In-Depth Concept Behind Real Estate

As years pass by, the population rises, and the demand for real estate also increases. High demand but low supply means that the products have a higher value. Real estate is a property of land, including the buildings on it along with its natural resources. Real estate is a good business opportunity because it has low risks but has high return potential. This is a really good investment since its value increases over time.

Now that the potential of starting a real estate business is highlighted, one must understand the job first before venturing into it. The following are the basic concepts that you have to learn and understand if you want to start a real estate business.

The categories of real estate:

  1. Land – this is the raw, undeveloped, vacant, and agricultural land. Land includes all the physical elements that are naturally present in a specific area.
  2. Residential – is the property that is used for residing purposes. Some examples of these are condominiums, subdivisions, and apartments.
  3. Commercial – this refers to the properties that are used for businesses. This includes grocery stores, malls, restaurants, and hotels.
  4. Industrial – this refers to the property that is for industrial businesses, manufacturing, and distribution. Examples of this are warehouses, factories, and power plants. 
  5. Special Purpose – is the property that is utilized by the public for a specialized purpose like parks, schools, and cemeteries. 

How the real estate industry functions:

  1. Development –  this process involves the purchasing and development of raw land. The developers create a ‘new product’ by adding value to the land. This can be done by rezoning, constructing, or renovating buildings.
  2. Sales and marketing – the sales and marketing firms sell the products that the developers created.  They are the ones who are in charge of the marketing materials and sell the inventory through their sales agents.
  3. Brokerage – this firm’s role is to employ real estate agents who facilitate the transactions between the property buyers and sellers.
  4. Property management – this firm is the one that collects rent, shows the units, performs repairs, and manages the tenant. They help the real estate owners rent the units in their buildings.
  5. Real estate lending – the lenders are the ones who help finance the business. Examples of these lenders are banks and private lenders.
  6. Professional services – aside from the ones mentioned, there are other real estate professionals who help the industry function. Some of the most common ones are lawyers, interior designers, and general contractors.

Factors that affect the real estate industry:

  1. Government policies – the price and the demand of the property can be affected because of the law. Thus, to know what changes in supply and demand and smart investments are to be made, it is important to know the status quo of the political climate first.
  2. Socio-economic factors – economic conditions and real estate have a direct relationship, so it is important to take this factor into consideration since it puts the industry at a disadvantage.
  3. Demographics – in order to sell the properties, it is important to know the target audience. This way, the plans, and strategies will be properly modified and applied.
  4. Technology – as people upgrade their technology, the real estate market should also adjust accordingly to fit the technology’s design.

Once you have completely understood these concepts, you can slowly start your business by creating your business plan. Of course, you must always keep in mind to build connections, plan, strategize, and analyze the situations thoroughly. When you have already created your own brand, work on growing your business. Do not forget to pay attention to the manpower, you must be able to spot a good real estate resume to quicken the process of selecting and training the employees. Though it is advantageous to have a vast workforce, quality is what’s more important.


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