Tag: estate

The Memphis Area Association of Realtors reports that in April 2023, the average sales price of properties in Memphis decreased by 1.5%. Even with this reduction, this number is still far lower than the 4 and 5% average price declines for the remainder of the nation that have been reported by many sources. If you know how to get the most out of your Memphis real estate investments, Memphis has excellent opportunities for anyone looking to profit from the real estate industry.

Read More: How to invest in Memphis real estate

For a quick overview of the top investments in this expanding metropolis, continue reading.

Take a Shot at House Flipping

A popular topic on reality TV, house flipping is an entertaining method to profit from real estate.

Restoring a dilapidated house may be quite fulfilling on an individual basis. If you know what you’re doing, it might potentially bring in big earnings.

Try your hand at this kind of real estate investing; it will require a lot of money. Delays are unavoidable, things may and will go wrong along the procedure, and you can lose out.

Remember that home flipping requires a great deal of knowledge and financial know-how, and that even while it’s still a popular option for US real estate investors, returns are at an all-time low.

Purchase REITs.

With the use of real estate investment trusts, you may participate in the real estate market without actually owning any property. These businesses own hotels, flats, and commercial buildings with offices and stores.

When necessary, you can take withdrawals from your investments, or you can keep investing to see your returns increase.

While REITs are a diverse and intricate phenomena that may provide profitable returns, it’s advisable to consult a real estate broker or financial expert to see which one is ideal for you.

Since it is challenging to appraise the private version, novice investors are best served by sticking to publicly traded REITs. By opening a brokerage account, you may invest in them through brokerage companies.

Investing in a vehicle that has shares in several REITs, such a mutual fund, is an additional choice. You are exposed to a wide range of real estate as a result.

Become a REIG member

Small mutual funds that invest in rental properties are known as real estate investment groups. To join the group, investors can acquire one or more housing units once the REIG creates or purchases a multi-family property.

You may own one or more residential units as an investor, but the REIG oversees all of them and receives a portion of the rental income in exchange. They essentially carry out the duties of a property manager, assuming you were the unit’s full owner.

A percentage of your rental revenue is allocated to a fund that protects against vacancies when you purchase into a REIG, and the lease is in your name. You will be able to make some money in between renters in this method.

Some real estate investors feel that they don’t have enough control over how they generate money from rentals because of REITs and REIGs.

Think about Memphis Rental Properties

The greatest method to monitor its management and keep an eye on your earnings and outgoings is to rent a home that you own altogether.

Memphis rental properties may be immediately profitable in two ways:

Lease a Portion of Your House

The demand for rentals in the United States continues to outpace the supply, and prices are still high.

Renting out an extra room in your house or an ADU in your yard to a needy person can bring in some more cash.

This may help you pay some of your bills and is one of the simplest methods to try out real estate investment without having to spend any money.

Consider using Airbnb instead of a long-term tenant if you’re not interested in that option. Recall that in Memphis, providing short-term rentals requires a permission, so make sure to find out the specifics beforehand.

Purchase a Rental Home

This is a simple path for second-home owners to take in order to become real estate investors. It makes sense to generate some additional money in this way if you don’t use your family vacation house very frequently or if you need help paying a second mortgage.

After the crazy surge of the previous two years, property values are beginning to level out, making real estate investments in Memphis a bit more accessible.

Make sure to get the assistance of a knowledgeable broker if you choose to purchase an investment property. These professionals will assist you in selecting a house in a highly sought-after neighborhood so you can get the most out of your investment.

Although a lot of people think that having a rental property is a passive income source, it actually requires a lot of labor.

In addition to making sure your renters are satisfied and responding to their concerns, you’ll need to take care of the property’s upkeep and repairs. For some real estate investors, this is a labor-intensive task that isn’t really worth the money.

Consider employing a property manager if you’re a Memphis real estate investor looking to maximize your return on investment by renting out your home.

1. Develop an attitude of success

Goal-setting and goal-achieving lead to a fulfilled existence. You begin by outlining your personal standards and definition of success. The next step in developing a mentality is to match those ideals with your behavior.

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Setting goals is essential because it makes you see achievement and devise a strategy to achieve it. Financial objectives are necessary since you must put food on the table, but what else do you want? What holds significance in your life? What future goals do you have for your children and family? In one, five, and 10 years, what do you want to be your title in the workplace? Put your thoughts on paper, create a strategy to reach your objectives, and schedule time each quarter to assess your progress.

2. Establish a well-defined plan.

Placing families in the houses that are best for them is the common objective shared by the majority of residential real estate agents. Customer service, diligence, follow-up, follow-through, and keeping ahead of market trends and resources are some of the ways we do this. So what makes excellent agents different from great ones, if we’re all doing this? well-defined plan.

With the use of technology, customers may now learn more and have options outside of the conventional real estate paradigm. But excellent counsel is due to good people, and no software will ever fully replace the value of a knowledgeable agent. Leaders assist customers in sorting through all the information and tools available to them so they can develop winning plans.

Just a few instances over the last two years will do for now. The buyer’s agent might suggest a lender who underwrites the loan before to entering into a contract, rather than merely providing a preapproval letter, if the buyer is eager to close. Alternatively, an agent can concentrate on listings in the weaker condominium market and apply contingencies that make the buyer competitive against all-cash bids, given the inflow of first-time homeowners in the market (attributed in part to the baby boom of the 1980s).

