Real Estate is big business. The value of all the world’s real estate is estimated to be $326.5 trillion!
So it’s no wonder that real estate investing is such a popular topic to learn.
But can you gain all the knowledge you need to become a real estate expert on your own?
Teaching yourself real estate is an achievable feat. Many successful real estate start out teaching themselves and learning through experience. You will need to understand the fundamentals of economics and learn how property is valued and can be impacted by market forces.
Understanding the fundamental concepts of real estate will go a long way in solidifying your success as you venture into the market.
This article will walk you through how to teach yourself about real estate and key considerations to keep in mind.
How to Teach Yourself About Real Estate
To teach yourself about real estate, you need to understand how the industry works before proceeding to take steps that might either make you the next Grant Cardone or drive you head-on into bankruptcy.
Every real estate rookie knows that demand and supply are fundamental concepts, however, to become a pro, you must grasp the subtle and complex art of real estate fundamentals.
The following are some real estate essentials to get you started. These are also the factors that affect the real estate market.
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1. Get Familiar with The Fundamentals of Supply and Demand
Supply and demand are two major driving forces of any real estate market. Together, they establish buyer’s and seller’s markets.
The supply of vacant properties for sale vs. The demand for them determines whether the market is more favorable to buyers or sellers.
Fewer properties with more keen buyers indicate a seller’s market (and hence the best time to invest and become a seller), and vice versa.
Selling in a buyer’s market or buying in a seller’s market is not advisable and would be challenging.
In the former, multiple offers would drive prices sky-high, leading to often undesirable price tags for the buyer and leaving him at the seller’s mercy.
The latter would see the seller being forced to sell at lower prices because of the availability of other options to the buyer.
However, selling in a seller’s market would give you lots of bargaining power, likewise, buying in a buyer’s market. The other party would have no option but to accept your dictated terms.
Here are some useful books to help understand the fundamental of supply and demand better
- An introduction to fundamental & strategies for buying & selling homes by Donna S. Robinson
- Building cycles: Growth and Instability by Richard Borras
2. Understand that Location Means Everything
The significance of location in the real estate market cannot be overstated, as the success of your investment will depend on where it is located.
The location of a property determines the desirability of the property, raising or reducing the demand and pricing.
Residential property values, for example, are highly linked to their proximity to amenities, beautiful vistas, and conditions. Factors like crime rate and historical status are also relevant.
To become a successful real estate investor, choose a location strategically and don’t focus solely on the price.
Below is a tabular representation of the desired location features of different properties.
| Property Type | Desired Location Features |
| Residential | Proximity to amenities |
| Scenic views | |
| Highbrow status | |
| Low Criminal Record | |
| Commercial | Proximity to Marketplaces |
| Proximity to transportation hubs | |
| High population | |
| High employment rate | |
| Strong local economy | |
| Low Crime rate |
3. Realize that Tracking the Median Prices of Real Estate is Crucial
The median price of real estate alludes to the prices of properties that are either above or below the marked price (half of the properties listed are priced above, and half are priced below.)
Knowing when and how frequently to track this data (monthly or quarterly) is essential as prices and sales differ by season.
Median prices indicate where the market is heading and are helpful information for beginner investors.
To get deeper insight on ways to track the median prices of real estate check out the link below.
4. Gain a Deep Understanding on Inflation and its Role in Property Valuation
Inflation has both a positive and negative effect on property values, and it is important to distinguish both.
Inflation positively affects the real estate market, leading to property values and rental income appreciation, however, this victory can be short-lived and pyrrhic.
So even though you might receive more money from a sale owing to inflation, other items will likewise be more expensive.
Here are videos on inflation and how it affects real estate
- https://www.youtube.com/watch?v=bDYc-vkcVLA
- https://www.youtube.com/watch?v=9B1xF8qt-ZM
- https://www.youtube.com/watch?v=ZIHiC9Pgxvc
5. Adopt a Wise Investment Strategy
Keeping your investment strategy simple is the key to long-term success as a novice in the real estate market.
