Real Estate Development Is First And Foremost A Cash Flow Business

Real estate appraisal is a service performed, by an appraiser, which develops an opinion of value based upon the highest and best use of real property. The highest and best use is that use which produces the highest possible value for the property.

This use must be profitable and probable. But it has a drawback.

"Real estate already is volatile and risky – like the stock market," says Shiller. "And the risk is increasing. The impression that real estate market only goes up is wrong. We need hedging for both sides." Real estate or immovable property is a legal term (in some jurisdictions) that encompasses land along with anything permanently affixed to the land, such as buildings. The terms real estate and real property are used primarily in common law, while civil law jurisdictions refer instead to immovable property.

In spite of the name, real estate has no connection with the concept of reality (in other words, the law does not consider real property more "real" than personal property). With the development of private property ownership, real estate has become a major area of business.

Property must be related to business or investment - Exchanged property must be held for productive business or investment use and traded for the same use.

Real estate investing will make you a lot of money if you learn the techniques and apply yourself. The bottom line is that education will help you avoid mistakes and learn new ideas. Read books, go to seminars and learn from other investors. Your best investment is in yourself.

The process of real estate development: ------

Although the process for development of real estate varies from project to project, the various phases can be categorized roughly as follows (in approximate chronological order):

Market research

Site selection / feasibility analysis Due diligence / preliminary pro forma Property acquisition

Project design / refined pro forma Obtain entitlements

Financing / final pro forma Construction

Lease-up / sales Operation (in cases where the project is retained as an asset)

The more knowledge of real estate investing techniques, financing, acquisition, negotiating and, of course, your local marketplace, the less risky your investments will be.

Successful real estate developers can become enormously wealthy due to the large sums of money being transacted and the assets they control.

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