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How Can I Make Money from Real Estate?
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Making Money in Real Estate
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How Can I Make Money from Real Estate?
Making money in real estate sounds like a simple idea: Buy a piece of real estate cheap, keep it for a while its price appreciates, and sell it when the going is high. Pocket the profits, and all will be happy.
In theory, what is described above is true, but in practice, well, thats another matter really.
There is a tendency to believe that real estate prices can only go up, simply because there is only so much real estate in the world and demand for real estate keeps increasing all the time. Hence, the demand is increasing while supply remains the same. The prices have to go up all the time, right?
Possibly yes. And well, possibly no as well.
While investing in real estate is not as choppy as investing in stocks or worse, in commodities or forex, real estate investments need a lot of understanding and learning as well in order for you to make significant returns. This page will try to assist you in this process.
This page like all the other pages at BillDoll.com, The Billion Dollar Questions Site - is a work-in-progress and stuff will get added regularly.
Topics under which contents will be added soon:
Some of the often asked questions in the context of real estate investments are:
Web References
Book References
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Content derived from Wikipedia article on Real Estate
Real estate or immovable property is a legal term (in some jurisdictions) that encompasses land along with anything permanently affixed to the land, such as buildings. Real estate (immovable property) is often considered synonymous with real property (also sometimes called realty), in contrast with personal property (also sometimes called chattel or personalty). However, for technical purposes, some people prefer to distinguish real estate, referring to the land and fixtures themselves, from real property, referring to ownership rights over real estate. The terms real estate and real property are used primarily in common law, while civil law jurisdictions refer instead to immovable property.
In recent years, many economists have recognized that the lack of effective real estate laws can be a significant barrier to investment in many developing countries. In most societies, rich or poor, a significant fraction of the total wealth is in the form of land and buildings. In most advanced economies, the main source of capital used by individuals and small companies to purchase and improve land and buildings is mortgages -- bank loans for which the real property itself constitutes collateral. Banks are willing to make such loans at favorable rates in large part because if the borrower does not make payments the lender can foreclose, that is, file a court action that lets them take the property and sell it to get their money back. But in many developing countries there is no effective means by which a lender could foreclose, so the mortgage loan industry as such either does not exist at all or is only available to members of privileged social classes.
In law, the word real means relating to a thing (from Latin res, matter or thing), as distinguished from a person. Thus the law broadly distinguishes between [real property] (land and anything affixed to it) and [personal property] (everything else, e.g., clothing, furniture, money). The conceptual difference was between immovable property, which would transfer title along with the land, and movable property, which a person would retain title to. (The word is not derived from the notion of land having historically been "royal" property. The word royal and its Spanish cognate real come from the unrelated Latin word rex, meaning king.)
Financial Viability
With the development of private property ownership, real estate has become a major area of business. Purchasing real estate requires a significant investment, and each parcel of land has unique characteristics, so the real estate industry has evolved into several distinct fields. Cities such as Vancouver, British Columbia have experienced remarkable growth in real estate prices in the new millennium. Specialists are often called on to valuate real estate and facilitate transactions. Some kinds of real estate businesses include:
Appraisal - Professional valuation services Brokerages - Assisting buyers and sellers in transactions Development - Improving land for use by adding or replacing buildings Property management - Managing a property for its owner(s) Real Estate Marketing - Managing the sales side of the property business Relocation services - Relocating people or business to different country Within each field, a business may specialize in a particular type of real estate, such as residential, commercial, or industrial property. In addition, almost all construction business effectively has a connection to real estate.
"Internet Real Estate" is a term coined by the internet investment community relating to the parallel that exists between high quality internet domain names and real-world, prime real estate.
Levels
According to The Economist, "developed economies'" assets at the end of 2002 was
Residential property: $48 trillion Commercial property: $14 trillion Equities: $20 trillion Government bonds: $20 trillion Corporate bonds: $13 trillion Total: $115 trillion That makes real estate assets 54% and financial assets 46% of total stocks, bonds, and real estate assets. Assets not counted here are bank deposits, insurance "reserve" assets, and human assets; also it is not clear if all debt and equity investments are counted in the categories equities and bonds. For US asset levels see FRB: Z.1 Release-- Flow of Funds Accounts of the United States.
