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What You Need to Know About Real Estate Investment

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The real estate investment business is like any endeavor; if you want to succeed, you have put in the effort and work. And you need to do it to your best ability. A student who wants to pass their final exams will study hard to get good results. The same holds true to every business. If you want to make a profit, you must put in the work and use the platforms available to you. 

And hard work is only part of it. In order for a business to be successful, you also must understand every principle the business is operated on and what it takes to succeed. You need to be knowledgeable and have the answers to any questions pertaining to that business. For example, a real estate investor should have an answer to questions such as, “what are liquid assets?”

real estate in a big city like these buildings makes for a good real estate investment

In this article, we are going to discuss real estate investment. It’s one of the most lucrative types of investments. And a person who gets into the business knowing how it operates and the risks that they may come across will perform better than another person who has no idea what real estate entails.

What is real estate investment?

Real estate is the land and any development that has been done on that land. For example, if you have built a house on a piece of land you own, real estate is the land plus the home. Real estate is then divided into five categories including;

•Residential – real estate exclusively meant for residential purposes. For example, townhouses and condos

•Commercial – real estate only used for business. For instance, malls, offices, and gas stations

•Industrial – the category of manufacturing companies, storage companies, and research and development

•Land – farms and unoccupied landfall under this category

•Special purpose – this includes all the social amenities such as schools and government buildings.

What do you need to know?

There is a lot you need to know when it comes to the real estate business and real estate investment. So much so, that there’s not enough room to put it all into one article. However, we will discuss a few of the most important things you should know.

Before you get into the business, you need to determine how you will invest. There are three ways you can get involved in the real estate investment industry.

Homeownership

This is when you want to buy a ready-made home to suit your needs. You could also buy a piece of land and develop the home on yourself.

Rental properties

You either buy land and build houses or buy an already made property intending to rent or lease.

House flipping

House flipping is where you purchase property and resell it within a short time.

Terms You Need to Know Before Getting Into the Real Estate Investment Business

Another part of being successful in the real estate investment industry is understanding the terminology. Below are some of the most important and common terms you will come across.

Property deed and title

The truth is that many people still don’t know the difference between these two terms. A title is a concept that represents legal ownership of the property and transfer of rights from the seller to the buyer. On the other hand, a property deed is a document that shows that the buyer is the latest and legal owner of the property.

Amortization

Most people will buy a house using a home loan. Amortization is the schedule of the loan installment payments over a specified period.

Appraisal

This is the process of determining the accurate value for the property.

Closing and closing costs

Closing is the final step a buyer or a seller makes. The transfer of the title and the deed is done on this day. The closing costs are the expenses that are incurred by both parties to finalize the deal.

Equity

When a buyer uses a loan to buy the home, the deed is transferred on the day they finish paying the loan. Even then, they already own a part of the property, which is referred to as equity.

Fair market value

This is the accurate value or worth of the property. When buying, ensure that you have known the precise value so that you do not pay for something not worth your money. As a seller, you can learn great ways to double your home’s value before selling it. You stand a chance to make better profits.

The above-stated terminologies are just the tip of the iceberg. There is so much to learn in the trade. 

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