What Is Real Estate Investing & How It Works

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What is real estate investing - how it works and types

Purchasing a property and then selling it to earn profit is a common type of real estate investing. Many people buy properties and then earn profits with effective management of the property. This is another popular type of real estate property investing.

Real estate investment involves ownership, management, profit accountability, and even liquidity. Liquid real estate investments offer various benefits for property brokers and real estate owners.

As real estate is a capital intensive investment, it involves less liquidity compared to other market investment. This is why, more and more people prefer to choose real estate investments for smooth rides and avoid hiccups.

Real estate investing also offers non-monetary benefits like the pride of owing a property. It also makes the person more familiar to local society and administration.

So, be it earning profits or be it working on the peace of mind, a real estate investment is a great way to go.

What Is Real Estate Investing?

Real comes from a Latin word res that means things, and estate means physical property. Overall, Real estate means property, building, air rights over and above the land and underground rights of the same land.

What is real estate investment - Types of real estates

In more simple words, real estate comprises property, building rights in some areas. In other areas, real estate means real immovable property along with the interest of that immovable property or to make more familiar crops, minerals, and water of that immovable property are also under the rights of real estate owner.

Free real estate is the most common real estate. Free real estate entitles several benefits like the owner not paying for general maintenance of the property or building.

Property taxes, insurance, utilities are also available free of cost with this type of real estate investing.

Also Read: Rich dad poor dad – a book every young investor should read

How to Become a Successful Real Estate Investor?

Success at real estate investment is not a kid’s game that everyone can learn and earn with joy. For sure, real estate investing doesn’t mean everything is difficult but it doesn’t means that it costs nothing too.

In short, there are 2 golden rules that you must abide by to become successful at real estate investing.

Acknowledge the Basics

First and foremost, real estate investment is all about acquiring, holding, and selling property rights.

Acquiring or selling rights of the property is same just like buying and selling stocks in a stock market. Holding the real estate rights is a tricky deal that involves high profits when managed in a proper way.

However, one needs to understand the risk involved in the process before going for it.

Understand the Element of Return

Real estate investment is all about adjudging the return on investment right. If managing expenses or running expenses are yielding just marginal profits and leveraging heavy pressures on the mortgagers, then it is recommended to sell or return the property to a worthy real estate buyer.

Types of Real Estate Investments

Real estate investing comprises four major types in both urban and sub-urban areas.

These are single family dwellings, duplexes and sub-divided housing, small sized multi-family apartment buildings, and medium to large multi-family apartment buildings.

These different types of real estate offer various types of benefits. They help in both short term and long period real estate investing.

Here are the benefits to buy one of any four types of real estates:

Single Family Dwellings

As the name suggest, single family dwellings are smart homes and condos available as rentals and easier to buy and keep for longer periods.

The only part worth a crack in this type of real estate investing is keeping up with the accountability. The local government also interferes in this type of real estate to implement homeowner’s association, and other rules that the mortgagers should abide by.

A good study of these rules and local laws is required to avoid any mistakes and reserve all rights or profits of the real estate. Violation of the rights of local authorities means serious damage to both owner and mortgager.

The easiest way to avoid issues or problems in this type of real estate is keeping up with the copy of implemented terms.

Whenever the authorities come asking for accountability, there should be an orientation package justifying the violation of local rules and laws.

Duplexes

These are sub-divided homes that vary in number from two units to as much as fifteen units. This type of real estate is more common among the real estate owners that wish to live in their next real estate investment.

Usually, the ground level is offered to the mortgager so maintenance issues should not become a headache to the owner.

Additionally, the renters are made beware of the noise levels, pet disturbances and other probable problems.

Small Size Multi-apartment Buildings

This is a common type of real estate investing that involves low investment and provides high returns. In this type of real estate, small dwellings are made to combine one single large building.

Usually, the number of dwelling units available in one single building varies from fifteen to fifty. High returns are offered by this type of real estate with security, entertainment, hospitality, and related services available to the residents at their doorstep.

This is why, good management tactics are required to buy, maintain, and successfully run this type of real estate.

Medium to Large Multi-family Apartment Buildings

This is the most popular type of real estate. There are twenty to thirty units available in one single real estate building.

Every single apartment comes with swimming pool, office, and gym at the least. Managing this type of real estate is not easy and requires partnering with other real estate owners.

Additionally, twenty four hour on-site management of the real estate is required that will involve fifty to hundred people managing the work load of large size apartment buildings.

In the end, there is more to real estate market that comes in and grows inside the real estate and involves tricks but avoiding the same is a great way to become successful at real estate investing.

Also Read: 10 investment books you should read today

Did you find this post insightful? Did you think real estate investment is profitable? Which of these types of real estate will you start with? Let’s have your opinion in the comment box below.

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