Tag: investment

The Basics of Real Estate

Real Estate is a popular investment option for those looking to diversify their portfolios or simply swap out renting for owning. However, the business of real estate is complicated and carries risks.

Real Estate

It begins with raw land and continues through development to finished buildings. The effort and money used to improve a piece of land is often a sizable fixed investment. For professional help, contact Trophy Point Realty Group.

Land is the basic building block of real estate. It is a specific area of the earth with clearly defined boundaries that has been claimed and controlled by an owner. There are many different types of land, including residential, commercial, agricultural and transportational land. The type of land determines how it is used and its value. Land valuation can also be affected by its location. For instance, land close to public transport and healthcare facilities, schools and supermarkets or stores will have a higher valuation than land far away from these places.

The term land is also sometimes used to refer to a piece of property that contains buildings, and in other instances to refer to the entire surface of the earth, including the airspace above it. The latter is more generally known as real property. The holder of a fee simple title to land owns all the rights to it, including the right to mine, build and develop it. He or she can also transfer the rights to others through legal transactions or as a gift.

In addition to the above, a piece of land can contain natural resources such as water or minerals that may have economic value. These resources can be extracted for a fee from the land and sold, and are usually recorded as assets on a company’s balance sheet.

As a commodity, land is typically seen as one of the most valuable assets a person or business can own. It is a long-term investment that can produce significant returns, and it has the added advantage of being scare, meaning it will always be in demand.

A lot of people and companies invest in raw land, often with the intention of developing it for a particular purpose. This can be for residential or commercial use, or it could be for a particular industry such as agriculture, mining or energy production. These developments take time to complete and are expensive, but they can produce a steady flow of income for the investor and are a vital part of any economy.


Buildings are structures – including homes, office buildings, strip malls and apartment towers – that sit on top of the land. They can also be beneath the ground, such as an underground parking lot for a shopping center or warehouse. New buildings get their start during the real estate development and construction phase, when developers, municipal officials, architects, engineers and builders come together to create something that satisfies the need for a particular type of housing or commercial space.

Residential property includes both new construction and resale houses, as well as condominiums, co-ops, townhouses, duplexes, triple-deckers, quadplexes and high-value homes. Then there’s the commercial real estate, which encompasses shopping centers and strip malls, offices and hospitals, as well as hotels and resorts. And finally, industrial property encompasses fabricating buildings and land. These properties may be used for research, manufacturing, warehousing or distribution. They are often leased out, rather than owned and occupied. Vacant land and raw, working farmland are also considered real estate, as well as the land in the development stages for the other three types of property.

Property Rights

Property rights are the concepts that determine how resources can be legally accumulated, held, altered or transferred. They are a key element of economics and the cornerstone of market exchanges. Different societies have very different sets of laws and customs that govern these rights. These underlying economic institutions have profound impacts on everything from the daily lives of citizens to a country’s economic health and growth to its international relations.

Property includes both physical and intangible objects, such as land or a house, as well as intellectual property such as patents or copyrights. Private property is a concept based on natural law principles that were embraced by the founding fathers of the United States and the drafters of the Fourteenth Amendment. These principles include ownership and control over private property, the right of property owners to exclude others from their property and the rights of property owners to use, sell or transfer their property.

A fundamental aspect of property is the ability to enjoy it. Owners of property have the right to do whatever they wish on their properties — as long as it doesn’t violate the law. They can plant a garden, grow crops for sale or to consume, build structures, use the surface of their land and even mine the soil beneath it. Owners can also grant or lease their rights to others. They can also sell or bequeath their property to heirs.

Besides the right to enjoyment, property rights also include the right of exclusion, which gives owners the power to determine who can or cannot enter their property. This is one reason why property owners want to protect their homes and other dwellings with fences, gates or security systems.

While the holder of property rights has these broad and expansive rights, the Supreme Court has recognized that the government can limit some uses of private property under certain circumstances. It can do so under its general police powers, which are primarily used to protect public safety and health, or by using the power of eminent domain, which allows the government to take private property for a legitimate public purpose, such as building a mall, after paying fair compensation to the owner.


Real estate contracts are the legal documents that form the basis of all real estate transactions. These contracts must contain certain essential elements to be valid and enforceable under the law.

One of the most important requirements is that both parties must knowingly and willingly agree to the terms and conditions of the contract. This requirement ensures that there is no fraud or misrepresentation, and that both parties understand the terms of the agreement. In addition, the contract must clearly identify the subject property and its physical address. A legal description is preferred, but is not required. The contract must also contain the names and signatures of all parties involved in the transaction.

A real estate contract must be in writing in order to be enforceable under the statute of frauds. This is a common law rule that states that any oral agreement or promise concerning real property is not enforceable unless it is in writing. The exception to this is if both parties are known to each other and the transaction is not unusual.

Besides the requirement that both parties must knowingly and willingly accept the terms of the contract, there is another legal requirement in a real estate contract: consideration. Consideration is anything of legal value that is exchanged for the transfer of property from one party to another. The most common form of consideration is money. However, some other forms of consideration such as labor and services, goods, and even love and affection may be used in a real estate contract.

Many real estate contracts have contingencies, or waivers, attached to them that allow the parties to cancel or modify the terms of the contract based on the circumstances of the sale. For example, a mortgage contingency is a common contingency that allows a buyer to cancel the contract within a specified period of time if they cannot get financing to purchase the property.

A real estate contract may also contain a disclosure statement, which is a document that discloses any significant defects or problems with a property. This is usually required by law for any property that is being sold in the States. These statements can help protect buyers from a lot of trouble down the road by giving them a clear understanding of what they are purchasing.