Real estate usually involves properties that cost so much that no one person has that amount of money. So what does one do to raise the capital needed to purchase real estate?
The answer is financial leverage. Financial leverage and real estate go hand in hand. Almost everyone cannot afford to pay cash for a house on the day they purchase it. Loans make purchasing real estate available to people who do not have the capital needed to purchase the house today.
This Forbes article describes some of the best ways to get capital to fund a real estate project.
http://www.forbes.com/2010/07/06/best-funding-sources-for-small-business-entrepreneurs-finance-dileep-rao_2.html
Some ways to get capital include:
Bank Loans
Family/Friends
Customers
Vendors
SBA(7) Loans
Local and State economic organizations
For some creative financing, this article states the IRS can deduct certain expenses so that will decrease the overall price.
This link provides the different types of mortgage loans one can use to purchase real estate:
http://www.realestatebriefings.com/mortgages/types-of-mortgage-loans/
1. Conventional mortgage - offers a fixed rate.
2. Adjustable rate mortgages - carry an interest rate that changes to keep pace with current market rates. This is a good idea for buyers planning to stay in their home for a short time.
3. Veteran Affairs loans - are great because they provide the opportunity to buy a home with no down payment.
4. Assumable mortgage - is a loan that stays with the property. It is simply transferred to the qualified home buyer.
I believe financing is good for real estate and loans are very important for the survival of the real estate market.
Sunday, November 4, 2012
Topic #7 Overview of Real Estate Finance 11/4
Real estate is a very broad category, thus leading to many different careers in real estate.
This website lists some of the numerous careers in real estate. http://www.realtor.org/realtororg.nsf/pages/careers
Certain careers include:
Real estate appraiser
Real estate broker
Real estate analyst
Property manager
Urban/land developer
Real estate counselors
Employers of the real estate profession is basically endless as most businesses conduct with real estate is some way or another. This website shows some of the major real estate firms in the United States. http://www.careers-in-finance.com/retop.htm
Some of the tops firms include:
Trammell Crow
Lincoln Property
JMB Realty
Grubb & Ellis
The real estate market took a huge hit when the "housing bubble" burst in 2007-2008. Today, it is improving with many cities seeing prices higher than before the housing bubble burst. Cities that weren't affected by the burst and are doing well today are cities like NYC, Houston, Dallas, LA. Cities hit hard by the crash include Detroit, Las Vegas, and Miami.
This website lists some of the numerous careers in real estate. http://www.realtor.org/realtororg.nsf/pages/careers
Certain careers include:
Real estate appraiser
Real estate broker
Real estate analyst
Property manager
Urban/land developer
Real estate counselors
Employers of the real estate profession is basically endless as most businesses conduct with real estate is some way or another. This website shows some of the major real estate firms in the United States. http://www.careers-in-finance.com/retop.htm
Some of the tops firms include:
Trammell Crow
Lincoln Property
JMB Realty
Grubb & Ellis
The real estate market took a huge hit when the "housing bubble" burst in 2007-2008. Today, it is improving with many cities seeing prices higher than before the housing bubble burst. Cities that weren't affected by the burst and are doing well today are cities like NYC, Houston, Dallas, LA. Cities hit hard by the crash include Detroit, Las Vegas, and Miami.
Topic #6 Overview of a real estate appraisal - 11/4
Real estate appraisal is the process of valuing real property. The value is usually in market value.
A real estate appraiser is someone who conducts a real estate appraisal. We need appraisals because the market value of real estate appreciates and depreciates and does not stay the same throughout time. We also need appraisals because every real estate property is unique and different than the next, so each will have a different market value.
There are 3 different methods of appraising a property. This article briefly explains each of the 3 in more detail:
http://homebuying.about.com/cs/appraisals/a/real_estate.htm
The 3 methods include:
1. Sales Approach Method - value subject property by comparing to similar properties recently sold.
2. Cost Method - value subject property by estimating the cost to replace the structure.
3. Income Approach - value subject property by estimating the income it will receive in the future.
Sales approach is best for properties with the most data. Cost method is best for new properties, and income method is best for properties used an investments that will generate a cash flow.