3. Take initiative

Proactivity is one of the leadership qualities I have observed in professionals across many sectors. “Pros are proactive, rookies are reactive,” as I like to say. To be clear, I was a rookie once as well, and I still find that I respond emotionally to some aspects of my business. But I have purposefully set up procedures that facilitate proactive behavior, particularly in areas that bring in money.

Proactive thinking, eating habits, and time and energy allocation characterize leaders. They hold events where potential buyers are invited to learn about the home-buying process, they conduct cold calls to former clients and referral partners, or they enroll in programs to hone their operational management skills. They go out and create business; they don’t wait for it to come to them. Being proactive is the best way to secure future business, but it does take initial time investment and persistence.

Unsettling? On occasion. I’ve done things in my profession that have scared me at times. But I don’t want to be a part of a group that only meets in meetings. Being surrounded by cheerleaders who just talk about what they want is not something I want as a cheerleader. I’m ready to act. IMPACT stands for I Must Personally Act, and it’s a small acronym that prods me forward.

4. Establish standards

Unmet expectations lead to frustration. A strong leader establishes clear goals early on for their team, clients, and themselves.

It’s probable that you will add more team members as your company expands. It’s like having a second full-time job to help others become leaders in your business, and having open lines of communication about your expectations and theirs may be the difference between success and failure. Setting expectations with customers before they even begin to look at houses is crucial.

“Is now still a good time to buy a home?” is a question I am asked a lot, especially in a hot market like this one. “You are ready to buy a home when you are ready to buy a home,” is how I usually reply. Put differently, if you’re ready, we start creating a strategy for you right now, beginning with figuring out what you want to get out of this purchase. It was probably not a good time to buy in 2021 if a customer intended to purchase and flip a house in six months. But if a buyer intends to stay in the house for five to ten years, statistics indicate that the house will increase in value and be a wise investment.

As the leader, you may create expectations by posing thoughtful questions, offering pertinent information, and deciding on the parameters (as well as the desired results) of your involvement.

5. Stay receptive to opportunities.

In my view, being receptive to opportunities entails not just breaking new ground but also being receptive to concepts or avenues that you may not have previously explored. Excellent leaders, in my opinion, are aware of this. They never close their eyes to chances, both personal and professional, and they never miss anything.

On the other hand, inexperienced leaders might take a certain path and show little inclination to veer off or investigate other options, even if they end up being workable fixes. When provided with facts, they refuse to consider unconventional ideas and remain closed off to new ideas. In the worst situations, these managers crash and burn because they become stuck all the time.

There is an eraser on top of the pencil for a reason: errors are made. Sometimes deleting mistakes, beginning over, and going in a different route is what true leadership entails.

Remember these astute words from real estate consultant Brian Buffini, whether you’re applying them to one specific tactic or your whole career: “Opportunity will come to you, but it will appear as work.” Be willing to put in a lot of effort, have an open mind, and don’t be scared to explore any option that presents itself.

Real Estate: What Is It?

Land and any permanent buildings, such as houses, or improvements, whether natural or man-made, affixed to it are considered real estate.

Read More: real estate

One type of real property is real estate. It is not the same as personal property, which includes things like cars, boats, jewels, furniture, and agricultural equipment but is not affixed to the land permanently.

Awareness of Real Estate

Although the phrases land, real estate, and real property are sometimes used synonymously, they have different meanings.

The term “land” refers to the entire surface of the earth, including the water, minerals, and plants, as well as the space above it and the earth’s center. The physical attributes of land include its uniqueness, indestructibility, and immobility due to the geographical differences between each piece of land.

Real estate includes both the original land and any long-term human constructions, including homes and other structures. An improvement is any land addition or modification that raises the value of the property.

After land is developed, the entire amount of money and labor required to construct the improvement constitutes a substantial fixed investment. Improvements like drainage, power, water, and sewer systems are often permanent, even though a structure can be demolished.

Real property consists of the original land, any improvements made to it, as well as the rights derived from ownership and use.

What Kinds of Real Estate Are There?

Real estate utilized for residential usage is referred to as residential real estate. Townhouses, duplexes, condominiums, cooperatives, single-family homes, and multifamily dwellings are a few examples.

Any property utilized only for commercial purposes, including parking lots, restaurants, shopping malls, theaters, hotels, hospitals, petrol stations, grocery shops, and apartment buildings, is referred to as commercial real estate.

Any property utilized for production, distribution, manufacturing, warehousing, research and development, or storage is considered industrial real estate.

Land: This refers to undeveloped land, open space, and agricultural land, including ranches, farms, orchards, and timberlands.

Special purpose: Real estate that is utilized by the general public, including parks, libraries, government facilities, cemeteries, and schools.

The Real Estate Economy

The number of new residential building projects in any given month, as reported by the U.S. Census Bureau, is a crucial economic indicator. Real estate is a major engine of economic growth in the United States. The report contains information on construction permits, housing starts, and housing completions for single-family, two- to four-family, and multifamily (i.e., apartment complexes) structures with five or more units.

Housing starts are closely watched by analysts and investors since the data may give a broad indication of the trajectory of the economy. Furthermore, the kinds of new home starts might reveal information about the direction the economy is taking.

A scarcity of single-family houses may soon be approaching, which would raise home prices, if housing starts show a decline in single-family starts and an increase in multifamily starts. 20 years of house starts, from January 1, 2000, to February 1, 2020, are displayed in the following chart.

The Art of Real Estate Investing

Investing in real estate may take many forms, but some of the more popular ones are house flipping, investment properties, and homeownership. Real estate wholesalers are one kind of real estate investor who contracts a house with a seller and then locates a buyer. Real estate wholesalers typically locate troubled homes, sign contracts for them, and carry out no repairs or upgrades.

