Knowledge Of Real Estate Can Be Essential For Success

Written by Posted On Thursday, 01 August 2019 15:54

Success in business is obtainable in multiple ways. Over time we have seen an industry shift as to how companies market to clients and the instant response clients expect in return. It is not unlikely to hear of significant franchises shutting their doors down falling from an empire once built. However, not all businesses are wise to follow the trend of shutting down their brick and mortar store, to only pop back up online. 


An example would be McDonald's. What makes McDonald's so successful? Many answers come to mind from convenience, menu options to marketing. Although these factors may have contributed to McDonald's success, the real nucleus of their success stems from real estate. Real estate has played a critical role in the value of the franchise, securing prime locations around the world. 

McDonald’s Is In The Real Estate Business

Once McDonald’s hit a certain momentum, it became more cost-effective for the company to operate as a real-estate enterprise. Essentially, management gets to know where McDonald's stores will likely be franchised out by locals and will buy that land and lease it to them. If the outlet doesn’t work as it should, they refuse to allow the franchise to remain, or they ship in another one.


Knowing real estate is essential for more than just property buyers and sellers in successful real estate firms. As an individual, real estate acumen can propel you into surprising areas of success. The key is in adjusting the way you think about real estate. Don’t consider it linearly, abstract it. Abstractly, the land is money; therefore, real estate is like precious metals or precious stones. You can invest in real estate, and see a return on your investment.

Value Fluctuation

Scenarios that affect real estate value may fluctuate in surprising ways. Changing your perspective will be essential if your goal is to approach real estate for profitability. Individuals who are new to investing may begin with their first income property or home flipping opportunity. This can be approached with two end goals in mind, either to maintain a certain level of cash flow or to reap the benefits of the home appreciation in the certain given period. 


You can sell it, and turn that money into something else, or you can keep it as a PIG, or Passive Income Generator. Owning a house someone rents makes you a Landlord, and if you buy right, you can see some profit through cash flow or the property’s appreciation. You may eventually branch out into apartments or duplexes, increasing your portfolio of investments Take a cue from neighborhoods that are of this variety, like apartment communities that have been designed as economic centers.


For instance, we can examine a particular neighborhood in a bigger city, to understand the elements which contribute to the value of the real estate. Certain communities have other value-adding factors which make them worthy real estate acquisitions.


Additionally, you may consider purchasing land itself around where such infrastructure is being installed. To complete this, real estate agents are required to become market experts. Focus on a particular neighborhood and understanding all the past, present and future elements that would contribute to the area, and how this would affect the real estate value. For example, if a city has plans to construct a strip of new businesses or community center shortly, the homes in that neighborhood would increase in value.  Carrying this knowledge will help either home buyers or investors to evaluate their investment by calculating the future potential. 

A Possible Approach To Establishing Personal Wealth

Consider this strategy: you take a loan out on a home with a co-signer. You start small; maybe an apartment in the $100k range, depending on the area you are interested in. 


Next, calculate the total cost required for carrying the house on a monthly basis and compare the rent prices in the neighborhood to arrive at your final offering. Setting a rental price too high, compared to other similar properties in the area, would leave your property vacant. On the other hand, placing the amount too low diminishes the opportunity to maximize your profits. Depending on the home layout, it may also be in profitable to separate the units within the property, if allowed by the local law, to increase your cash flow. Many investors rent out the basement as a separate unit than the top or main floor of the house. 

As you pay off the debt, you research upcoming development plans in your community. When you own the house, you sell it and turn the money into a piece of land a company is looking to utilize for a high-profile shopping district. You sell the land for a markup on what you bought it for, then turn that profit into other real estate ventures.


Granted, this is a risky venture, and you’ll want to do your homework; but if you’re savvy, you can control the “supply” of land such that its “demand” initiates profit. You’re looking at perhaps a ten-year plan, but if you can double your money on the initial real-estate deal, you can increase it again and again within the following years using similar strategies, ultimately leading to cumulative success.


Lastly, whatever properties you own, enhance them. This can be achieved in a variety of different ways, such as installing solar panels, cut down utility costs, get a tax break, and increase the value of the property. The key to real estate is patience and maximization of existing resources. A strategy can be used in every step of the process. Having a defined roadmap, building your knowledge base and asking the right questions with calculations to follow all contribute to creating wealth through real estate. 



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AJ Philips

AJ is a passionate writer who likes to share what he's learned for the day - and he learns something new every single one. His expertise in the real estate comes from both personal and professional experience, and AJ is happy to break down the complexity of the real estate world for everyone.

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