If you’re new to this industry, this will give you a great insight of how this kind of investment really works. You will also learn the basics of real estate, which means we’ll be talking about:
- The definition of real estate
- Real estate investing
- Real estate from the investor’s perspective
The definition of real estate
You can’t invest in an industry that you don’t know about. For this reason, you have to familiarize yourself with real estate before even thinking about any investments. Real estate is a term used in legal circles to refer to any piece of land. It also refers to all the developments done on the land. This includes all the building and the fencing around the land. If there are any other developments on the land such as boreholes or water wells they are also included as part of the real estate. However, if there are any developments on the land that are movable, they won’t be considered as part of the real estate. This is because, when the immovable parts of the land are considered as part of it. If you sell or buy the land, you will get these parts. However, the movable fixtures can be considered as property of the current owner. They can be sold or removed from the land at any given time. Real estate is governed by a set of laws called Real estate laws (easy to remember, right?). Real estate laws govern aspects such as jurisdiction, purchasing and development of land. Real estate is mainly categorized into two main divisions. Commercial and residential real estate.
Commercial real estate
Refers to the financial aspect or business aspect of real estate. It entails the buying and selling of real estate for a number of reasons. Under this division of real estate, there are a number of professionals. For instance, to establish the worth of the land, there is the appraiser. There is also a broker who assists in the price negotiation between the buyer and the seller. In some instances, there is the agent who helps in the buying and selling. This agent helps both parties in that, he helps the buyer to find property for sale. On the other hand, he helps the sellers to find buyers. These agents are normally licensed and in most cases are paid on commission basis. In place of an agent, a marketer may be put in charge. In this division, land may be constantly developed so as to increase its value in the markets. For this, we have land developers. There are also property managers who are usually in charge of managing the property on behalf of an owner. They have to ensure that the property is well kept at all times.
Now, residential real estate normally refers to property that has been set aside for occupancy. There are many types of such properties that fall under this division. These include condominiums, apartments, family homes, and townhouses. This can either be a residential or commercial property investment. Someone may decide to occupy the house or rent it out.
Real estate investing
This mainly involves commercial real estate. It usually entails the leasing, renting, buying and selling of the property. Apart from the acquisition, it also involves the ownership of the property. The main aim of this kind of investment is to make profits. For this exact reason, investors will develop and manage their property really well so as to ensure that they get good a good return on their investment (ROI). The capital to get started as a real estate investor is normally substantial. However, there are a number of options that investors can use to enable them to invest. One of these options is crowdfunding. Like any type of investment, there are a number of risks involved in the investing in real estate, but the amazing thing about real estate investing is that the worst scenario is not making any money – very few have lost money in real estate and I’m talking financial catastrophes.
The profits that come with the right real estate investments are very high. This is why business moguls such as Donald Trump have plenty of such investments. Have you heard of the Trump towers in Manhattan? They’re owned by President Donald Trump, one of the most successful real estate investors out there. If he’s doing it, then doesn’t that suggest real estate deserves a second look? There are a number of ways to get some real estate property. For instance, you can look for market listings in order to find the properties through crowdfunding platforms like Real Estate Affiliates.
Real estate from the investor’s perspective
There are two types of real estate investors. There is an active investor and a passive one. An active one is fully involved in the investment. He or she participates right from the purchase up to the point of sale. On the other hand, a passive investor hires a firm or a trust to make the investment on his behalf. The company hired is also responsible for maintenance of the property and the eventual sale. Real estate investors select different investment opportunities for varied reasons. There are some that are drawn by the leverage and tax benefits while others are interested in the cash. There are also others who are drawn by appreciation or depreciation. The opportunities are endless in this very lucrative industry. So many investors have managed to make fortunes. You can be one of these many investors, all you have to do it act because no one has ever won a race by standing still.