Direct housing investment as part of an investment company’s investment portfolio : a study on the development of Vesasco Oy's business plan
Vanha-Honko, Ville (2023)
Vanha-Honko, Ville
2023
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2023053116329
https://urn.fi/URN:NBN:fi:amk-2023053116329
Tiivistelmä
The purpose of this study was to develop a new investment strategy for a family investment company Vesasco Oy with an emphasis on direct housing investments. The study also provides insight into investment in rental housing and a deeper understanding of two distinct methods of conducting housing investments. The strategy was developed with qualitative methods. The chosen research method was case study supplemented with a literature study. It was analysed through cases how Finnish private individuals invest in rental housing. The descriptions obtained were then supplemented with literature study to augment the method’s validity and reliability. The descriptions were then analysed according to the grounded theory method to find answers to the question "what are the success factors in their strategies". IceCapital Housing Funds´ investment strategy was also described. A sufficient number of key factors were identified from the descriptions to build the new investment strategy for Vesasco. Mathematical formulas were used to describe the strategy numerically and to compare the direct housing investments of Vesasco with its indirect housing investments through real estate private equity funds. The impact of inflation and rising interest rates on revenue and cash flow was modelled. The functionality of the new investment strategy in Vesasco’s active investment portfolio
was evaluated. After the analysis, a low-risk investment strategy that emphasizes stable and rather risk-free long-term net income is proposed for Vesasco in the study. According to the portfolio theory direct housing investments reduce risk in the company’s active investment portfolio by diversifying the investment in rental housing into a new type of object. In recent years, use of debt has been of great importance when investing in rental properties due to the zero-interest rate environment. In the current market situation where interest rates have risen sharply and inflation has picked up, I suggest a portfolio without debt instead. In today's situation, it is possible to add value by utilizing good purchasing opportunities and paying less than the current market price for apartments.
was evaluated. After the analysis, a low-risk investment strategy that emphasizes stable and rather risk-free long-term net income is proposed for Vesasco in the study. According to the portfolio theory direct housing investments reduce risk in the company’s active investment portfolio by diversifying the investment in rental housing into a new type of object. In recent years, use of debt has been of great importance when investing in rental properties due to the zero-interest rate environment. In the current market situation where interest rates have risen sharply and inflation has picked up, I suggest a portfolio without debt instead. In today's situation, it is possible to add value by utilizing good purchasing opportunities and paying less than the current market price for apartments.