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Real Estate Investing
An Economic View of Real Estate
by Chris Parry (Write for us!)
(Click on the links within the article to get definition of that word)
Homeowners actually qualify as investors in the real estate market because homeownership is subject to the same
types of risks and growth as any other market. Homeowners actually have a dual interest in their homes since not
only are they investing in it but by economic standards they are also considered consumers.
LandOwners are the most common investors in the real estate market. Their interest is purely for investment purposes.
Real estate purchased by a landowner is then rented or leased out and is usually owned strictly for investment purposes.
Developers are a growing breed of investors in the real estate market. A Developer will purchase unused
land that
typically has no structures on it and will then "develop" the property to meet a certain need in a specific area.
Renovators or "house flippers" are individuals or companies that purchase a home for a significantly lower amount than
the surrounding houses. The goal of a renovator is to improve a property just enough to make its valuematch the median
value of the houses in the area. These projects are typically done in a relatively short period of time but carry
greater risk and profit potentials.
Investing in real estate, just like any other form of investing, involves a certain level of risk, especially when
dealing with residential properties. In order to make a sound investment choice in real estate a number of different
factors should be considered. Consider meeting with a licensed realtor who has access to resources and information that
will help minimize the risks in the real estate market. The profits gained from real estate transactions may often
initially seem high, but they are lowered due to a number of legalfees as well as real estate fees. It is important
when
considering real estate as an investment that thought is given to the cost of these fees and their affect on profit margins. Another inherent risk in the real estate market is the fact that the value of the property is often determined by the value of an area. Values can be affected by a number of external factors like location, limited amount of usable land (which is the case for many island regions) and the localeconomy. Demand for housing is an ever-fluctuating factor in determining real estate values.
If you are considering real estate as a means of investing, think about all of the factors and realize that the real
estate market is subject to the same economic laws as any other market which is driven by supply and demand.
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