Related Topics for Which Content available at Wikipedia
Housing bubble List of real estate topics Real estate pricing National Association of Realtors Real estate appraisal Real estate economics Real property 1031 exchange, IRC 1031 Tax Deferred Exchange Retrieved from http://en.wikipedia.org/wiki/Real_estate
End of Wikipedia content
Real Estate Glossary of Terms
A Abatement, Above building standard, Absorption rate, Ad valorem, Adjusted funds from operations (AFFO), Administrative fee, Advances, Adviser, Aggregation risk, Alternative or specialty investments, Amortization, Anchor, Annual percentage rate (APR), Appraisal, Appreciation, Appreciation return, Arbitrage, As-is condition, Assessment, Asset management, Asset management fee, Asset turnover, Assets under management, Assignee name, Assignment, Attorn, Average common equity, Average downtime, Average free rent, Average occupancy, Abstract, Abstract of Title, Acceleration Clause, Acknowledgment, Acre, Action to Quiet Title, Adjustable Rate Mortgage (ARM), Adverse Possession, Agency, Agent, Agreement of Sale, Alienation Clause, Amenities, American Land Title Association, Amortization, Annual Percentage Rate (APR), Appraisal and Credit Report Fees, Appraised Value, Appraisal Report, Appreciation, Arrears, "as is", Assessment Base, Assessed Valuation, Assignment, Assumption, Attached Homes
B - Balloon Loan, Balloon Payment, Bankruptcies, Basis, Beneficiary, Bill of Sale, Binder, Blanket Mortgage, Bond, Bridge Financing, Broker, Building Code, Building Line or Setback, Buy down, Buyer's Broker, Balloon loan / bullet loan, Balloon risk, Bankrupt, Bankruptcy, Base principal balance, Base rent, Base year, Basis point, Below-grade, Beneficiary, Beta, Bid, Blind pool, Book value, Buildable acres, Building standard plus allowance, Build-out, Build-to-suit
C - Call date, Capital appreciation, Capital expenditures, Capital gain, Capital improvements, Capital markets, Capitalization, Capitalization rate, Carrying charges, Cash flow, Cash-on-cash yield, Certificate of occupancy, Chapter 7, Chapter 11, Circulation factor, Class "A", Class "B", Class "C", Clear-span facility, Closed-end fund, Closing, CMBS (commercial mortgage-backed securities), CMO (collateralized mortgage obligation), Co-investment, Co-investment program, Collateral, Commingled fund, Common area, Common area maintenance, Comparables, Concessions, Condemnation, Conduit, Construction loan, Construction management, Consultant, Consumer price index (CPI), Contiguous space, Contract documents, Contract rent, Convertible debt, Convertible preferred stock, Conveyance, Core properties, Cost-approach improvement value, Cost-approach land value, Cost-of-sale percentage, Coupon, Covenant, Credit enhancement, Cross-collateralization, Cross-defaulting, Cumulative discount rate, Current occupancy, Current yield, Capital, Caps, Caveat Emptor, Certificate of Eligibility, Certificate of Occupancy, Certificate of Reasonable Value (CRV), Certificate of Title, Certified Copy, Cestui Que Trust, Chain of Title, Chattel, Client, Closing, Closing Agent, Closing Costs, Closing Statement, Closing Day, Cloud on Title, Code of Ethics, Co-Maker, Commercial Property, Commission, Commitment, Common Law, Community Property, Comparables, Condemnation, Conditional Commitment, Conditional Offer, Condominium, Consideration, Construction Loan, Contingency, Contract of Purchase, Contract of Sale, Contract Sales Price, Conventional Loan, Convertible ARMs, Conventional Mortgage, Cooperative Housing, Cost Plus Contract, Cost Basis, Counteroffer, County, Covenant, Customer