Rent or lease income as well as the increase in the property’s value are the sources of income from real estate investments. In the year-end 2021 U.S. house sales report, home sellers countrywide achieved a profit of $94,092, a 45.3% return on investment, up 45% from $64,931 in 2020 and up 71% from $55,000 two years prior, according to ATTOM, which is in charge of the country’s leading property database.

The location of real estate has a significant impact on its value, and other variables that may also have an impact include employment rates, the local economy, crime rates, transit options, school quality, municipal services, and property taxes.

Advantages

provides a consistent income

provides opportunities for capital growth

portfolio diversification

able to be purchased with leverage

Cons

is typically illiquid

impacted by very specific local elements

demands hefty upfront financial expenditure

It can call for proactive management and knowledge

Through a real estate investment trust (REIT), a business that owns a portfolio of properties that generate income, one can invest in real estate indirectly. REITs come in a variety of forms, such as equity, mortgage, and hybrid REITs. They are also categorized as publicly-traded, publicly non-traded, and private REITs according to how their shares are purchased and sold.

Purchasing shares that are listed for public trading on an exchange is the most common method of investing in a REIT. Because the shares trade like any other investment, including stocks, on an exchange, REITs are extremely transparent and liquid. Dividend payments and share appreciation are how REITs generate income. Investors have access to real estate mutual funds and exchange-traded funds (ETFs) in addition to individual REITs.

Which Financing Options Are the Best for Real Estate Investments?

Purchasing real estate is often done with cash or with a mortgage backed by a commercial or private lender.

Real Estate Development: What Is It?

Renovations of already-existing structures, the acquisition of undeveloped land, and the selling of built land or portions to third parties are all considered forms of real estate development, often known as property development.

Forward-thinking Management

Aspiring real estate executives set clear, quantifiable, and doable objectives for their groups. These objectives direct agents toward improved performance and results, acting as a road map for success.

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Beyond objectives, forward-thinking leaders draw a clear image of what the future could hold. By highlighting the potential benefits of diligence and hard effort, they arouse passion and devotion and help team members develop a feeling of purpose.

Excellent Interaction Skills

In the real estate industry, communication is essential, and skilled leaders thrive in this domain. Leaders pay close attention to the issues and suggestions raised by their clients and team members. Leaders in the real estate industry may better comprehend demands, manage disputes, and foster trust by practicing active listening.

Leaders in real estate communicate their concepts with conviction and clarity. To persuade stakeholders, bargain skillfully, and assist customers and agents in making wise decisions, they employ persuasive communication.

Flexibility and Sturdiness

The real estate market is typified by sporadic difficulties and ongoing change. Successful leaders keep up with changes in the economy, regulations, and market trends. By adjusting to evolving situations, leaders may strategically place their people and make well-informed choices.

Good team leaders remain calm and upbeat in the face of adversity. They act as the cornerstones of their teams’ strength, providing encouragement and strategies for overcoming challenges.

Emotional intelligence and empathy

Proficient professionals in the real estate industry recognize the significance of emotions in the process of making decisions. Leaders may build loyalty and trust by customizing their services to match the needs and preferences of their clientele. Emotionally intelligent leaders are adept at establishing and preserving bonds with both their clients and their staff.

Making decisions and solving problems

Effective real estate executives analyze the advantages and disadvantages, speak with specialists when needed, and make prompt, well-informed choices when faced with ambiguity. This decisiveness encourages team trust and keeps transactions on schedule.

Effective problem solvers are leaders. They take problems head-on, coming up with innovative solutions for difficult real estate problems and making sure that transactions go well.

Honesty and Moral Guidance

Real estate leaders are aware of how important moral behavior is. When it comes to their interactions, leaders are transparent and truthful, giving team members and clients all the information they require to make wise choices.

Leaders that are ethical uphold the greatest standards of professionalism and promote honesty in the business community. They provide a model for others to follow.

The Advantages of Skilled Leadership in the Property Industry

Group Efficiency and Output

Team performance and productivity are significantly impacted by effective leadership in the real estate industry. Leaders who are endowed with attributes like as vision, effective communication, and the capacity to encourage others foster an atmosphere in which agents are driven to achieve success. Agent communication and teamwork are improved as a result, which boosts productivity and facilitates more effective transactions and problem-solving. Teams with strong leadership and motivation are more productive, which boosts commissions, sales, and success all around.

Trust and Client Satisfaction

Customers who are happy with your services are more likely to refer you to others and use you again in the future if you have good communication skills, empathy, and honesty. Good leaders make sure that their customers feel appreciated and receive outstanding service at every stage.

Relationships between clients and agents are built on trust. Leaders are trusted by their clients to work in their best interests, bargain well, and give reliable information.

Sustainability and Business Growth

In the real estate sector, effective leadership creates the foundation for long-term development and sustainability in addition to short-term success. Visionary real estate executives create growth strategies and strategic goals to keep their companies competitive in changing marketplaces. Proficient executives adjust to fluctuations in the market, changes in the economy, and advances in technology, guaranteeing that their companies stay profitable and relevant in the long run.

Building Brands and Reputation

In the real estate business, a solid brand and reputation are advantages. Knowing this, competent executives take proactive steps to improve their standing and develop their brand, such as:

Leaders in the field are known for their constant provision of outstanding customer service, which helps them build a solid reputation.

Personal Branding: In order to draw customers and position themselves as authorities in their field, leaders frequently build their personal brands.

