Real Estate and Other Tangible Investment

REAL ESTATE AND OTHER TANGIBLE
INVESTMENT
Devitha Amelia
Andina
Kusumawardani
Lestari Widyastuti
Bagus Nugroho Putro Setia Ahdi Riyanto
Real Estate vs Tangible Asset

Real estate includes entities such as residential homes ,
raw land, and a variety of forms of income property,
including warehouses, office and apartment buildings,
and condominiums.
Tangibles are investment assets, other than real estate,
that can be seen or touched.
Differ Real Estate from

Securities Investment
Managerial decisions about real estate greatly affect the
returns earned from investing in it.
In real estate, you must answer unique questions:
What rents should be charged?
How much should be spent on maintenance and repairs?
What purchase, lease, or sales contract provisions should
be used to transfer certain rights to the property?
Investor Objectives
Analysis of Important Features
Determinats of Value
Estimating Market Value
Income Approach
Performing Investment Analysis
Market Value Versus Investment

Analysis
Positive Leverage
Negative Leverage
Discounted Cash Flow

NPV, the difference between the present value of the
cash flows and the amount of equity necessary to make
the investment
Yield
Three-step procedurs to estimate yield :
Step 1 : Calculate the investments NPV using its required
return
Step 2
: If the NPV>0, raise the discount rate (typically
1% to 5%); if the NPV<0, lower the discount rate (typically
1% to 5%). Recalculate it.
Step 3
: If the NPV in step 2 close to 0, the resulting
discount rate is a good estimate. If not, repeat step 2
Perform Valuation and

Investment Analysis
Jack berencana membeli properti dari Mrs Bowker yang
kemudian akan dia sewakan dan akan dijual pada tahun
ke-5.
o Initial equity
= $60.000
o Property Price
= $270.000
o Mortgage
= $210.000
o 30-year mortgage at 10%
o Asumsinya NOI akan naik 5% per tahun
Perform Valuation and Investment Analysis

Jack berencana menjual properti tersebut di tahun ke 5
(dengan asumsi adanya 5% apreciation)
Jack menghitung Proceed From Sale, dengan asumsi
selling price pada tahun ke 5 sebesar $344.520
Tax rate 28%, long term capital gain tax rate 15%, dan
recaptured depreciation tax rate 25%
Sythesize and Interpret

Result of Analysis
Berdasarkan perhitungan NPV atau
discounted
cash
flow
dan
yield,
memungkinkan Jack untuk membeli
apartemen.
NPV : +10.452
Yield > Required Rate of Return
Real Estate Investment Securities

(REIT)
REIT adalah sebuah perusahaan atau
bisnis kepercayaan yang tujuan
utamanya
untuk
memiliki
atau
membiayai real estate
Imbal hasil berupa dividen dan nilai
apresiasi saham
Memiliki pemegang saham melebihi
100 pemegang saham dengan catatan
bahwa tidak lebih dari 50% sahamnya
dipegang oleh lima orang atau kurang
pemilik individu.
Basic Type of REITs
Key Factors
Investing in Tangibles
Selection and timing are important
Separate the economics of the decision from the
pleasure of owning these assets
investment merits - the economic payoff from the
investment
must consider expected price appreciation,
anticipated holding period, and potential sources
of risk, carefully weigh the insurance and storage
costs of holding such assets
dont start a serious tangibles investment program
until you really know what youre doing
Gold and Other Precious Metals

Precious metals are tangibles that
concentrate a great deal of value in a small
amount of weight and volume.
Form of investing: Gold bullion coins, Gold
bullion, Gold jewelry, Gold stocks, mutual
funds, and exchange-traded funds (ETFs),
Gold futures, Gold certificates
Can be bought in a variety of forms
Transaction costs and Storage costs
Gemstones
Consist of diamonds and the so-called colored
precious stones (rubies, sapphires, and emeralds)
Precious stones offer their owners beauty and are
often purchased for aesthetic pleasure
Standards of value are fully appreciated only by
experienced personnel at fine stores, dealers,
cutters, and an occasional connoisseur-collector.
Relative illiquidity of the stones, high transaction
costs, require secure storage, and there are no
payoffs priorto sale.
Collectibles
Collectibles represent a broad range of itemsfrom coins and
stamps to posters and carsthat are desirable for any number of
reasons, such as beauty, scarcity, historical significance, or age.
An investment-grade collectible is an item that is relatively scarce
as well as historically significant within the context of the
collectible genre itself and, preferably, within the larger context of
the culture that produced it. Further, it should be in excellent
condition and attractive to display.
collectibles are not very liquid - resale markets are poor, and
transaction costs can be high
psychic income in the form of aesthetic pleasure, the financial
return, if any, is realized only when the item is sold.
Collectibles
Rare coins (numismatics)
Rare stamps (philately)
Artwork (the paintings, prints, sculpture, and crafts
of recognized artists)
Antiques (cars, furniture, etc.)
Baseball cards
Books
Games, toys, and comic books
Posters
Movie memorabilia
Historical letters

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REAL ESTATE AND OTHER TANGIBLE

Real Estate vs Tangible Asset

Differ Real Estate from

Analysis of Important Features

Estimating Market Value

Performing Investment Analysis

Market Value Versus Investment

Discounted Cash Flow

Perform Valuation and

Perform Valuation and Investment Analysis

Perform Valuation and Investment Analysis

Perform Valuation and Investment Analysis

Perform Valuation and Investment Analysis

Perform Valuation and Investment Analysis

Perform Valuation and Investment Analysis

Perform Valuation and Investment Analysis

Sythesize and Interpret

Real Estate Investment Securities

Basic Type of REITs

Gold and Other Precious Metals

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