An Introduction To The World of Real Estate

"You are all here for one purpose ... Make Money"

That's how Amanullah Panjwani broke the ice in our first class of real estate management.

Honestly, his judgement is as close to truth as white is to white. No matter what be the background of any participant and whether his goals are of short term or long term nature, the purpose is to make as much money out of the knowledge learnt during this course as possible.

A brief overview of the real estate industry is what I'll try to cover in this blog post.

A real estate agency is the first thing that comes to one's mind when thinking about property business. However, it is only one of the three major ways of making money in real estate business. The other two are investment and operation. Let's have a closer look at each one of these.

Real Estate Investment means aqcuiring real estate for the purpose of either generating an income through it, mostly in the form of rental charges, or holding it to be sold later when the price increases. A lot of capital and risk is involved with investment activities, however the gains are rewarding as well.

Real Estate Operation is another division that involves lots of money. Here the real estate entrepreneur engages in buying as well as improving the condition of his real estate for significant gains.

It's the operation part of real estate that consists of activities involving the development of land and construction of buildings. New housing schemes are mostly vacant tracts that real estate developers buy in wholesale and in not-so-great condition, and invest money to improve and develop these wild pieces of land into smaller plots that can be marketed to the general public. The development of streets within the housing society in addition to securing road access and public utilities is also an important aspect of this real estate operation.

Apart from the land, real estate operation also involves construction of buildings and structures either for a one-off sale or recurring income generation purposes.

Real Estate builders and developers belong to this division of real estate business.

Real Estate Agency, last but not the least, means dealing in real estate on behalf of others. These deals could either be buying and selling of real estate between two parties as negotiated through a real estate broker of the appointed agency or these can also include rental agreements for residential or commercial properties, again assisted via the real estate broker. Apart from the brokerage activities, an agency also has to dedicate management staff towards keeping a positive balance between its income and expenses.

Setting up a real estate agency is the lowest cost option and needless to say attracts more businessmen than the other two divisions of real estate business.