Economic Characteristics of Real Estate
Real estate investing is a lucrative market that promises high returns. The market is actually very complex, but with the right tips and tricks, you can surely rake in big bucks even without having a lot of money at your disposal. But the secret to real estate success doesn’t lie in buying properties right away and selling them at higher prices; there are a number of factors to keep in mind first. This article will teach you the basics of real estate investing to help you start making some money in this market.
The critical driver of the real estate industry is always the housing market. And it’s no different for the other major economic engine like consumer price index (CPI), personal income, gross domestic product (GDP), employment and average hours worked. If housing starts to fail to support economic growth, then consumers and businesses would suffer as well. So it is important to look at the housing sector closely and take appropriate measures to prevent the problem from getting out of hand.
One of the best ways to invest in housing starts right now is to invest in residential properties. Many people who are looking at making some money in the single-family home business are actually buying up more residential properties instead of investing in multi-unit buildings. It seems as if multi-unit buildings have higher returns so many investors prefer to invest in them instead. But residential properties are a much better choice for first time home buyers, especially if you intend to sell later on at a higher price since the demand for housing starts to increase.
A good indicator of whether a property is a good investment is to check whether the property is located in a region with lots of available land. A good example is investing in land that is permanently attached to the property. Permanently attached land can be used for a variety of things. If you plan on building a single-family house, then you can always rent it out to people for a part of their income. However, if you plan on building a multi-unit building then you must permanently attach the land to the property.
Usually permanent attachments to real estate work out best when there is plenty of available land surrounding the property. One of the biggest downsides to permanently attaching land to your real estate property is that you cannot build as big of a building as you want. Land always behaves like a very limited resource. You can build up to a certain size but beyond that no one will build anymore. If you get a piece of land with plenty of available land surrounding it, then you can start building something that will create a nice sized home before you know it!
There are a few more other less obvious economic characteristics of real estate property. One of those characteristics is whether or not there are plenty of public sewer systems within a certain distance from the land. If there are, then obviously the property will be more valuable and will therefore be more lucrative to buy.