In order to achieve this answer, first we have to know what the concept of real estate itself is and how it works, and then we can understand how these companies earn money. Real estate business it defined the profession of buying, selling, or renting land, buildings or housing. It is also a legal term used in jurisdictions whose legal system is derived from English common law, such as India, United Kingdom, United States, Australia, and New Zealand. Real estate agents work for real estate brokerages, and they earn money via commissions when they assist buyers and sellers buy or sell homes.
The most common way real estate offers a profit: It appreciates. That is, it increases in value. This is achieved in different ways for different types of property, but it is only realized in one way: through selling. However, you can increase your return on investment on a property in several ways. The most obvious source of appreciation for undeveloped land is, of course, developing it. As cities expand, land outside the limits becomes more and more valuable because of the potential for it to be purchased by developers. Then developers build houses that raise those values more.
Buying on low price is another form of profit for real state companies, as you turn an instant profit if you manage to buy a property for under market value. Think foreclosures, quick sales, and awesome negotiation skills. Renting smaller units it’s also an option for a lot of real estate companies, per example: i rent three rooms by the room, to three tenants. I can charge more than if one family was renting the whole place. You can divide your family house into a duplex or a triplex and increase the rent.
Also, real estate is a best business to deal with than stock market. Why? Because stock market is much more volatile than real estate.
That means if you buy 1,000,000 shares of a penny stock valued at $0.05, the trading company will not require that you fund your account with the full $50,000, it will let you buy the shares with only $5,000, BUT if the share goes down to $0.045, which it almost certainly will, you will get a margin call and your whole account balance will be wiped out.
With real estate, you can put the same $5,000 as a deposit on a $50,000 or even a $100,000 house, and rent it. If you have a renter, you don’t really care about the ups and downs of the market, as you are able to meet your monthly repayments. If the property sits empty for a while, all you have to do to keep it is pay the mortgage yourself. It isn’t fun, but it is much better than seeing your whole trading account annihilated by a margin call.
As real estate is a very complex subject, with a lot its own terminology and vocabulary, along with a lot of tricks and game secrets behind the scenes, we highly recommend you to go out and find more information.