Anything which is related to buying, selling, leasing, renting, organizing, dealing and owning of a house, flat, industrial unit or any other property with an objective of earning profit is termed as real estate business.
The real estate business in previous days had experience a shock due to the great depression whose remnants are still there and thus the investors are very shy in getting involved in this big venture of real estate. It is although some how a risky investment but it’s also very high returning in monetary terms.
The investment failure in a real estate during previous years has many factors around. Boom and bust, speculation, governmental policies of free market economy and lack of research in this area are some of the causes behind the recent crisis in real estate around the globe.
Therefore a very intensive analysis of the market is vital before going to the real estate business. A proper market survey analysis involving the study of boom and bust, analyzing speculations and well researched feasibility study can deliver amazing results.
There are many ways to earn in a real estate for example one can go for purchasing a property with the assistance of a bank and renting it to the people, but there is need to examine different regions and after making a research work with complete analysis of different locations we can go for highly returning location.
The analysis should include the list of areas with maximum profit margin in descending order. This can be done by working on each alternative locality; the analysis must include the existing situation of the house, the rate of rent on average in the locality, availability of consumers in the region, home worth evaluation and other factors.
It should be noted that monthly payments to the bank should be minimum 20 percent less than the rate of rent, so that one can make profit, so in the list only those localities should be included which can give positive 20 percent or more difference between monthly rent and monthly payment.
Also there is need to identify whether the area is in high demand or not. If it is not in high demand, it can be possible that a renter may leave the property and the property is left idle for months. In this case it is very insecure so there is need to make sure that the area is in high demand.
After this feasibility report one can go to select most suitable locality. Then the other phase is to select a renter for your property. It is a very crucial phase you need to pretty sure about the permanent income of the renter and renter’s previous records.
The renter should be well enough to pay all utility bills, monthly rent, taxes, insurance and other related charges. If the renter qualifies this given condition then he/she can be eligible to join the contract. By using this technique one can really make huge money.
The other way around is buying foreclosed property from banks and give it to the people on installments. But the whole process of research and feasibility study as discussed in renting should be made here as well. The only difference is that in this case the property at the end of the land contract will be given to the buyer, but it is more secure. Renters can leave the house any time so you should search for a new one but here the buyer is bound with the contract, if he failed to pay he will lose the property as well as the owner can go for a new buyer. It is estimation that this technique can provide a minimum of 16 percent on overall investment and normally.
There are several other ways to earn from a real estate business like acting as a broker in between buyer and seller, also known as estate agent. The role of estate agent is to facilitate both the buyers and the sellers to accomplish their requirements.
The estate agent assist buyer to buy the property but in actuality estate broker stands for the seller. In this process of facilitation the real estate agent takes his due commission which is usually in terms few percent of the property.
Further there is a multiple listing service which is there for brokers’ community; it is actually compensation between brokers and exchange of information to serve each customer of the broker community, hence this mutual network is today very effective and provides a chance to real estate agents to mutually grow.
There are ways of investing as well like private sales of estate is also one way to earn from this vibrant sector.
Real estate rating is one of the dominant features of the research that must be done before investment in a real estate. This is similar to control and manage the risk associated with the real estate. No matter superficially how fruitful the business is looking real estate rating is must for sensible investors.
Real estate rating provides complete description to all investors, sellers, lenders, and listing agents. With the help of real estate rating all raw data is converted in to very meaningful, comparable and solid information. So real estate investors should be well aware of this fact and should pursue a very calculated and secure business so that they can make benefit from their investment.
The real estate business is no doubt a great prospect for investors; it can’t only pay them high returns but can also increase their property possession, but it should be carefully noted that it is a very competitive and challenging venture, as lofty returns this real estate project grants but a little negligence can create a big loss. Investment in both commercial and residential areas is dynamic and returns vary from region to region.
Never run before a piece of land, home work is very important real estate rating, research and analyses about the feasibility of project are extremely significant tools to boost and secure your investment.