Networking: Skilled executives make the most of their connections to build their brand and open up new business prospects.

Recap

It’s clear from this examination of the essence, traits, advantages, difficulties, and traps of leadership in real estate that effective leadership is about more than just closing deals; it’s about motivating groups of people, establishing a culture of trust, guaranteeing sustained success, and developing a spectacular reputation.

Go to Icons of Real Estate if you want to hone your leadership abilities and get the rewards of successful leadership. Our extensive coaching, mentoring, and training programs are designed to enable real estate professionals to develop into outstanding leaders. With our help, you can hone your leadership abilities and surpass everyday obstacles while also taking your team and career to new heights.

Purchasing real estate is a difficult endeavor. It might be challenging for a foreigner to completely understand each country’s unique aspects, in addition to the legal procedures and difficulties that must be taken into account during the process. We have thus included our finest advice for a simple and profitable Spanish real estate investment in one post. We will examine the seven suggestions for investing so that you are happy with your choice in the end.

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How to choose areas and properties that offer the best value for the money

Perhaps the most crucial element among all those that characterize a successful buy is its location.

A key effect of the particular location is, thus, a variation in price per square meter, which is an important metric to consider when evaluating real estate options.

The cost per square meter varies significantly between regions and autonomous communities in Spain. This is the reason this may be the initial filter you try to locate the best offer with.

The regions with the highest prices per square meter are Extremadura, la Rioja, the Canary Islands, and Catalonia; the lowest costs are found in Murcia, la Rioja, and the Basque Country.

This research could assist you in eliminating a lot of regions and narrowing down to only two or three that truly meet your needs, but how can you locate the greatest houses in any given area?

Idealista, the largest real estate marketplace on the internet in Spain, is the ideal partner for this endeavor.

You can be certain that if you use Idealista, you won’t miss any fantastic deals because the great majority of houses for sale are posted there.

All you have to do using an extremely user-friendly interface is put in your desired city or location, then apply the various filters based on your tastes (like pricing, for example).

Recognize why you are purchasing.

However, the true reason or goal for which you are purchasing the property must also weigh heavily in your selection.

You have two choices in that regard: either purchase for future rental use or purchase for personal use, such as a place to live or vacation.

What distinctions does this seem to make?

If you want to purchase the property with the intention of renting it out later, you could choose properties that are near major cities and the beach as you can charge a higher rent there; otherwise, it might be difficult to attract renters.

So, locations with easy access to public transit and close proximity to essential services (like large supermarkets, retail centers, etc.) are also essential for a successful rental in the future.

However, the quality of the structure would be even more crucial if you purchase the house for your own use.

Look around first, make the buy later

With top-notch photos and videos, a lot of real estate brokers and sellers these days provide really engaging online experiences.

You get the impression from those digital assets that you are genuinely in front of the home you want to buy, that you are prepared to make the purchase even if you are far away.

That is untrue, though.

Aside from the number of rooms in the house and the size of the kitchen, there are many other factors to take into account; the location and surrounds of the property are just a few of them.

Due to this, you should always arrive at the property’s location first. During your visit, you should take a stroll about, get a feel for the neighborhood, and pay attention to all the little things that add up and are ultimately what matter most.

Soon after, you will truly know how much the property is worth and whether buying it is the best decision for you.

Furthermore, if you choose the next legal route, as we shall show in a moment, you may accomplish the entire process with ease.

Acquire a Golden Visa.

Foreigners and real estate investors who buy property in Spain sometimes ask for the golden visa, which is a residence permit.

That’s because, as long as your home purchase is worth at more than €500,000, you will be granted a resident permit that will allow you to work and bring your family with you.

And it is true that it has a lot of benefits.

First, you can get it by traveling to the nation as a tourist. In other words, you may acquire a tourist visa, visit Spain to view a few houses you had on your “wishlist,” buy the property of your choice, and thereafter receive a golden visa for permanent residence. without at any point leaving the nation.

Once you have it, as long as you maintain the real estate investment, you will be able to maintain and extend your Spanish residency annually. And you may do so as long as you only make a yearly visit to the nation (there is no minimum stay requirement like there is with other licenses).

Possibly the most crucial aspect for numerous investors is that the necessary half-million real estate valuation does not have to originate from a single property.

For instance, you may purchase three residences in total, live in one, and rent the other two. As long as the three properties’ combined value exceeds €500k, you will be allowed to live there.

Trust a real estate professional to help you save money.

To save a little more money on your purchase, you might be thinking about eliminating the additional expenses that using an intermediary entails.

However, that might not be a suggested course of action for two key reasons.

To begin with, hiring a real estate professional may save you money. She will help you locate the greatest bargains and walk you through the entire process step by step. She is not simply someone who is familiar with the region and all the hidden features that a foreigner cannot notice.

On the other hand, you should keep in mind that in Spain, the seller often covers the cost of the real estate fee, so as a buyer, you might not have to pay for the service while still benefiting from it.

Naturally, next make an effort to locate trustworthy real estate brokers; a business with sufficient qualifications and references to provide their undivided attention to your situation.

Here at Balcells Group, we can assist you with every aspect of your real estate investment and guarantee a smooth and pleasant transaction.

Take care of any outstanding debt.

In several instances, our firm has discovered that a foreign buyer thought they were getting a great bargain and struck a price with the seller; but, later on, they discovered that the property had some unpaid debt, which increased the ultimate cost and rendered the agreement less favorable.

All property-related obligations that were not paid at the time of purchase pass to the buyer in Spanish territory.

