One of the most popular businesses is real-estate because properties are high value, it has the potential to make someone very rich very quickly. If you’re interested in the real-estate business, this article will offer you a way to get started.
For people who start with limited capital, they tend to start by becoming a ‘real-estate agent’. A real-estate agent acts as the middleman between the property owner and the interested buyer. They earn a commission when a transaction does take place at around 3% for the selling price. This all depends on the agreement between the agent and the seller.
The person responsible for that commission is usually the seller, because it is the agent acts as a salesperson for the seller. Being a real-estate agent is popular because it is very easy to get started. The success of a real-estate agent rests upon the ability to find buyers. The more buyers an agent finds, the better the opportunity to close a deal.
For those with some capital on hand, another popular real-state business is renting out property. These investors start by purchasing property, perhaps a condominium or a house, and either rent out rooms or the entire property. If you have enough capital, you might consider investing in the construction of an entire dormitory or apartment to receive income in the form of rent from multiple tenants.
Investing to rent out property is considered a form of ‘passive income’. While it is a popular way to earn passive income, there are several cautionary remarks to note in comparison to being a real-estate agent. As an agent, the cost of a non-deal may be transportation cost. As an investor who rents out property, if you cannot find a tenant, you will be faced with what is called ‘depreciation’, which is the main cost of this model of real-estate business. Therefore, to prosper in this business model, you must know your target tenant group, competitors, competitive pricing, and competitive quality.
3. Trading property
The last type of real-estate business is ‘trading property’. It is the most high-powered money-makes-money real-estate model. It requires a deeper understanding of real-estate than the other two business models and is, of course, risker as well. The concept is simple: buy low, sell high. Many investors buy during the pre-sale period when prices are low with special discounts. Many of you may be familiar with the popular trend of buying ‘Preemption Certificates’. Preemption Certificates typically cost less than 100,000 baht. If we hold the certificate, we will enter the period of paying installments for the down payment. Most people, however, look to profit from selling the certificates to another buyer by selling at a higher price. For instance, let’s say we bought a certificate for 50,000 baht and we later sell the certificate for 100,000 baht. We’re making 100% profit in just a short period of time. In many instances, investors make up to 500% of this type of business.
However, investing in preemption certificates is extremely high risk, because if you are unable to sell the certificate in time, you may not want to lose the certificate for free and may have to enter into paying installments on the down payment. This is the period in which you cannot rely on financing from financial institutions. You’ll have to invest your own money. And if you invested in multiple certificates at once, you may be looking at a huge amount of investment capital ahead.
Another way to invest in real-estate is to purchase a home or condominium and enhance its value by renovating the property and reselling at a higher price. The return for this type of investment is typically higher than renting out property and real-estate agents. However, this business model requires expertise in home design and negotiations with contractors to reduce cost.