Investment properties

News from DL MoneyPark and information on the financial market and Swiss romande real estate

Author : Kristen

Investment properties

In real estate investment, as in most other types of investment, an investor often finds himself confronted with two questions: How to put a value on the property and how to measure the profitability of the investment? From a financial point of view, these two questions are closely linked. Either you estimate the future income associated with owning a property and the profitability required to determine the its value or you already know the value of the property and its income and you are able to calculate the profitability of the investment.

Therefore, determining the value of your coveted real estate property is fundamental. In most cases, you have the option to survey the property value with an expert during the transfer of ownership. This step protects the investment for not only the buyer, but also for seller who wants to be well positioned on the market and the financial institution who finances the acquisition. The methods for determining property value could take several forms according to the type of property, the purpose of the investment and the foreseeable period of possesion. Other characteristics to consider include the rental, mixed, administrative, commercial and even industrial nature of the property. Usually, the goal of a property survey is to determine the market value, that is the price that could be obtained on the market under normal conditions for a relatively long period of possession.

We will begin by presenting you with the traditional methods for determining the value of investment properties: the depreciated cost method, the capitalisation method, and the discounting of future cash flow. We will not address here the pleasure-seeking methods that are principally used for primary and secondary residence properties.

Articles on investment properties