Mortgage payments, real estate taxes, and other associated expenses are being discussed.

It is thus important that you verify those before proceeding with your investment selection and figure out the overall cost taking into account all of the expenses we will cover in the next section.

Real estate lawyers, or simply “real estate attorneys,” are experts in everything from title transfers and transactions to resolving conflicts between parties involving real estate. You may want to think about hiring a real estate attorney to assist you with the legal aspects of purchasing property, in addition to a real estate agent to assist with transaction negotiation.

Read More: Condominium attorney in South Florida

A Summary of Real Estate Attorneys

A lawyer with a license to practice real estate law is known as a real estate attorney. As a result, they are well-versed in a variety of real estate-related topics and laws. They can assist in making sure a property transaction in which you are involved goes smoothly by acting as your representative. A real estate lawyer must be present at the closing of a real estate purchase or sale in many states across the United States.

Property owners and buyers may need their help with a number of things, including:

Title Lookups

Transfers of deeds

Reviews of home inspection reports

Price talks

Putting together a contract

examining and interpreting a third-party contract

Participation during the closing

Owners’ and buyers’ legal rights

You may want a real estate attorney to be there to represent your interests even if your state does not require one. While some real estate attorneys charge a flat fee, the majority bill on an hourly basis. Later in this post, we’ll go over real estate attorneys’ bills in more detail.

Requirements

A real estate lawyer has completed their legal education, which normally requires three years of full-time study. Additionally, they passed the state bar exam given by the jurisdiction in which they practice. A real estate law certification can be obtained after completing elective courses and an internship during law school to further one’s preparation for a career in real estate law.

The Duties of the Attorney

In general, the duties of a real estate lawyer differ from one transaction to the next. A brief summary of the typical tasks that a real estate lawyer would perform in a typical, general sale is provided below.

Purchase agreements, mortgages, title documents, and transfer documents can all be prepared and reviewed by a real estate lawyer. They will examine all paperwork ahead of time and offer advice on any errors or omissions.

A real estate lawyer representing the buyer will always be present at the closing. The payment of money and transfer of title occurs at a closing. The lawyer’s job is to make sure the transfer is lawful, enforceable, and in the client’s best interests.

In the course of buying a property, the real estate lawyer and staff may prepare title insurance policies, finish the property’s title search, and manage the money transfer. In the event that the purchase is financed, the buyer’s lender will need documentation for the transfer of funds, including the federal HUD-1 Form, which must be completed by the attorney.

The lawyer will settle any real estate disputes, including those involving contracts, lot line disputes, and chain of title disputes.

In the event that a real estate dispute reaches the courtroom, a real estate attorney may also offer legal representation for the buyer or the seller. The real estate lawyer attempts to resolve the conflict by gathering information from all parties involved. This can entail going through the specifics with a surveyor or title company.

In addition to having a license to practice in the state in which the transaction is being handled, real estate lawyers are required to keep up with any changes in the law that may have an effect on the transaction.

Land and any permanent buildings, such as houses, or improvements, whether natural or man-made, affixed to it are considered real estate.

Read More: Calgary Real Estate

One type of real property is real estate. It is not the same as personal property, which includes things like cars, boats, jewels, furniture, and agricultural equipment but is not affixed to the land permanently.

Awareness of Real Estate

Although the phrases land, real estate, and real property are sometimes used synonymously, they have different meanings.

The term “land” refers to the entire surface of the earth, including the water, minerals, and plants, as well as the space above it and the earth’s center. The physical attributes of land include its uniqueness, indestructibility, and immobility due to the geographical differences between each piece of land.

Real estate includes both the original land and any long-term human constructions, including homes and other structures. An improvement is any land addition or modification that raises the value of the property.

After land is developed, the entire amount of money and labor required to construct the improvement constitutes a substantial fixed investment. Improvements like drainage, power, water, and sewer systems are often permanent, even though a structure can be demolished.

Real property consists of the original land, any improvements made to it, as well as the rights derived from ownership and use.

The Real Estate Economy

The number of new residential building projects in any given month, as reported by the U.S. Census Bureau, is a crucial economic indicator. Real estate is a major engine of economic growth in the United States. The report contains information on construction permits, housing starts, and housing completions for single-family, two- to four-family, and multifamily (i.e., apartment complexes) structures with five or more units.

Housing starts are closely watched by analysts and investors since the data may give a broad indication of the trajectory of the economy. Furthermore, the kinds of new home starts might reveal information about the direction the economy is taking.

A scarcity of single-family houses may soon be approaching, which would raise home prices, if housing starts show a decline in single-family starts and an increase in multifamily starts. 20 years of house starts, from January 1, 2000, to February 1, 2020, are displayed in the following chart.

The Art of Real Estate Investing

Investing in real estate may take many forms, but some of the more popular ones are house flipping, investment properties, and homeownership. Real estate wholesalers are one kind of real estate investor who contracts a house with a seller and then locates a buyer. Real estate wholesalers typically locate troubled homes, sign contracts for them, and carry out no repairs or upgrades.

Rent or lease income as well as the increase in the property’s value are the sources of income from real estate investments. In the year-end 2021 U.S. house sales report, home sellers countrywide achieved a profit of $94,092, a 45.3% return on investment, up 45% from $64,931 in 2020 and up 71% from $55,000 two years prior, according to ATTOM, which is in charge of the country’s leading property database.

The location of real estate has a significant impact on its value, and other variables that may also have an impact include employment rates, the local economy, crime rates, transit options, school quality, municipal services, and property taxes.

