Annotation
Introduction
What is real estate and how it works
Capital for real estate development
Real estate managing
Real estate contracts
The facility manager’s role in real estate management
Conclusion
Bibliography
List of terms
Introduction
In any social structure, real estate occupies a special place in the system of social relations, the functioning of which in one way or another is connected with the life and activities of people in all areas of business, management and organization. The fact is that it is real estate that forms the central link of the whole system of market relations. Real estate is not only the most important commodity that satisfies the various personal needs of people, but also at the same time capital in an eternal form, generating income. Investments in them are usually investments for profit.
What is real estate and how it works
Real estate is the property, land, buildings, air rights above the land and underground rights below the land. The term real estate means real, or physical, property.
Real estate also refers to producing, buying and selling real estate.
Everyone who buys or sells a home engages in real estate investing. That means you must consider several factors. Will the house rise in value while you live in it? If you get a mortgage, how will future interest rates and taxes affect you?
Capital for real estate development
Development capital refers to money used in the development of real estate or business ventures. In the case of real estate, development capital is money used for the construction of a new property or rehabilitation of an existing building. In a business venture, development capital refers to money used to start, maintain, or grow a business.
Real estate development capital refers to the money needed to develop a property, like demolishing existing structures, clearing and grading land, and preparing the site for a vertical structure like a house, apartment building, or retail store. To obtain this type of capital, an investor or property owner usually first creates a plan to submit to potential lenders. This plan usually cites proposals and bids from licensed contractors and builders estimating the overall construction costs to develop the real estate. Lenders assess the value of the potential development to determine how much capital they will lend to the real estate owner or speculator. This loan is paid back through the future rental income of the real estate or through the final sale of the property.
Business development capital refers to money used in the “development” of the business. This can be start-up capital to get the business running, working capital to keep the business running, or expansion capital to help the business grow. The capital could be used to purchase new equipment, add additional business locations, or increase existing lines of business.
Real estate managing
Rental property management refers to managing residential or commercial real estate. Property managers work for property management companies to manage and rent out real estate owners' properties. Residential properties range from furnished to unfurnished, urban to rural and apartments to houses. Commercial rental property management may involve managing either office space or industrial warehouses.
Companies that manage rental properties for owners charge the owner a management fee. In most cases, the fee is a percentage of the rental income received by the owner. Property owners decide to work with property managers if they are able to make a good profit on their rental investment. By hiring a rental property manager, the owner may live in another city or country and receive rental payments. Many rental property managers also help clients find rental properties to invest in.
Property managers send monthly rental payments to owners along with accounting statements and other records that pertain to the rental property. The rental property management company's fee usually includes checking tenant's references, collecting rent, maintenance and repairs of the property and inspections of rental units along with the accounting and reporting services provided to the owner. A property management company may charge the owner for advertising costs associated with rental properties.
Real estate contracts
A real estate contract is a contract between parties for the purchase and sale, exchange, or other conveyance of real estate. The sale of land is governed by the laws and practices of the jurisdiction in which the land is located. Real estate called leasehold estate is actually a rental of real property such as an apartment, and leases (rental contracts) cover such rentals since they typically do not result in recordable deeds. Freehold ("More permanent") conveyances of real estate are covered by real estate contracts, including conveying fee simple title, life estates, remainder estates, and freehold easements. Real estate contracts are typically bilateral contracts (i.e., agreed to by two parties) and should have the legal requirements specified by contract law in general and should also be in writing to be enforceable.
It is a legal requirement in all jurisdictions that contracts for the sale of land be in writing to be enforceable.
The common practice is for an "exchange of contracts" to take place. This involves two copies of the contract of sale being signed, one copy of which is retained by each party. When the parties are together, both would usually sign both copies, one copy of which would be retained by each party, sometimes with a formal handing over of a copy from one party to the other. However, it is usually sufficient that only the copy retained by each party be signed by the other party only. This rule enables contracts to be "exchanged" by mail. Both copies of the contract of sale become binding only after each party is in possession of a copy of the contract signed by the other party—i.e., the exchange is said to be "complete".
The facility manager’s role in real estate management
In an industry that requires careful management of physical property operations, personnel, and finances, an asset plan provides the necessary direction for successful real estate management. The asset plan is designed following an in-depth analysis of the property and its position in the market. It implements the owner’s objectives in the property’s management, and it is typically developed within 60 to 90 days of a property acquisition. An asset plan may also be developed when a property is transitioned from one asset manager or asset management company to another, or on an annual basis, as a part of the ongoing management of an already-owned property.
For a facility manager, asset plans are most likely part of the ongoing management, but there may be times when you are also asked to contribute to due diligence on new acquisitions, as well. Before recommending any plans for a property, you need to effectively understand what exactly is owned. Thoroughly answering the question “What is owned?” requires extensive research. It is not enough, for example, to state simply that a ten-story office building is owned. Rather, the answer warrants a detailed response that includes specifics about the property and its surrounding market. A complete understanding of a property should evolve from three specific areas:
• Legal document inspections
• Physical property review
• Market analysis
Aspects of each of these can be supported by a facility manager, but none more so than the physical review. Physical inspections, in most cases, take place following the review of legal documents. Standardized checklists are an effective and efficient means to make certain that no areas are overlooked. Many managers find it essential to take along a camera and tape recorder to document areas of interest or concern, as well.
Conclusion
The importance and significance of real estate for its owners and for the state have led to the existence of a special legal regulation of issues related to real estate. The legislation contains many regulations on the use of real estate, the rules for its acquisition and sale.
Real estate objects, acting as the basis of social production, are the basis of economic activity, the development of enterprises and organizations of all forms of ownership. Real estate has the features of a product that is sold and bought, i.e. drawn on the market.
The responsible management of rental properties makes it necessary to always be on the lookout for new real estate investing opportunities. Making a solid real estate investment helps to enhance the profitability of owning properties for rent, while also providing the landlord with more options for potential tenants in terms of location, apartment size, and building styles. As with many businesses, owning several properties offering different amenities can also make it possible to retain a good tenant who has outgrown one property but is an ideal fit for another property owned by the same landlord.
