Understanding Real Estate

What does ‘Special Use’ real estate mean?

This refers to real estate that’s either multipurpose or built for a specific purpose. Special use real estate can be found in the four real estate types (land, commercial, residential and industrial). Examples of special real estate include:

  • Car washes & gas stations
  • Recreational facilities, e.g., golf courses, tennis clubs, and sports avenues
  • Government buildings, e.g., post offices
  • Senior & assisted living facilities
  • Public & private schools
  • Worship places
  • Student housing near institutions of learning, for example, universities

How does the real estate industry work?

In the real estate industry, six areas work together:

  • Developers – buys raw land and develop it by constructing new buildings and then selling or leasing them to end-users
  • Sales & marketing firms – play vital roles in selling newly developed properties.
  • Brokerage firms – hire licensed real estate agents and assistants to help homeowners and investors rent, buy or sell properties.
  • Properties management companies – if you own a real estate property and you need someone else to manage it for you, property management companies are the ideal choice. They handle daily rental property operations, including collecting rent and facilitating maintenance and repair services.
  • Lenders – provide financial support to investors to acquire real estate property. They include mortgage brokers, national banks, and local credit unions.
  • Service providers – they provide real estate services to investors. They include escrow officers, accountants, financial planners, handypersons, attorneys, etc.

How can you invest in real estate?

  • Rental property – to generate a regular monthly income and equity growth in the long run
  • Wholesaling – you need minimal capital to ‘tie-up’ a property. Later, you can assign the property to another investor and get a one-time wholesale fee.
  • Rehab/foreclosure – here, you buy a property at a low cost and sell high, thus earning a huge profit.
  • Crowdfunding – entails pooling money from numerous investors to purchase or operate commercial properties, e.g., shopping centers.
  • JV partnership – here, two or more investors combine their skills and finances to invest in more major real estate deals.

Knowledge is power, and knowledge and experience come in handy in real estate. That’s why most people begin in residential real estate because it is vast and has high returns.