Real estate as an investment

I recently presented at the 2017 Q Group colloquium on

You can apply rigorous analytics to the real estate asset class (it doesn't have to be guesswork and slick salesmanship)

I want to help people see that the real estate asset class can be treated as an investment, rather than speculation. In my view, buying one house, or even a handful, isn't investing, it is speculating. However, saying that, I do know you can treat real estate as an investment.

I also pointed out most of the "everyone knows ..." conversations that keep happening about real estate are misleading and in many cases just wrong.

What does one need for an investment?

  1. Valuation of the underlying asset (& Income)
  2. Forecast / Prediction of future behaviour of the asset
  3. Default likelihood - Is the asset going to keep existing?
  4. Diversification / Correlation
  5. Derivatives, Hedging, Risk - How can I manage this asset?
  6. A market - There's no point if I can't acquire and dispose of the asset easily.

Unsurprisingly, Vifortech Solutions has tools for some of these and relationships with companies to help provide the valuations if you need them.

We view real estate as simply another asset class - like equities, FX, commodities, etc. With the tools that Vifortech Solutions has developed, the process of including real estate in current, multi-asset, investment strategies is straightforward.

Future posts will highlight some a couple of slides from my Q Group presentation in these areas. We've also got some fact checking on "everyone knows ..." type comments that are thrown around in this space.


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