D - Declaration of Restrictions, Dedication, Deed, Deed of Trust, Deed of Trust Rider, Deed Restriction, Default, Defective Title, Deficiency Judgment:, Deposit, Depreciation, Devise, Devisee, Devisor, Direct Endorsement, Direct Reduction Mortgage, Discount, Discount, Disbursements, Documentary Tax Stamps, Dower, Down Payment, Dragnet Clause, Deal structure, Debt service, Debt service coverage ratio (DSCR), Dedicate, Deed, Deed in lieu of foreclosure, Deed of trust, Default, Deferred maintenance account, Deficiency judgment, Defined-benefit plan, Defined-contribution plan, Demising wall, Depreciation, Derivative securities, Design/build, Discount rate, Discretion, Distraint, Diversification, Dividend, Dividend yield, Dividend-ex date, Dollar stop, DOWNREIT, Due diligence, Due on sale
E - Earnest money, Easement, Economic feasibility, Economic rent, Effective date, Effective gross income (EGI), Effective gross rent (EGR), Effective rent, Electronic Authentication, Eminent domain, Encroachment, Encumbrance, Environmental impact statement, Equity, ERISA (Employee Retirement Income Security Act), Escalation clause, Escrow agreement, Estoppel certificate, Exclusive agency listing, Exit strategy, Economic Obsolescence, Eminent Domain, Escheat, Escrow Payment, Escrow Reimbursement, Estate at Will, Estate for Years, Estimated Closing Costs Statement, Estoppels, Exclusive Agency, Exclusive Right-to-Sell
F - Fannie Mae (Federal National Mortgage Association/FNMA), Federal Home Board, Federal Home Loan Bank, Federal Home Loan Board, Federal Home Loan Mortgage Corporation (Freddie Mac/FHLMC), Federal Housing Administration, Federal National Mortgage Association, Federal Reserve Bank, Federal Tax Lien, Federal Tax Return, Fee Simple, Fiduciary, Financial Depositor Institutions, First Mortgage, Fixture, Foreclosure, Freddie Mac, Full Disclosure, Functional Obsolescence, Face rental rate, Facility space, FAD (funds available for distribution), FAD multiple, Fair market value, Fannie Mae (FNMA), Fee simple interest, FFO (funds from operations), FFO multiple, Fiduciary, Finance charge, First mortgage, First refusal right, or right of first refusal, First-generation space, First-loss position, Fixed costs, Fixed rate, Flat fee, Flex space, Float, Floor area ratio (FAR), Force majeure, Foreclosure, Forward commitments, Four quadrants of the real estate capital markets
F - Freddie Mac (FHLMC), Full recourse, Full-service rent, Fully diluted shares, Future proposed space
G - General contractor, General partner, Going-in capitalization rate, Graduated lease, Grant, Grantee, Grantor, Gross building area, Gross investment in real estate (historic cost), Gross leasable area, Gross lease, Gross real estate asset value, Gross real estate investment value, Gross returns, Ground rent, Guarantor, Guaranty, General Lien, General Warranty Deed, Government National Mortgage Association (GNMA/Ginnie Mae)), Grandfather Clause, Ground Rent, Grantee, Grantor,
H - Hazard Insurance, Heirs and Assigns, Holographic Will, Homeowners Association, Homeowner's Policy, Homeowner's or Maintenance Fees, Homestead, Housing and Urban Development (HUD), HUD 1, Hard cost, High-rise, Highest and best use, Holdbacks, Holding period, Hold-over tenant, HVAC, Hybrid debt
I - Implied cap rate, Improvements, Incentive fee, Income capitalization value, Income property, Income return, Indirect costs, Individual account management, Inflation, Inflation hedge, Initial public offering (IPO), Institutional-grade property, Insurance company separate account, Interest, Interest-only strip, Internal rate of return (IRR), Inventory, Investment committee, Investment manager, Investment policy, Investment strategy, Investment structures, Investment-grade CMBS, Investor status, Impound Account, Improvement, Incidental Recording, Delivery, Wire, etc., Fees, Index, Installment Sale, Insured Mortgage, Interest Payment Notification (1098), Interest Rate, In testate, Investment Property
