What Is A Critical Driver Of Real Estate Investing?
Real estate is real property consisting of the buildings and land on it, and its accompanying natural resources like water, plants or minerals; immovable property including the same, buildings or residential housing in itself, together with other fixed assets of this kind. Real estate is considered to be a practical option for investment because it is not subject to market fluctuations, and there is a guaranteed return. A number of institutional investors as well as individual ones have taken an interest in real estate.
One of the ways real estate investment is pursued is through buying a re-sellable piece of property and investing on it. An investor can buy one to be used as rental property and sell it at a higher price when the time of rental is over. This is one of the methods to invest. The rental income that is generated by the property can be channelized into other forms of investment. For instance, it can be used to undertake a renovation project on the house.
Another way to make real estate investments is to invest in residential properties that have good economic characteristics. These properties include apartment buildings, plots of land, condominiums, row houses in substandard neighborhoods that have been built in good engineering. The good economic characteristics of these apartments, row houses, condominiums and other properties include ample supply of tenants, excellent amenities and good plumbing systems and sewer systems. When these properties are sold at a higher price, the investors make a profit.
While real estate investing requires an initial investment of some amount, this need not be too large. Most investors usually invest in several properties, but those who are new in this business prefer to invest in just four types of properties. These four types are homes, commercial buildings, vacant land and other structures. Investors also prefer to invest in real estate within their locality or in locations that are close to their place of residence. This helps them cut down on travel time and commuting costs.
The process of investing in real estate involves buying a piece of land or a piece of property and developing it. Developing the land involves improving the infrastructure of the land, installing sewers and electricity systems, putting up a building on the land and eventually selling it to earn a profit. The four main types of real estate transactions include development, construction, occupancy, and sales. Developing involves improvements in the physical structure of the land such as installing better drainage, better irrigation and other necessary steps to improve the lot’s physical condition.
Investing in real estate involves lots of paper works and legal formalities, but it is believed to be one of the safest ways of making long term investments. There are various other factors that are considered to be a critical driver of the real estate industry, including demographics, demand, and financing. But what is considered a critical driver of the real estate industry is the increase in housing starts, which has resulted in a significant increase in the demand for properties for rental and ownership.