Real Estate as an Investment
I see investments in Real Estate mirroring other investments in today's world. Real Estate is an attractive medium that gains capital appreciation and investor return. In the general aspects of investing your money, Real Estate is the same as other investments. There are advantages and disadvantages to every investments. You just have to figure out which one you enjoy.
Baker Valuation-Different kind of Investments
I enjoy Real Estate and in the near future I will be an investor of Real Estate. I think that Real Estate investors have different attitudes towards risk than other investors. You can be a little risky in the stock market, but know what you are getting into. Being risky in Real Estate can lose you a lot more money than one might think. You never know what is going to occur in the future. A negative consumer housing report, an incident in the neighborhood, the type of neighbors you have, or even a shift in social trends. Anything could happen in the area where you have Real Estate. You can not just wake up one morning and sell your house like you can a stock. Real Estate is a more risker investment.
Real Estate Investing 101
Currently, Schlitterbahn has decided to build in my community in North Padre Island. As driving over the bridge onto the island, I see houses going up EVERYWHERE. I do not see many empty lots. The majority of people building homes are from San Antonio and workers from the Eagle Ford Shale boom. The price of housing has increased and will increase the market in the next 3 years. (Schlitterbahn should be completed in a couple of years) Why am I being this up? Well for homeowners that live on the island, their homes value will being increasing more than it has in the past. It has been pretty slow since 2008, so it is nice to see the housing market go up. That is just the residental side of things. There are many plans for hotels, strip malls, restaurants, etc. Investors have been planned for this and are currently taking action at this time of the market. It is amazing to see it going up this fast in Corpus Christi.
Schlitterbahn- Corpus Christi
Supply & Demand in a Real Estate Context
and Basics of Urban Development
Demand for Real Estate consist of many things. It matters where you are looking to invest your money. The demographic areas in this world are totally different. You need to look for factors like income, price of housing, cost of credit, population size and growth and so forth, before you put your investments towards Real Estate.
Supply for Real Estate consists of available land, enough people for labor, and your supplies to complete the job. Researching the cost of these things will help your decision to invest in Real Estate.
According to my readings about value in Real Estate, you must have demand, utility, transferability, and scarcity to create a valuable profit.
Supply and Demand-Forbes
Is Real Estate an Efficient Market?
This article below explains if the Real Estate Market is efficient. I do know if it is or not. It depends on how you look at the picture. The article points out that it is not efficient because the same design of house in Texas is not the same price of the same house in New York. But, the article states that if you base the market on climate it could be efficient. It depends on Supply and Demand.
Efficient Market in Real Estate?
Operating Statement & Forecasting;
Forecasting Cash Flow, Deriving Value, Capitalization Rates
When looking into investing your money into a residential or commercial Real Estate, you need to do an analysis on the property and area that the property is located in. This is where your finance classes will come into play. The proforma statement is a good analysis to calculate. You will be able to see where the seller got their selling price from.
Analysis Examples
Forecasting these values will let you know what the future will hold if everything is run properly. You will be able to know if the value is overpriced or underpriced. With the pro-forma statement you can calculate the capitalization rate, certain cash flows that are available to the public, value, and more. If you go to the link below you will be able to start searching and creating a pro-forma statement to see which properties you might be interested in investing in. Take a look!
LoopNet
When buying a property you look at 3 different approach techniques: Cost, Income, and Sales Comparison. The cost has two types: Reproduction and replacement. The income technique is the most likely approach when looking at Real Estate. In the income approach you have the Direct Cash Flow Method and the Direct Capitalization. The Discounted Cash Flow (pro-forma statement) is a better way to value a property then the Direct Comparison. The Direct Comparison is just the easier way to get the value. Once you understand the way to value a property, you will be able to make a decision and start the process of buying that property. Very interesting subject and exciting to do pro-forma statements on many different properties for sale to see if you can gain a bigger investment. You can invest in Real Estate many different ways. When looking at certain cash flows, operating income, expenses, etc on your pro-forma statement, remember their different ways you can invest in property.
Ways to Invest
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