Through a real estate investment trust (REIT), a business that owns a portfolio of properties that generate income, one can invest in real estate indirectly. REITs come in a variety of forms, such as equity, mortgage, and hybrid REITs. They are also categorized as publicly-traded, publicly non-traded, and private REITs according to how their shares are purchased and sold.

Purchasing shares that are listed for public trading on an exchange is the most common method of investing in a REIT. Because the shares trade like any other investment, including stocks, on an exchange, REITs are extremely transparent and liquid. Dividend payments and share appreciation are how REITs generate income. Investors have access to real estate mutual funds and exchange-traded funds (ETFs) in addition to individual REITs.

Mortgage-backed securities (MBS) represent an additional avenue for real estate investment. One example of an MBS is the Vanguard Mortgage-Backed Securities ETF (VMBS), which is composed of federal agency-backed MBS with minimum pools of $1 billion and minimum maturities of one year.4 or the Bloomberg U.S. MBS Index-tracking iShares MBS ETF (MBB), which focuses on fixed-rate mortgage securities. Among its assets are bonds from government-sponsored companies like Freddie Mac and Fannie Mae, which are either issued or guaranteed.

How Should a Real Estate Investment Be Financed?

Purchasing real estate is often done with cash or with a mortgage backed by a commercial or private lender.

Real Estate Development: What Is It?

Renovations of already-existing structures, the acquisition of undeveloped land, and the selling of built land or portions to third parties are all considered forms of real estate development, often known as property development.

What Professions Predominate in the Real Estate Sector?

Leasing agents, foreclosure specialists, title examiners, house inspectors, real estate appraisers, real estate agents, and mortgage brokers are among the common professions in the real estate sector.

Purchasing real estate has a lot of advantages. Investors can benefit from good returns, tax benefits, diversity, and regular cash flow with carefully selected assets. Real estate can also be used to create wealth.

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Considering making a real estate investment? What you should know about the advantages of real estate and the reasons it’s regarded as a wise investment is provided here.

Cash Movement

The net revenue from a real estate investment after operational costs and mortgage payments are deducted is known as cash flow. The potential of real estate investing to provide cash flow is a major advantage. In many situations, cash flow only becomes better with time as you increase your equity and pay down your mortgage.

Tax Benefits and Incentives

Several tax benefits and deductions are available to real estate investors, which can result in financial savings come tax season. The reasonable expenses of owning, running, and maintaining a property are often deductible.

Appreciation

The three main sources of revenue for real estate investors are appreciation, rental income, and any earnings from businesses reliant on the property. When the time comes to sell, you might make money if you make a wise investment because real estate values often rise over time. Over time, rents also have a tendency to climb, which might result in increased cash flow.

The median house price in the United States since 1963 is displayed in this graph from the Federal Reserve Bank of St. Louis. The regions that are gray-shaded represent US recessions.

Develop Wealth and Equity

Equity is an asset that you accumulate and contribute to your net worth when you pay off a mortgage on real estate. Additionally, when equity grows, you have the leverage to purchase additional real estate, which boosts wealth and cash flow even further.

Diversification of Portfolios

The possibility for diversification that comes with real estate investing is another advantage. When compared to other main asset classes, real estate has a poor correlation, sometimes even a negative one. Accordingly, adding real estate can increase return per unit of risk and reduce portfolio volatility in a portfolio of diverse assets.

Leverage in Real Estate

The use of different financial instruments or borrowed resources, such as debt, to raise the possible return on an investment is known as leverage. Leverage is the ability to obtain 100% of the house you wish to buy with a 20% down payment on a mortgage, for example. Real estate is a physical asset that is easily financed since it may be used as collateral.

Competitive Returns with Adjusted Risk

Returns on real estate can differ based on a number of variables, including asset type, location, and management. Nevertheless, beating the S&P 500’s average returns—what many refer to as “the market”—is a goal for many investors.

The Inflation Hedge

The positive correlation between GDP growth and the demand for real estate is the source of real estate’s capacity to hedge against inflation. Rents rise in response to the demand for real estate as economies grow. Consequently, this results in increased capital values. Therefore, by transmitting some of the inflationary pressure to renters and integrating some of the inflationary pressure in the form of capital gain, real estate tends to retain the purchase power of capital.

Trusts for Real Estate Investments (REITs)

You might want to think about a real estate investment trust (REIT) if you want to invest in real estate but aren’t yet ready to take the risk of buying and managing properties. Traded REITs are available for purchase and sale on major stock markets. You may enter and exit a position fast because many trade at a high volume. REITs usually give greater dividends than many equities since they are required to distribute 90% of their revenue to investors.

Indirect Real Estate Investing: What Is It?

Direct ownership of a property or properties is not involved in indirect real estate investing. Rather, you participate in a pool with other investors in which a management business either owns and manages a portfolio of mortgages or owns and operates buildings.

How Can Inflation Be Hedged by Real Estate?

Real estate ownership offers numerous options to stave off inflation. First, capital gains might result from property prices increasing faster than the rate of inflation. Secondly, investment properties’ rentals have the potential to rise in tandem with inflation. Lastly, the proportionate monthly mortgage payment amount for properties financed with a fixed-rate loan will decrease over time. For example, a $1,000 monthly fixed payment will become less difficult as inflation reduces the $1,000’s buying power.

Is the Property I Live in My Main Residence an Investment?

