Wednesday, March 22

How do you spell real estate?

Real estate is property contain land is permanent attach it. It is made by man or present naturally. Direct investment make by buying houses, land or property and indirect by REITs or pooled real estate. Investment in real estate done by many methods that are discuss in article.

Real estate

The land, long lasting structure and improvements attach to the land called the real estate. This improvement is done naturally or by the man. It is same as the real property and it is  from the personal property. The personal property is the property that does not permanently attach with the land like boats, furniture, equipment, inventory, vehicles, etc.

Concept of real estate

People think the term “real estate” and the “real property” is same word these are different terms. The real estate is land and land is the place from the surface of earth to the center of earth and to the airspaces like coal, water, trees, etc.

The features of land are as follows

  • It cannot move
  • Cannot be destroy
  • Land the other part means every part is unique and exclusive from the other

In the definition of real estate, the word “improvement” is use.  What does it mean? The permanent additional things made by the man with the land called the improvement. The improvement is done by the total capital and labor. This show a sizable fixed investment. After improving the land, a building scatter. The improvement as electricity, water, sewer system become permanent.

The land and improvement in the land plus the rights of inherent to its ownership and customs includes in the real property.

Real Estate Agent

Real estate is a license profession. The real estate agent helps in dealing with the buyer and seller, arranges the transactions of real estate and work as a Representatives in negotiations.

What Are Types of Real Estate?

The types of real estate

  • Residential real estate:
    The properties use the purpose of residence. Examples include cooperative, townhouses, multifamily, single family home.
  • Commercial real estate: The properties use the purpose of businesses. Hospitals, restaurant, stores, shopping center, cinema houses, offices, gas station.
  • Industrial real estate: The properties use the purpose of manufacturing, distribution, production, storage, research and development.
  • Land: Land as discuss above, the property from earth’s surface to center of earth and from center of earth to air spaces called land. Land are property that are undeveloped.
  • Special purpose: The properties use for the general public are the special purpose. Place of worship, parks, schools, etc.

The Economics of Real Estate

The economic growth is act as a driver of real estate in the US and number of houses increases. The economic indicator of it is the number of new construction of residential projects in any month. These projects are release by the US Census Bureau. The elements of reports contain permit of building, start the housing projects, data of houses projects completion for a family house, 2 to 3 units of house and 5 to 6 units of multi-family buildings like apartment complexes.

The number of houses give the general idea about the economic direction at that time, the analyst and investors keep close at the start of the housing projects. These new houses projects give the idea about how economy is develop.

The housing start represent the few single family start or the multi-family start. It distinct progress the short supply of single family homes and these are drive by the home prices.

Ways to invest in real estate

Many choices and options are available for investment. Put the money in exchange traded funds, stocks, mutual funds, bonds. These are good options where put the money and need no level of experience. For the new investors, the forex and crypto currency become too volatile. What options choose depend upon how much money want to invest, how involved in investment and how much risk one can bear.

The investment in real estate by purchasing and owning proves very satisfying and advantageous.it is not like the stocks and bonds investment. In real estate investment, owners get high profit by purchasing a property and pay amount of total cost. Paying all the balance with interest over time.

The ways investors make money:

Rental Properties

The person who is expert in renovation skills, has patience and ability to manage tenants himself become good owner of rental properties. This strategy needs substantial capital for financing the maintenance cost and cover vacant months.

Benefits

  • Gives regular income
  • Increases capital
  • Several tax deductible related expenses

Disadvantage

  • Managing tenants is unexciting
  • Tenants, it potentially damage the properties
  • The potential vacancies decreases the income

According to US Census Bureau data, from 1960s to 2007 the sales prices of new houses is constantly increase in value. Even surpassing pre-crisis levels, sales prices continue the ascent.

Real Estate Investment Groups (REIGs)

The person want to become the real estate owners without the hassle of running it are real estate investment groups. The investment in REIGs needs a capital cushion and access to finance. These groups are same as small mutual funds that invest in rental properties. Companies purchases or builds the apartment blocks or condos, permits investors to buy them through company.

Advantage

  • Handoff become the owner of rental
  • Get more income and appreciation

Disadvantages

  • Susceptible to unscrupulous managers
  • Vacancy risk is increases
  • Fees is same as the mutual funds

House flipping

This is done by people who has best experience in valuation, renovation and marketing. It requires ability and capital and do repair need. Buy and rent landlords. Looks profitable sell the undervalue properties buy in less six months.

Advantage

  • Give high return
  • Tie with the capital for short period of time

Disadvantage

  • Need large knowledge about market
  • Hot markets cooling

Online Real Estate Platforms

It is for the people want to join others by investing in commercial or residential area requires investing capital. Real estate platforms investment is made online real estate platforms. It connect investors who are searching for the finance project. Sometime, investment is diversify with less amount of money.

Advantage

  • Investment in a projects or collection of projects
  • Diversification in geography

Disadvantage

  • Become illiquid with lockup period
  • Managing the fees

Real Estate Investment Trusts (REITs)

This is best for those investors who want to get the portfolio exposure without the traditional real estate transactions to real estate. It is made companies uses money of investors for buying and operate the income properties. Sell and purchase on the major exchange as any stock (preferred stock, common stock).

Advantage

  • Provide the important dividend paying stocks
  • Core holding become long term and cash generate leases

Disadvantage

  • Benefits link with traditional rental does not apply

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