obsolescence, damage; moral and economic depreciation(risks of physical, moral and economic depreciation can reduce the profitability of real estate);

8) opportunities and conditions for reinvestment(the effect of the source of this risk is opposite to the effect of inflation, since the received cash income cannot be reinvested at the same rate of return as the initial investment);

9) changes in legislative regulation and taxation .

3.1. RECOVERY OF CAPITAL INVESTED IN REAL ESTATE

By investing capital in income-producing real estate, the investor expects not only to receive a return on invested capital, but also to fully reimburse the capital itself. Reimbursement of invested capital is possible by reselling the property or by generating income, the amount of which ensures not only the receipt of interest income on capital, but also its gradual reimbursement over a certain period of time. The indicator that characterizes this process numerically is capitalization ratio .

The capitalization ratio consists of two parts. One part of it is related to the return on invested capital, i.e. remuneration to the owner of capital for the use of funds invested in real estate. In other words, it is the percentage (also called return) paid to the investor. The second part of the capitalization ratio is related to the recovery of capital originally invested in real estate.

So, the investor, placing his capital in a particular property, involves, first of all, the return of invested capital and making a profit. There are three ways to calculate the return on investment in real estate:

Method of straight-line return of capital;

Method of return of capital on the reimbursement fund and the rate of return on investment;

Method of return of capital on the reimbursement fund and the risk-free interest rate.

Straight-line return on invested capital method (Ring method) is implemented in accordance with the following procedure - it is assumed that the reimbursement of the principal amount of the invested capital occurs in equal installments. In this case, the payments for the principal amount of the investment will be equal. An important feature of this method is the annual decrease in the value of the members of the cash flow used to repay the debt, so this method cannot be applied to flows with uneven income.

Method of return on invested capital by compensation fund and rate of return on investment (Inwood method) characterized by the fact that the rate of return on investment is an integral part of the capitalization ratio; it is equal to the compensation fund factor calculated at the same interest rate as the return on investment. Another component of the capitalization ratio was the interest rate on investments. The use of this method implies a full recovery of investments and the receipt of appropriate income from them.

Method of return on invested capital by compensation fund and risk-free interest rate (Hoskold method) is used in cases where a loss of part of the invested capital is possible in the course of the transaction (for example, depreciation of a residential building leased out), current income should be considered both as a return on investment and as a return on investment. In such cases, the capitalization ratio should be calculated in such a way that, when assessing the value of assets, not only the full recovery of the invested capital, but also the receipt of income on it, would be ensured, for this, the capitalization ratio should be increased accordingly.

Having considered the methods for calculating the reimbursement of capital, it should be noted. That the incoming periodic income can be divided into two fundamentally different parts: the return on capital and the replacement of capital. Return on capital is the interest money received on invested capital, i.e. ultimate return. The return of capital is characterized by the rate of its compensation. The rate of return on capital depends on the duration of ownership of real estate, the rate of current return, the stability of periodic income and capital appreciation.

3.2. ACCOUNTING FOR DEPRECIATION IN THE APPRAISAL OF REAL ESTATE ON THE BASIS OF THE COST APPROACH

Accounting for depreciation in the valuation of real estate based on the cost approach is an integral component of the property valuation procedure. The cumulative depreciation of buildings and structures is characterized by their loss of their value as a result of the combined impact of physical, functional (moral) and economic (external) depreciation.

WITH wear and tear associated with a gradual decrease in the cost of buildings and structures due to their aging and destruction as a result of operation, physical and chemical effects, overload, improper storage, etc.

Under functional (moral) wear and tear is understood as the loss of its value by the property due to the inconsistency of the space-planning, design solution, materials, equipment and quality of work with modern market requirements and consumer preferences.

Under economic (external) depreciation refers to the loss of value by a property as a result of external factors in relation to it (the natural and social environment, adjacent objects).

The following methods can be used to estimate cumulative depreciation, depending on the availability of reliable information:

1) method of economic age (method of life span);

2) the method of breakdown by wear components.

lifetime method. The life span of each property is laid down during its design. In the theory of valuation, there are the following concepts that determine the various terms of the functioning of a property: the term of physical life, the term of economic life, effective age.

The term of physical life is the period during which the property actually exists and can be used for its intended purpose.

The term of economic life is the period during which the property makes a profit (income). The end of economic life occurs when the property ceases to generate income.

The effective age is determined by the condition and appearance object, design, economic factors that reveal its value. The operating conditions of the facility, the timeliness of repairs and modernization to a large extent affect its effective age. It may be more or less than physical age.

It is necessary to take into account the differences in the approach to depreciation assessment between accounting and valuation practices. The appraiser must first proceed from the effective age and determine the remaining economic life. The period of economic life depends on many factors, such as the economic situation in the country, the tastes of consumers, etc. At the same time, when evaluating real estate, the appraiser proceeds from the fact that no significant changes will occur with the property in the remaining period of economic life. The definition of the economic life is based on a visual inspection of the object, an analysis of the economic situation. Ultimately, it largely depends on the experience and opinion of the appraiser.

By economic age method (lifetime method) the amount of cumulative depreciation is defined as the quotient of dividing the effective age by the economic life (normative service life) of the building. In this case, the effective age is understood as the conditional age of the building, determined by the physical condition and functional utility, and the economic life is the period of time during which the building has economic value, i.e. has utility.

