Studies & Degrees in Real Estate
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Real Estate Study Programs
Real estate is the general term applied to anything that has to do with land in a legal sense. The actual piece of land, the title, land taxes involved, buying, selling, leasing, renting, developing the land and even the fixtures attached to the land like buildings and houses are all included within the scope of real estate.
Usually, the state of the Real Estate industry is used as a gauge on how local and national economies are faring. Occupancy rate of rental spaces and the increase and the decrease in land valuation are used as confirming indicators if the economy is doing good or bad. A high occupancy rate usually would mean more business activity is going on in a particular locale, state or country. Increasing land valuation would indicate that people have money set aside for investing and while decreasing value would mean that times are hard and landowners are selling their properties at bargain prices.
Speaking of money set aside for investment purposes, investing in Real Estate is usually the top choice among moneyed individuals to place their bet into if the time frame considered is long term. Obviously, investing in Real Estate is not for short term because investors will not feel the gains in one or two years. To get modest gains, investors in Real Estate should at least wait around 10 years. Well, of course, this is not as simple as picking a land at random and then wait for ten years and profits are assured. No, that is not how the game of investing in Real Estate properties is played. First rule of course is always consider the location. Where is the property adjacent to? Is there some potential hazard in the area of the property? Is there a development ongoing or some sort of master plan being devised to improve the area? Location alone of the property can usually give reason why its price is higher or lower. The nearer the property to the center of a city the higher they are priced and those located on the periphery of the city borders are priced much lower because that would mean that they would be farther from the amenities of city living like malls, place of work, the city hall, stadiums and so forth. So before buying a real estate property, it would be wise to always consider where it is situated. Other things to consider of course are: if the title is clean, meaning it’s not mortgaged or doesn’t have adverse claimants, the added costs needed to fix the place to one’s liking, the price versus prevailing market price which can be estimated by browsing a classified ads column and, of course, the timing.
The Real Estate industry has been observed to experience a cycle of boom, where prices tend to be expensive, and bust when prices tend to be lower than the published rates.
Because Real Estate encompasses so much more than just land as other industries are dependent on it like the construction and construction supply and many others, the Real Estate industry is among the biggest contributor of wealth in every economy that’s why there are now courses being offered to fully understand it and everything that has anything connected to it directly or indirectly.
Job positions for Real Estate:
Real Estate Developer
Construction of condominiums, villas, resorts, shopping malls, theme parks, subdivisions, sports arenas or any other structures put up in a specific location whose intentions are to increase land valuation of the general area in question is primarily what Real Estate Developers do and are on the lookout for. The success of a project depends solely on the vision of a developer. Development projects fail only when the developer fails to consider every aspect of the project which includes source of financing, cost of financing, the market, and, of course, the timing.
Source of financing usually are banks or consortium of banks. Even though the developers have enough capital to finance the project on their own, they would still opt to have financing because a bank approval for a loan will give the project further credibility. A loan grant from banks would mean that the project is viewed as viable and the risks were properly assessed. Some financers are investors who would agree to infuse capital in exchange for a stake in the project. The cost of financing, if the project would depend from a loan, has also somewhat caused the demise of several Real Estate Developers so it would be prudent for developers to know this. If the loan was, let’s say, sourced from abroad and then devaluation suddenly struck like the one that hit the Thai Baht in 1997 where the Baht weakened against the dollar sharply, developers in Thailand who acquired foreign loans suddenly found themselves having higher amounts to pay for their dollar loans when expressed in the local currency.
Cost of financing also pertains to the interest rates. If the approved loan is on a prevailing market terms then a jump in interest rates, then the cost of doing the project have also increased and the projections previously forecasted are now wrong. Proper assessment of the demand is also very important.
Finishing a project is one thing but if the project have no end-users to draw profit from then it is also considered a failure. This happens usually to condominium projects. When the units don’t sell after turnover time, usually what happens is that units are forced to be sold at very low prices than originally intended, hence profits are not realized.
And lastly, the timing of the project can also determine the success of the project. Because real estate boom cycles tend to last around 18 years before going bust, the developer who can time on developing and marketing their projects during the boom times would usually make huge profits. However, some developers are so greedy and get whiplashed because they keep believing that the boom times would not end and kept on starting new development projects until suddenly they’re in a middle of a real estate bust and they have numerous projects still far from being finished. A cautious developer would not start several projects at the end tail of a boom cycle.
Undertaking real estate development projects is not as simple back then as there are lots of complicated factors now to consider. The good news, however, is that there are now courses being offered that focuses on understanding the different factors affecting the real estate sector and their potential impact. Hopefully, those who want be serious as Real Estate Developers should take advantage of these courses so as not to repeat the mistakes of the past.
Real Estate Broker
One of the most financially rewarding jobs in the world is being a Real Estate Broker. Being a Real Estate Broker is basically a sales driven job. There are times that even just making one sale is enough to guarantee a good life. Primary objective, of course, is to sell as many real estate properties as possible. A Real Estate Broker earns a commission for every sale they close. Selling real estate properties however is not a very simple task to do. Just like any sales job, having a presentable and dignified aura is a golden rule. Looking spiffy and dapper immediately impresses potential clients even before uttering a single word. A good and clear speech would be helpful but the more important thing is that a broker should exude deep knowledge of the product he is selling. In any type of seminars about sales, one thing is always emphasized by sales gurus and that is “practice your sales pitch”. This is very important because when done right, the flow and pace of the conversation would be on the brokers control leaving almost no room for questions except “where do I sign?”
Apart from selling, Real Estate Brokers secure agreements from property owners to sell the property. The more successful Real Estate Brokers are the pro-active guys that are always knocking property owner’s door asking if they might want to sell their properties. With more properties to sell, the more commissions to be made.
Real Estate Brokers should know relevant laws applicable for a particular locale concerning real property. Depending on the country, like, in the US, different states have different laws governing buying and selling of properties, so knowing these pertinent things would give real estate brokers added edge in selling properties.
Consider the scenario: Somebody who obviously is a foreigner, walked in and expressed interest to buy the property the broker is selling. Naturally, the Real Estate Broker smelling a potential sale goes for the jugular and makes the client sign up a contract. In some countries, foreigners are allowed to buy real estate properties and in some it is restricted. In the scenario above, if in his area of operation does not permit a foreigner to own real property but allows foreigners to own condo units then the broker could have recommended selling a condo unit instead of the house he originally offered. Aside from the wasted effort, the reputation of the broker would have also been tarnished if the scenario above happened in real life.
Brokers should also be able to know available financing options as most transactions are through financing. Different commercial banks usually offer different financing terms and sharing this bit of information to the clients especially as to what bank gives the best terms might sometimes translate to referrals. The government may also offer affordable financing programs so it is up to the broker to recommend which among available options would fit best the needs of the client.
Perhaps the most important skill a broker should have is the ability to expand his network of acquaintances. As mostly is the case, most sales happen because somebody recommended somebody to his/her broker and walk-ins actually buying are rare cases. That’s why calling up old friends and old clients from time to time won’t hurt so investing in a reliable cellular phone would also be a wise decision.