Sunday, January 13, 2019

Understanding the four essentials with some analogies


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Sometimes we need analogies and simple examples to help understand things better, and also retain in our memories for a longer time. The simplicity that follows can look child-like but do we not understand best when we learn as children? We have probably not forgotten even today, whatever we learnt well when we were children. Many concepts in this book have been presented in this manner.

The analogies presented are of a tree (our investment tree) and a money box (finances that help the investment tree grow)...


The table of contents is presented below, in relation to these analogies, to help relate to the flow / structure of this book. This manner of relating the modules (chapters) with the analogies, can help in easy understanding and also remembrance. But first, a recall of the 'snapshot of table of contents':


REIT
Above: Recap of our table of contents: structuring of the four essentials

The analogies related to the table of contents....

Module 1:
Introducing the four essentials
Let us inspect the field where we plant our investment tree. We will understand this ‘field’ which serves as a base for our entire future activities.

Volume 1: Real Estate Investment

The Tree Analogy (or our investment tree)

If we compare the steps taken for our investment decision to planting and growing a tree, we may understand many aspects quite easily.
PART A:

Understanding the basic nature and characteristics of our investment tree: starting with the seed.

Module 2
Meaning of (i) Real Estate (ii) Realty Investment
The seed of our investment tree
Module 3
Real Estate as an Asset Class
Identifying the species and the genus of our investment tree
Module 4
Real Estate Investment Basics
What, when, and how will we get the fruit or flower or timber or maybe even shade?  
Module 5
Tools for Real Estate Investment Study
Wait! Before we go further, we need some tools to measure the height or weigh the fruits of the tree
PART B:
Planting the investment tree, protecting it and gaining from it
Module 6

Macro Approach to Realty Investing

Is it the environment all-right now for the tree to grow, or should we wait for the season to change?
Module 7

Realty Indices: Macro Assessment for Realty Investing

Using data of the meteorological department to assess the correct season.
Module 8

Understanding Returns & Risk in Real Estate

This tree should give us plenty of sweet mangoes. But, could something harm the tree and its fruits?
Module 9

Valuation of Properties: Core of Investment Analysis

Evaluating the investment tree and assessing the potential for fruit, flower or girth.

Volume 2: Real Estate Financing

The Money Box Analogy (or the finances for our investment)

To help us grow and nourish the tree, we need resources - a money box. All that is mentioned in Volume 1 is impossible to do without this box. It is also a symbiotic relationship - the tree in turn helps fill up this box even more

 

PART C: The basic understanding of our money box: structure, compartments etc.

Module 10

Basic Concepts

What is the structure of the money box? Taking the box apart bit-by-bit and understanding its compartments.
Module 11

Debt Finance: Variations and Applications

Inspecting a prominent compartment in the money box - the loan compartment.
Module 12

Debt Finance in Realty: The Prevalent Styles

A closer look inside the loan compartment of the box: who takes what (and ways to take it!).
PART D:
Making bigger and better money boxes; a deeper understanding of this process and of the boxes
Module 13

Securitization: Enabling Pooled Debt finance

How to get more people to put their money in the box? Working out new structures of the loan compartment to suit more people.
Module 14

REITs: General Overview

Innovating sturdier boxes to help many more people fill them up.
Module 15

Pooled Finance in India: REITs, InvITs & More

A look at some bigger boxes that are marked “Made in India”.
Module 16

REITs Analysis and Valuation

Getting more knowledgeable about our ‘innovative’ boxes- tones, textures and usage. How could we benefit from them?
Module 17
Real Estate Cash Flow Modeling

Accounting and money box statistics- keeping a check on what comes in or goes out of any type of money box

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