J - Joint and Several Liability, Joint Tenancy, Judgment, Junior Mortgage, Joint venture, Just compensation,
L - Landlord's warrant, Lead manager, Lease, Lease agreement, Lease commencement date, Lease expiration exposure schedule, Leasehold interest, Legal description, Legal owner, Letter of credit, Letter of intent, Leverage, LIBOR (London InterBank Offered Rate), Lien, Lien waiver, Lifecycle, Like-kind property, Limited partnership, Liquidity, Listing agreement, Loan-to-value ratio (LTV), Lock-box structure, Lockout, Long-term lease, Loss severity, Lot, Low-rise, Lump-sum contract
M - Magic page, Maker, Mark to market, Market capitalization, Market rental rates, Market study, Market value, Marketable title, Master lease, Master servicer, Maturity date, Mechanic's lien, Meeting space, Metes and bounds, Mezzanine financing, Mid-rise, Mixed-use, Modern portfolio theory (MPT), Mortgage, Mortgage constant
N - NATIONAL ASSOCIATION OF REALTORS, Negative Amortization, Net Listing, Non-conforming Loan, Nonconforming Use, Note
O Obsolescence, Offer, Office of Comptroller Currency, Office of Thrift Supervision, Open End Mortgage, Open Listing, Origination Fee, Owner of Record, Owners Policy, Ownership
P - Package Mortgage, Paper, Parole Evidence, Partial Release, Permanent Mortgage, Personality, Physical Depreciation, PITI, Plat, PMI, Points, Portfolio Loan, Power of Attorney, Prepaid Interest, Prepaid Items of Expense, Prepayment, Prepayment Penalty, Primary Mortgage Market, Primary Residence, Principal, Private Mortgage Insurance (PMI), Processing, Underwriting and Document Fees, Property, Property Tax, Perorations, Prorate, Planned Unit Development (PUD), Purchase Money Mortgage
Q - Quit Claim Deed
R - Real Estate, Real Estate Broker, Real Estate Tax, REALTOR, REALTOR ASSOCIATE, Realty, Recital, Recording, Recourse, Redlining, Refinancing, Reissue rate, REIT (Real Estate Investment Trusts), Recession of Contract, Release, RESPA (Real Estate Settlement Procedures Act), Restrictive Covenants, Revenue Stamps, Reverse Mortgage, Riparian
S - Sales Agreement, Satisfaction of Mortgage, Second Home, Secondary Financing, Secondary Market, Secondary Market Investor, Secondary Mortgage Market, Security, Seller's Broker, Septic Tank, Set Back Ordinance, Settlement, Settlement Cost, a HUD Guide, Settlement Statement, Sheriff's Deed, Single Family Detached Home, Special Assessments, Special Lien, Special Warranty Deed, Specific Performance, Standard Uniform Application, State and Local Housing Programs, Statute of Frauds, Statutory Lien, Substitute of Trustee, Survey, Survivorship, Sweat Equity
T Tax, Tax Lien, Tax Sale, Tenancy, Tenancy at Sufferance, Tenancy at Will, Tenancy by the Entirety, Tenant, Testate, Time is of the Essence, Title, Title, Escrow and Closing Agent Fees, Title Insurance, Title Search, Trustee, Truth in Lending Statement (Regulation Z)
U - Usury
V - Valuation
W - Warranty Deed, W2 Form
Y - Yield
Z - Zoning Ordinances
General Reference
Web Portals
The following portals provide resources on research, directory, search engine / search engines, yellow pages, classifieds
AOL, Yahoo, Google, eBay, YouTube, Yahoo Groups, Wikipedia, CNN, Time, Forbes, Forune, BBC
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