Real estate refers to everything above, beneath and inside a land. It is a people business that has to do with having the ability to understand your customers’ needs in buying or selling of properties.
Whether you are buying or selling a land or a home, there are many truths about real estate you should know and here are some of the truths.
1. Real Estate is a sure way to wealth.
Real estate is a vehicle for producing income and acquiring wealth in a gradual process. Real estate provides the highest returns on investment. Investing in real estate is comparable to starting your own business, especially individual holdings like rental homes, raw land and commercial buildings.
Investing in one real estate company holdings is comparable to investing in stocks. According to the team at HighReturnRealEstate.com, real estate offers investors cash flow three times the national average. Real estate is probably the safest investment in the world as it has almost no risk.
2. You need to learn the Ropes.
Investing in real estate is a lot of work and requires some business ingenuity, financial sense, people savvy and organizational skills. You need to learn about insurance, mortgages and home maintenance as well as the laws that govern such.
3. There may be no returns in the short term.
Property values go up over time and you can count on real estates’ increasing value with inflation rates and yes, you have to consider at least a decade to alleviate transient ups and downs.
The market does expand and contract, so if you are lucky and buy when low, you can do really well when the market adjusts to normal.
It is wise to buy in a more established area at a higher cost, or an area with more potential for growth at low cost. If you buy when the market is high, and its crashes, you can end upside down, but in the long term, no big deal.
The only time you can be concerned with anything upside down is when it’s time to sell otherwise, just keep making the payments as usual.
4. You need a thick skin for real estate.
It is no different from every other business, it can be simple but it isn’t easy. You will always be learning something new in real estate, even if you have been on it for decades.
Real estate can work out, but the truth is, it’s going to take at least a decade on average before you realize much in the value of owning or renting it.
5. There are economic risks in real estate investing.
In a slowing economy and bad market, tenants may not be able to pay their rents. The value of the properties may not appreciate as expected. Every investor should take this into consideration. It is hard to lose money as a landlord. If the market is good and hot, you make money.
When you sell, you can either use the income to acquire more property or pay capital gain. A general investment principle is the higher the expected return of investment, the higher its expected risk. In other words, risk and return are related.
There are many ways to invest in real estate and this includes valuing all four types of real estate: residential real estate, commercial real estate, industrial real estate and the land. To succeed in real estate you must have leads to meet or exceed your goals, else, you will not make much out of it.
In real estate there will be politics and laws. Government may interfere with the land owners’ property laws. Sellers may lose their overall advantage. New real estate and personal finance products will continue to be increasingly digital because of the Millennials.
What about Commissions?
Real estate commissions are negotiable. For example, it is very common for a real estate agent to discount their commission when a client is buying and selling a home at the same time any smart business person would be wise to have two sales than to walk away because they take in a little bit of money.
Real estate remains an age-long method of amassing wealth but requires an in-depth knowledge of how things work. This will help arm a potential investor with what to expect and prevent again disappointments that may arise.
