Investing in real estate can be a profitable business if you know the tricks of the trade. To make this a successful venture, it is imperative that you understand the basic concepts of real estate investment finance and how it works. Investing in real estate not only means acquiring a piece of property but also ensures your continued financial stability. For this reason, you must have an overall understanding of the subject before actually jumping into the business. Click Here to learn more about investment financing.
Investing in real estate finance starts with real estate valuation. The process involves identifying the property’s appraised value and studying it to determine whether it is undervalued or overvalued. A real estate valuation determines the current value of the real estate and compares it with the prevailing market prices. While learning to invest in real estate finance through MSc, you will gain first-hand knowledge from instructors on conducting the most thorough valuation of the real estate. This enables you to make informed decisions regarding the purchase and selling of the property.
As part of your real estate finance learning package, you will also be introduced to financing through different modes such as borrowing, street trust, mortgage, commercial mortgage, and other unsecured financing options. As a real estate investor, you need to access several financing sources to acquire new properties and upgrade older ones. These methods include borrowing, co-signing, investor loans, construction loans, and development partnerships, among others. Learning about these various financing options allows you to pick the most reliable one to use when you need it most.
Another subject that you will learn during your MSC includes public policy and business ethics, which are essential components of real estate investment finance. You will learn about the different approaches that government takes to regulate small businesses and even insurance companies. Public policies are designed to protect investments by ensuring that the risk associated with investing is kept minimal. Businesses, meanwhile, are required to abide by laws set by labor organizations, the government, insurance companies, and other relevant industries to ensure fair practices in their business operations.
Public policies include those that affect property used for commercial purposes. These include environmental laws and rules, building codes, occupational health and safety regulations, zoning restrictions, and land-use policies. One of the significant reasons why investing in real estate can be so profitable is that real estate’s economic characteristics constantly improve over time. For example, real estate values increase as the years go by since the number of new constructions is generally higher than the number of old buildings.
As part of your MSC, you will also learn the different approaches that different real estate markets take to value properties. Both government-sponsored and privately-sponsored programs help provide guidelines on determining the actual value of a property. You will study the historical trends of value improvement, take note of any changes in appraisal standards and trends, and learn about the best ways to approach the assessment of a property’s value. You will understand the importance of a proper valuation and what should be considered in a valuation.
Investment finance can also include the practice of real estate financing. Financing allows investors to borrow funds and make monthly payments without paying interest for a fixed period. When it comes to real estate financing, you will need the assistance of a loan officer, a certified public accountant, an attorney, and a financial planner to handle the plan’s details. Finance options include property investment trusts, venture capital funds, commercial real estate loans, investment-grade bonds, mortgage-backed securities (BMBS), commercial real estate loans, and real estate exchange-traded funds.
The last part of your MSC coursework focuses on studying various investments, including private equity real estate loans, wealth management funds, corporate real estate investments, alternative capital investments, and real estate owned investment partnerships (REO). These investments fall into several different investment asset classes, including investment-grade bonds, money market funds, junk bonds, GIC’s (guaranteed loans), and other financial markets. All of these different investment asset classes have their advantages and disadvantages that must be evaluated, and all factors of risk should be considered. One important lesson you learn is that there are different time frames in which an investment may be profitable. You may know the different periods through graphs and case studies in the MSC program.