In accordance with wear component breakdown methods The following components of cumulative depreciation are singled out and separately assessed:

Removable physical wear, i.e. physical depreciation, the elimination of which is economically justified - the cost of eliminating which does not exceed the monetary value added to the value of the object as a result of its elimination;

Irremovable physical depreciation - depreciation, the cost of eliminating which as a result exceeds the corresponding increase in the value of the object;

Eliminable moral (functional) depreciation;

irreparable obsolescence;

Economic (external) depreciation (obsolescence) is, by definition, practically unremovable, the only way to eliminate it is to change the external environment, which in most cases seems to be an unsolvable task.

The appraiser must make a reasonable reconciliation of the estimated valuations of the value of the property, obtained as a result of using all three approaches to valuation, based on the relative weights attached to the values ​​​​obtained within each of the three approaches. Thus, the appraiser calculates the weighted average value of the value of the property. As a final conclusion on the assessment of the value of real estate, there can be either one value or a range of values ​​of the value of the property.

3.3. USE OF FINANCIAL LEVERAGE IN MORTGAGE LENDING OF REAL ESTATE TRANSACTIONS

The real practice of market transactions with real estate in most cases involves the involvement of mortgage lending, i.e. loans secured by real estate. In this case, we can say that financial leverage is applied - financial leverage. The main property of financial leverage is that, using borrowed capital for investment, it is possible to acquire ownership of real estate objects with a higher yield than the interest paid on the loan received.

A mortgage loan when buying a property is attractive for the following reasons:

When buying real estate, only a few buyers have their own funds sufficient to fully pay for the purchased property;

Those buyers of real estate who have the funds necessary for its acquisition seek to reduce the possible risk of capital investments by diversifying them;

Attracting a mortgage loan allows the investor to control large amounts of real estate;

The investor has the opportunity to receive tax benefits.

Real estate investment in mortgage lending consists of two parts: equity and mortgage loan. The capitalization rates of these two elements of invested capital should correspond to the market return, taking into account the risk of investments. Therefore, the capitalization rate is also divided into two components: the capitalization rate on equity and the mortgage constant.

Capitalization rate on equity- the ratio of annual cash receipts from real estate before taxes to the amount of the investor's own funds invested in real estate.

Mortgage constant - the ratio of the amount of annual debt service payments to the principal amount of the mortgage loan.

The acquisition of real estate can be carried out using various methods of financing. A common method of acquiring real estate in installments for a long period with the payment of appropriate interest, with the addition of financial leverage. Other funding schemes are also possible. It should be noted that the process of financing real estate transactions can have a significant impact on its price. Financing does not physically change the property, but it does affect the buyer's cash payment and monthly loan payments. The consequence of this is the following - the longer the term of the loan provided by the seller of real estate to the buyer, and the lower the interest rate on it, the higher the market price will be set by the seller. The use of financial leverage can significantly change the financial impact of a transaction for a property buyer.

If the return on real estate purchased with borrowed funds exceeds the annual interest on the loan, financial leverage is continuous. In cases where the rate of annual financial benefits from the acquired real estate does not exceed the interest on the loan received, leverage is considered negative (in this case, it would be better not to talk about financial leverage). In cases where the property brings an annual income equal to the annual interest on a mortgage loan, leverage is considered neutral (zero).

Using leverage, an investor can increase the current return on real estate, extract significant material benefits from an increase in real estate value, and ensure significant diversification of their assets.

The effect of financial leverage can be explained by the following formula:

r CK \u003d r IR + K / SK (r IR - r K),

where r CK is the return on equity of the investor;

r IC - return on all invested capital (equity and mortgage loan;

r K - interest rate on a mortgage loan;

K - the amount of the mortgage loan;

IC - investor's own capital.

It should be pointed out that the value of a property is influenced not only by the size of the mortgage loan, but to a large extent by its share in the investment of capital, as well as by the method of repayment of the mortgage loan.

CONCLUSION

Summarizing the above, we can draw several conclusions regarding the implementation of the investment project and note that when making any investment decision, it is necessary, first of all, to conduct a study of the investment environment.

Investing in real estate is a profitable investment, especially under current market conditions and conditions, but the effectiveness and benefits depend on the awareness of the investor.

The implementation of investment projects involves the investor's refusal of funds today in the expectation of receiving them in the future. Moreover, as a rule, profit should be expected not earlier than a year after the investment.

The objects of real investments (capital investments) can be real estate, business, machinery, equipment, buildings, land, natural resources.

An investment project is primarily evaluated in terms of its technical feasibility, legal validity, environmental safety and economic efficiency, which is understood as profitability (rate of return) - the result of comparing the profit generated by the project and the total costs incurred for this project.

Obviously, when making investment decisions - when choosing an investment project - preference is given to an object that is technically feasible, legally justified, environmentally safe and most economically efficient.

Obviously, if there are several projects, you can get an equal amount of income, but the effectiveness of these projects may be different, since their implementation may require different costs.

When evaluating the effectiveness of an investment project, one should also take into account the degree of various types of risk (business, financial, etc.).

The main task in the analysis of the effectiveness of investment projects is the calculation of future cash flows generated (projected) during the implementation of the project.

Only the cash flows received during the implementation of the investment project are able to ensure the payback of the investment project.

Therefore, it is cash flows, and not profit, that are the main central element in the analysis of the effectiveness of an investment project. In other words, the effectiveness of investment projects should be based on the study of cash flows that are generated as a result of the implementation of these projects, in our case, investments (investments) in real estate.

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