Making money in real estate

Making money in real estate

When one speaks of real estate and making money from it most people tend to sum it up to landlords, brokers and sales people. In reality real estate industry is way bigger than that and has more players to it. Making money in real estate, assuming you are not the owner of the property in which case no one is paying you rent, will depend on the position or profession you have chosen in the real estate field. This is assuming you already understand the demand and supply aspect of the market. The professions or specialties in question include;

Brokerage

In real estate transactions, the business of bringing people together is known as brokerage. Your job, if you decide to join the real estate market from this angle, is to act as a point of contract between two or more persons negotiating sales, purchase or rental of property.

The property you are dealing with could be, residential, commercial or industrial. The idea is to bring the parties together, which is something you can do as an individual or you can set up your firm and work on developing leads and contacts to bring together.

A broker in real estate is not the same as a salesperson. A salesperson is a licensee employed by or associated with the broker. Meaning if you decide to go the brokerage way you can hire salespersons to work for you. Remember, the salespersons conduct brokerage activities on behalf of the broker. The broker, however, is ultimately responsible for the salesperson’s acts.

Property management

If the broker thing doesn’t work for you, then you can put your management skills into use as a property manager. Property manager is a person hired to maintain and manage property on behalf of its owner. Making money in real estate from this perspective means the owner of the property is relived of day to day management task, which then becomes your obligations. Such include; finding new tenants, collecting rent, altering or constructing new space for tenants, ordering repairs and generally maintaining the property

The scope of this work will depend on how you structure the management contract, that is, the contract between the owner of the property and the person or firm handling the management.

Property Appraisal

Appraisal is the process of establishing properties market value based on established methods and the appraisers professional judgement.  This will obviously mean learning so that you can be a credible source. The idea here is that, people pay you to help them understand the fair market value of their property or the price at which an informed person will be willing to pay for the property or to sell the property at. As an appraiser you must have detailed knowledge of the methods of valuation and that also means being certified. Some common property valuation methods include: the income approach, the sales comparison approach or even the cost approach.

Financing (Asset financing)

This is on a high end. Financing is the business of providing funds that make real estate transactions possible. Most transactions are financed by means of mortgage loans or trust deeds secured by loans. If you are to go this route then you can work with commercial banks, saving associations and mortgage banks.  It is also easy if you set up your brokerage firm and offer this as part of your affiliate program assuming you have successfully partnered or associated with financial houses.

Consulting and counseling

This involves providing clients with competent independent advice based on sound professional judgment. Your work here, assuming this is the option you’ve chose for making money in real estate, is to help clients choose among various alternatives involved in purchasing, using or investing in property. The challenge will be the level of expertise you have in the industry.

Conclusion

While owing property is appealing given the amount of passive income and tax breaks you can get from it, not everyone joins that market from the acquisition point of view. Some start with the options mentioned above. You can decide to join this market as a sole person with these tips or you can form a firm and go it as a company, the choice will depend entirely on your context.