Real Estate Means

Physical factors of a property are important because they can be the driving factor behind a community’s economy. For example, a location next to a protected harbor would be expected to develop industries related to shipping. Physical factors can determine whether a location is feasible for development at all based on the soil conditions and TOPOGRAPHY. They can also drive the market demand for specific types of real estate development in the location. A market analysis should consider these physical factors for the subject property and their potential impact on current value and future cash flows. Physical characteristics that both limit and encourage new development are key to understanding the demand for and value of real estate in all market segments. Physical factors important to real estate market analysis may include: Location – Define the property boundaries and consider the neighboring properties as well. How does this location fit in with the surrounding pr...

What is Real Estate Crowdfunding? Real-estate crowdfunding is a way of raising money for real estate investment by reaching out to a pool of investors to contribute a small amount of money towards a project. Simply put, it is a form of raising funds that allow small real estate investors to fund big projects. Real estate crowdfunding is also referred to us real estate peer-to-peer lending or financing of real estate projects. The process of raising money is conducted via an online crowdfunding platform. One party (the borrower) joins a platform with the aim of getting funds to start or improve a real estate project. Another party (the investor/lender) joins a platform to invest capital in exchange for high returns on the investment. Why people use it? A viable option for raising money amongst real estate investors is real estate crowdfunding, which involves raising money to buy properties for selling or renting. The approach has become a feasible alternative to traditiona...

What is Quality of Real Estate? For potential buyers or investors, determining the quality of real estate is a very important undertaking. Real estate is widely considered as one of the most profitable investments for those looking to build wealth over time and invest in opportunities that provide stable incomes and returns. It is one of the low volatility investments that investors can tap into. Also, real estate offers investors an opportunity to diversify their portfolio since it demonstrates a low correlation with other asset classes. For example, real estate is not affected by the movement of stock prices, and its prices remain high even when stock prices are down. Important Considerations When Investing in Real Estate When investing in real estate, there are various factors that an investor can consider to determine the quality of real estate, and if the investment is right for them. The factors include: - Property valuation Knowing the actual value of a property can help an ...

Calculating Opportunity Cost in real estate. There is no specifically defined or agreed upon mathematical formula to calculate opportunity cost, but there are ways to think about opportunity costs in a mathematical way. Opportunity cost is the benefit of the next best alternative or option. You can measure this benefit in money. As such, one formula for calculating opportunity cost is the ratio of the returns from the alternative you’re sacrificing to the returns you’re gaining from the chosen investment opportunity. When you think about it this way, then the opportunity cost formula becomes very straightforward: Opportunity Costs = Sacrificed Returns / Gained Returns   A real estate investor can use this very simple formula to make educated decisions in different situations. We should note, however, that you should take certain variables into account before making an investment decision and calculating opportunity costs. These include your investment goals, ris...

value in use vs. value in exchange. Trade has been part of our day-to-day activities even before civilization. Since the early days, goods and services have been exchanged for other goods, precious metals, credit, paper currency and most recently cryptocurrency. What really determines the amount of exchange? According to economics, the law of demand and supply determine the price of the commodity; as demand increases and supply falls short, the price of the good or service will increase and vice versa. The question that begs is, does the price of this commodity really reflect its value? Early economists’ and philosophers addressed this in the paradox of value, also known as the diamond-water paradox. The paradox is the apparent contradiction that although water is more useful in terms of survival than diamond, diamond commands a higher price in the market. To solve this paradox, Adam Smith a Scottish economist and philosopher in his book, An Inquiry into the Nature and Causes of the We...

“Ready, Willing, and Able”  Ready– Is the buyer truly ready to make the purchase? Have they looked at enough properties to know what they want? Are there lingering questions that are preventing the buyer from moving forward with the purchase? One of the hallmarks of a buyer that is not ready to make the purchase is that they continually ask about other properties or are raising objections about the subject property. A buyer that is “ready” will either have done or will be doing the legwork. Willing– Is the buyer exhibiting the signs of someone who is eager to make a purchase? Are they talking about what they can do with “my” property? Is the buyer under pressure from a spouse or partner to make the purchase, or not make the purchase? “I like the property, but let me talk to my wife (or husband)” is a sign that you may be dealing with a willing buyer, but one that may not be ready or able. There are also plenty of people that are willing to purchas...