How Does Real Estate Work?

Real estate is a business that encompasses the ownership of land and any structures attached to it. It includes natural resources like trees and ponds as well as manmade attachments like buildings and fences. Ownership of real estate allows the owner to resell, rent or do business on the property. Real estate can be divided into four major categories: residential, commercial, industrial and raw land. Real estate can also be categorized by how the property is used.

The most common use of real estate is for housing purposes. Residential real estate includes single-family homes, apartment buildings and condominiums. Commercial real estate is land and buildings used by businesses for office space, shopping malls, parking lots and hospitals. Industrial real estate is land and buildings used for manufacturing, processing or storing goods. Raw land is any vacant or undeveloped land. The most common way to make money in real estate is through appreciation in value. This occurs when a piece of real estate increases in value over time, such as when inflation causes prices for other goods to increase. Another way to make money is through rental income. This can be in the form of monthly rent paid by tenants or the periodic harvesting of timber from land tracts.  More info

If you want to become a real estate investor, it’s important to understand how the industry works. There are several different ways to invest in real estate, including through REITs (real estate investment trusts) and online real estate platforms. REITs are similar to mutual funds and help investors diversify their portfolio by investing in multiple properties. Online real estate platforms connect investors with specific projects.

To be successful in the real estate industry, you must be licensed. Real estate agents, who are also known as real estate brokers, act as liaisons between home buyers and sellers. They can be employed by a real estate brokerage or work independently. Real estate agents who are employed by a brokerage firm must follow their employer’s branding and procedures for conducting transactions. Agents who work independently can choose to specialize in one or more areas of the industry. Read more

Real estate professionals must be available at all hours to meet with clients. They must conduct research on local property values and trends, set up showings of potential properties and negotiate the details of a sale. They must also be knowledgeable about the mortgage lending process and able to assist their clients with obtaining financing. If a home buyer makes an offer on a property, the agent will submit it to the seller for review. Once the seller accepts the offer, the escrow process begins.

Real estate is a fast-paced industry that can be rewarding for those who are willing to put in the work. It’s not for everyone, however. Those who are not comfortable being around people, do not have the patience to deal with frequent rejection or who find themselves stressed out by fast-paced schedules should not pursue a career in real estate.