Since a main house serves as a person’s primary abode, it is frequently not seen as a real estate investment. However, it is possible to make money if you sell your house for more money than you originally paid for it. Furthermore, you could have to pay taxes on those earnings if this does occur.

The Final Word

There are disadvantages to real estate investment in spite of all of its advantages. Lack of liquidity, or the relative difficulty of turning an asset into cash and cash into an asset, is one of the primary ones. A real estate deal may take months to finalize, in contrast to a stock or bond transaction, which may be finished in a matter of seconds. Finding the ideal counterparty might take weeks of labor, even with a broker’s assistance.

Nevertheless, real estate is a unique asset class that is easy to comprehend and may improve the portfolio’s risk-and-return profile for investors. Real estate by itself provides a buffer against inflation, tax benefits, equity development, competitive risk-adjusted returns, and cash flow. Real estate, whether you invest in real properties or REITs, may also improve a portfolio by reducing volatility via diversity.

The real estate industry is one that can be both lucrative and extremely difficult. According to research conducted by the National Association of Realtors (NAR) in 2022, 86% of purchasers recently bought their houses with the assistance of a real estate agent or broker.

It is crucial to raise awareness and get in front of consumers as soon as possible. The same survey also revealed that 73% of buyers only spoke with one real estate agent when looking for a property. That’s why everyone working in the business has to have a firm knowledge of real estate marketing.

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I’ve put together some effective real estate marketing strategies that top agents utilize to advertise their companies below. These marketing pointers can assist you in developing an effective marketing strategy, regardless of your level of experience or desire to draw in new business as a realtor.

1. Establish a webpage.

Making a website for your real estate company can showcase your offerings to potential customers. Put listings on your website and be sure to update them frequently. This attracts potential customers to your website while they look for real estate.

To make your website stand out, use something a bit unusual. Consider this mortgage calculator—a simple way to provide visitors more value.

Why this is effective

Putting up a website gives prospective purchasers a digital center to research homes that are for sale. They will also have access to information about your real estate company and the agent handling their behalf.

Pro tip: Building a website is a terrific way to develop your own brand, display gratifying customer testimonials, and keep attracting more qualified leads—whether you work for a brokerage or operate your own business.

2. Start a blog.

Additionally, you may launch a blog and produce SEO-optimized material. This makes sure that every time a prospect searches, your postings appear in the results. You may identify the search phrases and keywords that your target clientele is using with the use of tools like Ahrefs and Google Analytics, which can also provide you with ideas for new blog posts.

To help them discover more about you and your company, make it simple for them to access your main website and include links to your profile pages on other real estate websites.

Additionally, remember to provide captivating photos for your postings. Any blog article or email marketing campaign will benefit greatly from the inclusion of this infographic.

Why this works: By showcasing your industry knowledge on your blog, you may build credibility with prospective customers. Blogs provide a platform for exchanging industry news, happenings, and guidance for prospective customers. By doing this, you can ensure that your audience remembers you when it’s time to make a purchase.

Ideal for: New real estate brokers that want to expand their clientele while gaining the respect and confidence of their neighborhood.

3. Create campaigns for email marketing.

Distribute a monthly email curated from your blog posts, and notify acquaintances of any new real estate listings. Provide a virtual staging of the house, a video walkthrough of the property, or pictures of the properties with links to the whole listing.

Why this is effective

In real estate marketing, email marketing campaigns are a great way to stay in touch with former and future clients. Agents may increase the likelihood of referrals and repeat business by staying in contact and remaining at the forefront of their audience’s mind.

Expert advice: To increase the likelihood that your clients will read your emails, include words like urgency and interest in your subject lines. These 20 suggestions can help you create attention-grabbing topic lines.

Examine your surroundings. You are in real estate if you are on land. It is both pervasive and essential. Real estate is the largest or second-largest asset on the books for the majority of firms, yet since it is so ubiquitous, it is simple to take it for granted. Real estate management is challenging since it impacts all parties involved, including neighbors, workers, investors, regulators, and consumers. In this piece, I hope to condense real estate axioms that will assist CEOs, board members, and others in overcoming this obstacle.

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Commercial real estate is a strategic asset as well as an operational requirement. However, senior management is rarely interested in it. Real estate is still often viewed as a reactive, second-order staff role in many firms, with an emphasis on specific transactions and projects rather than the larger strategic concerns facing the business. Decisions on layout and location are determined inside business units, mostly based on conventional knowledge and short-term requirements. Employee and consumer preferences may not always be prioritized above proximity to the corporate office. The following five maxims emphasize the things that top managers should know, and they are not meant for real estate experts but rather for the executives who mentor them.

1. Take Charge of the Portfolio

The portfolio of real estate assets held by a business should be worth more to the firm than the total of its individual locations. Executives want a high-level perspective of their real estate position in order to guarantee this, and they cannot obtain it from the site-by-site study that is often the domain of internal staffs and systems. A “snapshot” of the company’s physical footprint, including its locations, types of land and buildings, use and state of key facilities, lease terms and operational expenses, and dangers to the company’s finances and environment, is necessary for executives. Additionally, executives want a dynamic and evolving view of how company strategy is influencing their real estate holdings and how that footprint may vary based on the path chosen. The research is likely to show certain misalignments when they compare the snapshot—tables, maps, and photos—with the “movie,” which consists of complex scenarios of a company’s known and projected demands. The firm can have the incorrect sort of space in certain regions, or too much room in some and not enough in others. Additionally, the analysis will display which leases are expiring when, how much they will cost over time, and how their locations and order of expiry may make future activities more difficult or even impossible.

