The purpose of this blog is to help people who are already in real estate industry and to aid the ones that are just starting, by giving out some techniques and tips.
If you are just starting your career or thinking whether to join the real estate industry, this post should help you out. Some of you might know that real estate term actually indicates a property, along with all buildings and resources on it. But other than this, it also stands for a legal name or profession, based on buying, selling or renting properties.
So now that is settled, we want to inform you of some basic terms and concepts of the real estate industry:
- Basically, in real estate world, everything spins around investment property. Just as the name says, it is literally any property, that you as an agent, buy with your goal to create an income out of it. Two ways to earn a profit is to either rent or sell the property, after you have fixed or repaired, what was needed. You must also understand that there are two types of those properties:
- Residential – This type is more recognized, as most of the real estate agents, actually go for this one, having in mind that it is easier to flip this one, and move out to another investment, instead of waiting for a longer term profit.
- Commercial – This one is for the more experienced investors, taking in consideration that it usually costs more and asks for more patience, but if everything is well done, the profit from this one can be much greater.
- After you understand what type of properties there are, and what are the best ways to invest in for a start, we want to clarify how a property gets valued, or to be more concrete, what does the price depend on. Of course, you have to keep constant track of your finances, writing down investments, repairing costs, as well as mortgage payments, and money that you give to your staff. But other than that, there are more things, related to your income, that you have to keep always in mind:
- Net income – This basically signifies, how much money you are left with, after you subtract all your costs, from the sum that you earned. If the result you get is negative, that is a signal that you have to change something, as you are losing money instead of gaining.
- Tax shelter – This is another way to increase your income, as you are actually provided a shelter from some taxes.
- Capital appreciation – This signifies the rise in the value of your property, whether it is due to the area becoming more desirable or for some other factor. This is important as you, as an agent, tend to buy at the lowest price and sell at the highest one.
- You also need to focus on the financing of your income property. Basically, you have to be able to make a sizable payment so you can ensure a low-interest rate for later. Two tips-
- Actually live in that property for some time before selling it, so you can ask for owner-occupant loans.
- Before you actually go and decide for a bank, you should probably be looking for the best fit, finding the best option, and actually collecting some financial advice.
- One more fact that you need to be aware of before actually starting out is that the process of buying and repairing mean everything. Three tips-
- Do not buy without previously getting information on property
- Do not miscalculate
- Do not be too ambitious on repairing, but as well, do not be non-ambitious
Basically, the thing that you always need to be is to be prepared. So we hope that we cleared out some things and have helped you to get started. Remember; if you have your income/outcome and priorities settled, you should have a much greater chance of succeeding.