Real estate as an investment asset

Tomáš Krulický,Jakub Horák,J Horák

doi:10.1051/shsconf/20196101011

Abstract

The present text focuses on perceiving real estate property as an investment asset that generates a certain amount of revenue to its owner, assuming expected risk and the expected level of liquidity. The first step is to determine the open market value of the selected property, which represent the expected expenses of the investment costs incurred (taking into account other acquisition costs), then we determine the open market rent value, which is the expected return on the selected property, then identify possible business risk associated with the commercial use of real estate and finally, the liquidity of the entire investment is estimated. In conclusion, methods for evaluating investments are applied to assess the realization of the investment – acquisition of the selected real estate for commercial purposes, the estimated return time and the percentage of the return on investment is calculated of the paper.

Highlights

Together with the general increase in the standard of living of the population, the available funds of the population of the country increase and, household savings, according to the Czech Statistical Office in the second quarter of 2018, the saving rate reached 9.8% of revenues, which was a year-on-year increase of 0.4 p. p
The first step is to determine the open market value of the selected property, which represent the expected expenses of the investment costs incurred, we determine the open market rent value, which is the expected return on the selected property, identify possible business risk associated with the commercial use of real estate and the liquidity of the entire investment is estimated
Investment real estate can be defined as real estate that is purchased with the intent of its commercial use and not solving own housing needs, which are already solved in another way [3]

Summary

Introduction

Together with the general increase in the standard of living of the population, the available funds of the population of the country increase and, household savings, according to the Czech Statistical Office in the second quarter of 2018, the saving rate reached 9.8% of revenues, which was a year-on-year increase of 0.4 p. p. The manners in which households can free their funds are many , depending on the approach to risk, the required liquidity, the required return, the confidence of the population in individual financial products, and especially on the level of awareness of the household. One of the options households invest in is buying real estate [2]. Investment real estate can be defined as real estate that is purchased with the intent of its commercial use and not solving own housing needs, which are already solved in another way (by owning other property, for example) [3]. The aim of the contribution is to determine the return on investment real estate and the payback period of such investment

Objectives

Methods

Results

Conclusion