Appraisal are not always accurate. Bad information can cause an appraisal to be inaccurate. Here is a link that describes certain things one can do to challenge or change a bad appraisal.
http://www.aaronline.com/azr/2012/january/frustrated-by-appraisals.aspx
A real estate appraiser is someone who conducts a real estate appraisal. We need appraisals because the market value of real estate appreciates and depreciates and does not stay the same throughout time. We also need appraisals because every real estate property is unique and different than the next, so each will have a different market value.
There are 3 different methods of appraising a property. This article briefly explains each of the 3 in more detail:
http://homebuying.about.com/cs/appraisals/a/real_estate.htm
The 3 methods include:
1. Sales Approach Method - value subject property by comparing to similar properties recently sold.
2. Cost Method - value subject property by estimating the cost to replace the structure.
3. Income Approach - value subject property by estimating the income it will receive in the future.
Sales approach is best for properties with the most data. Cost method is best for new properties, and income method is best for properties used an investments that will generate a cash flow.
Appraisal are not always accurate. Bad information can cause an appraisal to be inaccurate. Here is a link that describes certain things one can do to challenge or change a bad appraisal.
http://www.aaronline.com/azr/2012/january/frustrated-by-appraisals.aspx
Topic #5 Overview of a real estate appraiser 11/4/2012
A real estate appraiser's job is to estimate the value of real property. Appraisers are needed because land and property does not have a defined value because all real estate is different. Here is a link describing what a real estate appraiser does, salary, and environment in which they work in.
http://www.bls.gov/ooh/business-and-financial/appraisers-and-assessors-of-real-estate.htm
An interesting fact this article states is that real estate appraisers employment is expected to grow 7% from 2010 to 2020. This is positive information that shows there is a demand for anyone looking to become a real estate appraiser.
So what all is required to become a real estate appraiser? This link summarizes the necessary requirements to become a real estate appraiser.
http://voices.yahoo.com/how-become-real-estate-appraiser-part-time-work-9160.html
There are 3 classes that a real estate appraiser can be.
1. License Appraisal Trainee - lowest class of an appraiser, in which 90 hours a classwork is required usually resulting in an associates degree.
2. Certified Residential Certificate - After receiving a license and completing 2000 hours and 30 hours of additional classwork one can get this certificate. This certificate allows appraisers a greater variety of real estate to appraise especially more expensive real estate.
3. Certified General Appraisers - Need an additional 60 hours. Appraisers who hold this certificate can appraise any property without limit to value.
A real estate appraiser's job is to estimate the value of real property. Appraisers are needed because land and property does not have a defined value because all real estate is different. Here is a link describing what a real estate appraiser does, salary, and environment in which they work in.
http://www.bls.gov/ooh/business-and-financial/appraisers-and-assessors-of-real-estate.htm
An interesting fact this article states is that real estate appraisers employment is expected to grow 7% from 2010 to 2020. This is positive information that shows there is a demand for anyone looking to become a real estate appraiser.
So what all is required to become a real estate appraiser? This link summarizes the necessary requirements to become a real estate appraiser.
http://voices.yahoo.com/how-become-real-estate-appraiser-part-time-work-9160.html
There are 3 classes that a real estate appraiser can be.
1. License Appraisal Trainee - lowest class of an appraiser, in which 90 hours a classwork is required usually resulting in an associates degree.
2. Certified Residential Certificate - After receiving a license and completing 2000 hours and 30 hours of additional classwork one can get this certificate. This certificate allows appraisers a greater variety of real estate to appraise especially more expensive real estate.
3. Certified General Appraisers - Need an additional 60 hours. Appraisers who hold this certificate can appraise any property without limit to value.
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