If you’re new to this industry, this will give you a great insight into how this kind of investment 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. It includes all the buildings and the fencing around the land. Also included as part of the real estate, any other developments on the land such as boreholes or water wells they are.
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 viewed as the 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?). These 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
Commercial real estate refers to the financial or business aspect of real estate. It entails the buying and selling of real estate for several reasons. Under this division of real estate, there are many 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 an agent who helps in buying and selling. This agent helps both parties in that he supports the buyer in finding property for sale.
On the other hand, he helps the sellers to find buyers. These agents are typically licensed and, in most cases, are paid on a commission basis. On occasion, instead of an agent, a marketer may be put in charge. In this division, land may be continuously developed 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 refers typically to property that has been set aside for occupancy. Many types of such properties fall under this division. These include condominiums, apartments, family homes, and townhouses. It can either be a residential or commercial property investment. Someone may decide to occupy the house or rent it out.
Real estate investing
Real estate investing primarily involves commercial real estate. It usually entails the leasing, renting, buying, and selling of the property. Apart from the acquisition, it also consists of 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 well to ensure that they get a good return on their investment (ROI). The capital to get started as a real estate investor is ordinarily substantial. However, there are several options that investors can use to enable them to invest. One of these options is crowdfunding. Like any type of investment, there are several risks involved in investing in real estate. Still, the fantastic 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 about 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 real estate investments. Have you heard of the Trump towers in Manhattan? They are 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 many ways to get some property. For instance, you can look for market listings 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 – 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 invest on his behalf. The company hired is also responsible for the maintenance of the property and the eventual sale. Real estate investors select different investment opportunities for varied reasons. While the leverage and tax benefits draw some, while others are interested in the cash, others are attracted 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.