Equipped with these discernments, a leader may capitalize on portfolio prospects that a site-by-site examination would miss. For instance, offices that don’t need to be in the heart of the city can be moved to less expensive submarkets that aren’t too far away. It is possible to sell, sublet, or remove redundant facilities.

The portfolio strategy is particularly significant during a company’s big transition, such a merger, acquisition, or divestiture. Just as essential as reducing the personnel may be the process of rationalizing an organization’s real estate, or the matching of space and facilities (supply) to strategic and operational demands (demand). Relocations, closures, and disposal are frequently necessary steps in the process of operationally, financially, and physically balancing supply and demand. The global advertising and communications behemoth WPP Group quickly sold J. Walter Thompson’s Tokyo headquarters after purchasing the firm, pocketing a whopping $100 million in proceeds. Furthermore, real estate is sometimes the most valuable and noticeable asset when divestitures are imminent. Bear Stearns, for example, had a Wall Street skyscraper that served as its main asset until the company failed.

Leaders may also learn about a property’s long-term expenses and usage by using portfolio analysis. A facility’s entire running and maintenance expenditures over its useful life, which is usually 50 years or more, can easily exceed the initial costs incurred during construction or renovation. Adopting a portfolio perspective facilitates more efficient scheduling of building rental and sales as well as maintenance expenditures. Leaders may anticipate—and perhaps prevent—project-level behaviors that jeopardize portfolio-wide gains by understanding this life cycle holistically. For example, an executive may make costly changes to the company’s headquarters while more junior managers are looking for ways to cut costs, or a business unit may lease more space to accommodate growth or a reorganization without realizing that another unit has vacant space in a nearby building.

Companies should be aware of their indirect responsibility for the buildings where outsourced operations are housed while they work to cut costs through outsourcing. Even though the workers at those locations may not be employed by the firm, their productivity is greatly influenced by the layout and placement of the facilities. Additionally, if worker health and safety regulations aren’t followed, businesses may face legal action and activist stakeholder action. Businesses like Citigroup and Nike, for instance, that have outsourced a large percentage of their operations have discovered that they have enormous de facto portfolios that need to be managed just as skillfully as the actual real estate they own.

2. Include Flexibility

The agile company makes sure it has the most flexibility possible with all of its real estate assets, even if that occasionally requires making larger upfront payments. Financial, physical, and organizational flexibility include building modular spaces, leasing rather than buying, and dispersing labor.

Businesses that value flexibility typically lease more and own less. For instance, Pfizer has always held the majority of its buildings in order to maintain control and because it felt that ownership would ultimately be less expensive than leasing. Pfizer discovered that selling specialized R&D facilities was very challenging, though, since changes in the sector forced the business to sell buildings rather than invest in pricey retrofits. When the firm eventually requires more R&D space, it intends to look at leasing and flexible-use possibilities.

When Pfizer’s executives started reorganizing its enormous real estate holdings in 2006, they found that roughly 15%

The lease itself provides a means of optimizing flexibility. A corporation may find it easier to adjust to changing conditions if its terms are shorter and include features like expansion and exit clauses, renewal choices, and more frequent and early termination dates. Organizations can also move or terminate activities by arranging the expiration dates of leases, sublet agreements, and departure clauses in nearby sites. As with equipment purchases, astute managers negotiate leases by setting a base price and outlining a range of options, some of which the business is willing to pay more for depending on the level of flexibility required. For instance, they may include modular options on new space for a rapidly expanding start-up, or exit rights after one year (rather than the customary five) for a unit that is up for sale. When corporate real estate managers are aware of how company demands vary, they may make well-informed judgments regarding how much to spend. Expenses up front could be little in uncertain times compared to the hidden running expenses of having too much or too little space, or the wrong kind of space in the wrong location.

Simple physical flexibility is the ability to split or sublease space with ease. Businesses can benefit from less expensive long-term leases in these types of facilities and adjust to changing needs by subleasing a portion of their space to third parties.

It is possible to design entire structures to be flexible. For example, structures that are modular may be swiftly assembled and transformed from one purpose to another. “Shrink-wrapped” facilities, which are constructed from the inside out, might have smaller footprints because they lack the spare spaces that usually find themselves inside a one-size-fits-all structure. A piece of land may be put to many purposes because to this smaller footprint. China’s “disposable factories,” which have a brief lifespan, provide for flexibility in the utilization of money and land. It is not always appropriate to use a disposable structure; considerations like as environmental effects and worker comfort are important. However, the cost of these buildings is just one-fourth that of a permanent plant, they can be rapidly and affordably deconstructed, and they only require one-sixth of the time to create. They are also easy to run and maintain.

Future uses can be considered while designing more permanent structures, which makes it simpler for businesses to switch from an expensive, complicated, or outmoded usage to a new, more profitable one. Simple, universal common spaces, standardized space modules, moveable walls, and easily accessible HVAC and electrical infrastructure are all features of these fungible designs that enable quick reconfiguration of the space when expected usage or running costs vary. It is far less expensive to include flexibility early on than to knock down barriers to make room for new arrangements.

Businesses may preserve their real estate flexibility by being open to the idea of offering employees several workspace configurations. The most obvious example of an alternative workplace is working from home. Although the term “telecommuting” has been around for a while, it was only ever applied to a small number of senior employees and workers who performed self-directed tasks until recently. (See HBR’s May–June 1998 article, “The Alternative Workplace.”) However, many types of employees may now choose to work from home, and as a result, some businesses are exploring ways to reduce their real estate expenses while also raising employee happiness.