How the real estate industry works

A lot of people do not know how the industry works; they tend to think that it depends on salespeople and brokers.

However, some people earn a living through this real estate in construction, sales, appraisals, development, dedication, counseling, and so many other fields.



Other people who depend on real estate industries are banks, accountants, lawyers, banks, surveyors, architects, and title insurance companies.

Real estate is the main source of economic growth in the US; reports provided include housing starts, building permits, and housing completions data, which is divided into the following categories.

Homes with 2-4 units

Multifamily buildings with more than five units

Single-family homes

How to Invest in Real Estate

The most common ways of investing directly in real estate are;

House flipping

Homeownership

Rental properties

You can make money in so many ways if you buy physical property. You can make money through revenue from leases or rents and the real estate appreciation value.

Real estate is affected by location and other factors such as crime rates, employment rates, transportation facilities, property taxes, school quality, municipal services, and crime rate. All these can either drive real estate prices up or down.



Pros

Diversified portfolio

Offers steady income

You can buy them with leverage.

Offers capital appreciation

Cons

Requires big initial capital

Requires active expertise and management

Is usually not liquid

It’s influenced by highly local factors.

You can also invest indirectly in real estate, and this is through a real estate investment trust (REIT). There are various types of REITs, and this is a mortgage, equity, and hybrid REITs.

REITs are divided into three categories that are public non-traded REITs, publicly-traded REITs, and private REITs. If you want to invest in a REIT, buy publicly traded shares.

This is because these shares trade like any other traded security shares, and furthermore, REITs make it transparent and very liquid.