Owning Real Estate
Real estate can involve numerous types of transactions, the most important being buying and selling property. These actions require decisions about a home’s worth, the state of the market and what type of sale or ownership would be best. Learn more about buying and selling real estate.
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A mortgage is probably the largest loan you’ll ever take out. It allows you to buy a home and slowly pay it off over one or several decades. That way, you can invest now in a home that will likely gain worth over your lifetime. Home equity is the value of the home minus your mortgage. Learn about mortgages and home equity.
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Dealing with Real Estate Debt
Real estate is a valuable asset which you can use to your advantage. Refinancing your mortgage, taking out a second mortgage or using a home equity loan can give you extra cash, but you may be stuck in debt for years longer. Learn how to use real estate to take control of your finances and reduce your debt.
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Types of Real Estate
There are three main types of real estate: residential, commercial and investment properties. Residential, owner-occupied homes are the most common forms of U.S. real estate, with more than 130 million residential housing units as of 2010. Real estate that is used principally to conduct business on the premises is classified as commercial property. An investment property is one the owner uses to generate income. The investor does not live in or use the property. Rather, someone else leases the property, generating income for the landlord.
Real Estate Risks and Rewards
Owning real estate comes with its fair share of risks and rewards. Among the risks are the following:
- Declining property values as a result of volatile housing markets
- Liability for any negative actions that happen on your property
- Increased debt in the form of mortgages
Real estate’s possible rewards include:
- Short-term profit for investors in an improving housing market
- Leverage for financial opportunities like loans and business development
- Diversification of investment portfolios
About The Author
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].
- United States Census Bureau. American Housing Survey for the United States: 2009. (2011) Retrieved from http://www.census.gov/prod/2011pubs/h150-09.pdf
- Cummings, J. (2008, Aug. 11). Real Estate Finance and Investment Manual. Retrieved from: http://books.google.com/books?id=92UbiGPsDBcC&pg=PT46&lpg=PT46&dq=wealthy+often+have+real+estate+in+portfolio&source=bl&ots=lC6214Dx3R&sig=FayKK6iyJQNC5_xB4OEHwBjUTn0&hl=en&sa=X&ei=7oB_T8r5NJKi8gT09Z3UBw&ved=0CEQQ6AEwBQ#v=onepage&q=wealthy%20often%20have%20real%20estate%20in%20portfolio&f=false
- Marquand, B. (2010, Oct. 26). Why didn't more economists predict the housing market collapse? MoneyRates.com Retrieved from http://www.money-rates.com/blog/2010/10/why-didnt-more-economists-predict-the-housing-market-collapse.htm
- Advantages of Buying Repossessed Homes. Retrieved from http://www.realtytrac.com/foreclosure/Repo/repossessed-homes-advantages.html
- What are the risks in owning real property? Retrieved from: http://real-estate-law.freeadvice.com/real-estate-law/real-estate-law/risks_real_property.htm
- What is commercial real estate? Retrieved from http://real-estate-law.freeadvice.com/real-estate-law/commercial_real_estate/commercial_real_estate_definition.htm
- Real Estate Glossary from the National Association of Realtors http://www.realtor.org/ncommsrc.nsf/files/commercial%20real%20estate%20glossary.pdf/$file/commercial%20real%20estate%20glossary.pdf
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