Investments. Real estate as an asset for investment, its characteristics (the most important)

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Investments. Real estate as an asset for investment, its characteristics (the most important)

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REAL ESTATE AS ASSET FOR INVESTMENT, ITS CHARACTERISTICS

Real estate includes land, land plots, everything on and below the surface of the earth. It includes objects attached to the earth, regardless of whether they are of natural or anthropogenic origin. Real estate includes rights to real estate. Movable property includes cars, furniture, ships, aircraft, everything that can be moved. Annexes, utility rooms and buildings, i.e. extensions that are attached to movable property in such a way that they cannot be separated from it without causing damage to it.

Real estate is classified into the following types:

▪ for housing (house, dacha);

▪ for conducting commercial activities (offices, buildings, structures);

▪ for production purposes (workshops, factories, industrial buildings);

▪ for agricultural activities (agricultural complexes, farms).

The advantages of real estate are:

1) investing capital in real estate gives a higher return than providing a loan secured by real estate and receiving initial interest from the borrower;

2) real estate itself is the most reliable way to insure against a decline in the purchasing power of the currency and rising prices.

The disadvantages of real estate are:

1) real estate does not have high liquidity in a short period of time;

2) it is difficult to reasonably invest when buying real estate without qualified advice;

3) ownership of real estate forces the investor to take actions to manage it;

4) there is a high degree of risk that real estate will not bring such income that the investor expects, and even vice versa.

Real estate is also considered as an investment asset. From an investment perspective, the most important characteristics of real estate are both economic and physical characteristics. Economic characteristics include: various extensions and objects characteristic of them, rarity, which is expressed in uniqueness, originality. Physical characteristics include: immobility, which allows the legal mechanism to be regulated to a greater extent than in relation to movable property, indestructibility, which determines the permanence of investments in real estate, heterogeneity, and the presence of different types of buildings. To make a decision on investment, it is necessary to conduct an analysis of the real estate market to decide on the issues of assessing the cost of certain types, to identify profitable segments, determine the level of risks of investors, and the feasibility of investing in construction.

Author: Kuznetsova S.A.

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