Implementing multiple strategies from the onset will only complicate an already complicated concept and run the risk of bankruptcy.
Keep it simple and straight while biding your time. You can switch to another once you’ve mastered a particular investment technique.
Real estate investments yield returns through appreciation in property value and income from rent or leases, so buying low and selling high is the safest strategy for a beginner.
To learn more on real estate investment strategies, check out these books:
- Timing the Real Estate Market: How to Buy Low and Sell High in Real Estate
- The Book on Rental Property Investing: How to Create Wealth with Intelligent Buy and Hold Real Estate Investing
To learn about how to profit from real estate appreciation, check out these books:
- You can profit from real estate appreciation
- Passive Income, Aggressive Retirement: The Secret to Freedom, Flexibility, and Financial Independence
Common Mistakes to Avoid When Learning Real Estate by Yourself
Learning about Real Estate on your own might be a smooth ride at first, but things can turn sour really fast.
To avoid this, here is a compilation of common mistakes you should avoid especially if you’re teaching yourself real estate.
1. Backing On the Wrong Investment Strategy
This is a common mistake people make while learning real estate. So, before making any investments, it is advisable to research the best-investing strategy for your needs.
2. Avoiding Legislation That Protects Homes and Business Owners
To avoid losing your property and incurring unnecessary costs, be completely aware of all laws and regulations guiding homes and business owners.
3. Exceeding Your Financial Budget
To avoid financial ruin as a beginner, maintain a realistic budget to allow growth while covering unexpected situations.
4. Lack Of Long-Term Investment Plans
To create a realistic long-term plan that takes into account the expected rate of return and risk, do all necessary background checks on your projected investment plan.
5. Doubting Your Abilities
As a beginner, it’s natural to be skeptical about your abilities and skills, but it’s also important to trust your investment approach. Take calculated risks and make wise decisions.
6. Quantity vs. Quality
The more options you have, the better your chances are not always the case in real estate. Before making any investments, conduct thorough research; it only takes one good deal to save you the anguish of trying many bad ones.
7. Spending Too Much Time in The Learning Phase
This is another mistake learners make. Spending too much time in the learning phase undermines the potential of making any real estate investment.
Come out of your shell and implement your real estate strategies.
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Frequently Asked Questions
Q: Can I Learn Everything About Real Estate on My Own?
It would be challenging. In the long term, it’s ideal for you to seek guidance from experts rather than relying just on self-observation and market analysis.
Q: Is Real Estate Profitable?
Real Estate is highly profitable as it is one of the few investments that almost never depreciates, meaning the values are continuously rising.
Q: How long will it take to sell my property?
It can take four to six weeks after it is listed on the market to sell. If the market is inactive and negotiations stall, it may take months.
Q: What Is the Most Important Factor to Consider While Venturing into Real Estate?
Location. A property’s size, value, and condition can all be changed, but its location cannot. A single incident could discourage potential purchasers from trying to buy a house.
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Final Thoughts
To be a successful self-taught real estate investor or agent, you must first master the fundamentals.
We’ve taken care of all the basics in the body of the article, so before putting your money into any real estate scheme, do well to understand all that we’ve discussed above.
References
- https://www.mashvisor.com/blog/how-to-become-a-real-estate-investor-8-steps/
- https://www.opendoor.com/w/blog/understanding-fundamentals-of-real-estate-market
- https://www.investopedia.com/articles/investing/110614/most-important-factors-investing-real-estate.asp
- https://www.investopedia.com/articles/mortgages-real-estate/11/make-money-in-real-estate.asp
- https://www.investopedia.com/investing/simple-ways-invest-real-estate/
- https://www.investopedia.com/terms/r/realestate.asp#:~:text=%20Understanding%20Real%20state%20%201%20Land%20refers,benefits%20and%20rights%20inherent%20in%20the…%20More%20
