Real Estate As an Economic Characteristic
Real estate investment refers to the buying of property with the intention of making money by renting or selling it later. Real estate is all real property comprising of the actual buildings and land on it, and its accompanying natural resources like water, minerals or vegetation; immovable property without the movable part of it; or an equitable right vested in it, buildings or property in general. There are many ways in which one can make money from real estate investment. One can buy properties for which there is demand in the market, increase its value by renovating it, or sell it for a higher price. However, before you invest in real estate, you need to understand certain things.
Firstly, you should be very clear about what you want to achieve by making a real estate investment. Are you looking for a secure investment option like purchasing a permanently attached house, a piece of commercial real estate or a plot of rural land? If you want to earn more from your real estate investment by investing in residential buildings, then look at those that are easily affordable and are located close to your home. These houses will be rented or leased out and thus you will earn revenue from its rental. However, if you are looking to earn more from your residential properties, buying plots of land within a larger area where there is a lot of development would be a better option for you.
You can also opt for a real estate investment trust where you will earn a passive income from renting or leasing your vacant land or building to others. However, the re-sale value of these properties will be less than that of the initial purchase price. Another option of earning more from your real estate investment trusts is to buy rental properties such as apartments, cottages, houses and plots of land. These properties may require renovation, but after they are fully furnished, you can sell them off at a higher price.
One of the major economic characteristics of residential real estate deals is that most of the properties have constant demand for housing. In most countries, land ownership is considered essential for building homes and infrastructure projects and without enough availability of land, cities and towns find it difficult to build new homes. Residential real estate investors can either build or buy houses in cities with enough land, or in rural areas where homes are still built to the extent that the land is not required for building houses. The prices of such properties are usually lower than that of new houses.
Since it is not possible to develop new towns and cities, the only option left for an investor is to buy lands with agricultural capabilities in return of letting them develop for agricultural purposes. There are many farmers who rent their lands to businessmen who wish to establish farms on them. In these situations, the farmer’s land is not used for creating homes but is used for developing crops, farming implements and other equipment. An example of such a real property would be fields of corn or rice, which can be developed to produce ethanol for fuel.
Other examples include waste treatment plants, manufacturing plants and water bodies which have been built. Most of these examples are necessary in order for these industries to run successfully. Water rights for the drainage of agricultural lands, agricultural land ownership and other properties required for development do not come for free. A large number of real estate developments are required in order to make these properties available.