Real Estate Training

The real estate market has taken a strange turn in the last few years. Thousands of homes have been sold and or built all across America. Each time someone lists with an agent there is a commission paid when the house sells. The agent has certain duties to perform in order to get paid this fee. The agent went through real estate training in order to know what these duties are.

The training can differ from state to state. Most of the classes cover the same basic material. There are things an agent, no matter the location, must know. How to measure square footage is one. Determining the fair market value of a house is another. Real estate training prepares someone to go into the field and list a house. The information will also teach how to sell.

Real estate training classes are now being offered over the Internet. Some states, like Ohio, will not allow this type of training. Ohio requires the classes be from an accredited technical school or college. Some of the classes required are things like Principles and Practices of Real Estate, Finance, and others similar to this. Once the classes have been taken and passed, the student can apply with the state to take the real estate license test.

The agent does not actually possess the license. It is issued to the broker the agent will be working with. The license can be placed with another broker should the agent decide to switch. The agent can also put the license in escrow with the state to take a leave of absence from the business. In order to keep the license, an agent must take continuing education real estate training.

In real estate training, the student will also learn about finance. These classes will teach how to amortize a mortgage. It will teach the students about interest rates, points, premium mortgage insurance, and other financial matters. Students must know how the financial aspect of real estate works. Being an agent means pre-qualifying the buyer to ensure he or she can afford the property being looked at.

Agents with a license have learned through real estate training how to attract buyers and sellers. The agents will know how to list a home within the price range dictated by the market. They will be able to calculate what the seller proceeds will be after a sale. The agent can determine a ball park figure for house payments when the buyer asks. The agent will have been trained to do his or her job.

Real estate training is good for someone who is thinking about investing in the market. The person can quickly assess a property to determine if it would be a good investment. They would be able to calculate payments and financing with the training offered.

The cost of the real estate training classes is substantially less than any other professional license. The time involved is less too. In many states the real estate training classes can be finishes in 6 months or less, depending on scheduling. There are some states where licensing can be completed in two months from the day of the first class to the day of the state exam. For someone wanting a career with very little up front investment, real estate training may be just what is needed.


How Real Estate Investing Can Make You Money

Property purchased as a personal residence is the typical way many care for the needs of their family; but other than a minimal tax write off for interest expense, and perhaps some accumulation of wealth through appreciation, the benefits of home ownership are not measured in the same financial terms as properties acquired through real estate investing.

Home buyers are looking for safe tree-lined neighborhoods, good school districts, an ample amount of bedrooms and bathrooms, and beautiful open floor plans.

Real estate investors never buy investment property based upon these things other than how they might influence rents and occupancy.

Real estate investing is not about how beautiful the property, but rather how much the investor’s return on investment. Or as one investor once told me, “Only women are beautiful. What are the numbers?”

Fair enough. So let’s talk numbers.

The benefit of real estate investing boils down to four ways investors plan for to make money on investment property.

1. Cash flow

The primary purpose of most property investors, of course, is rent out space in their asset with the intention to collect rental income.

Cash flow is generated after the property’s operating expenses and debt service (i.e., mortgage payment) are deducted from this rental income. When more cash comes in than goes out the result is a “positive cash flow” that becomes periodically available to the investor on a regular basis.

2. Tax Shelter

Real estate investment also provides investors the benefit of being able to legally reduce his or her annual or ultimate Federal income taxes generally by allowing the owner to take deductions for the following:

  • Acquisition costs – Most costs incurred at the time of purchase are deductible in the year of purchase.
  • Property expenses – All expenses incurred in the operation of the property are deductible.
  • Mortgage interest – The interest paid on the mortgage is deductible.
  • Depreciation – The IRS also assumes that your buildings are wearing out and becoming less valuable over time and therefore allows you take a deduction for that presumed decline in what the tax code calls cost recovery (i.e., depreciation).

Of course there are nuances and exceptions in all tax matters that every investor should always discuss with a tax expert. But you get the idea.

3. Loan Amortization

Loan amortization is a periodic reduction of the loan over time. In other words, with a fully-amortized loan (i.e., not interest-only) each payment made reduces some amount of principal. The benefit surrounding real estate investing is that each time tenants pay the rent they are virtually paying down the debt and therefore helping the investor to buy the property.

4. Appreciation

Appreciation is certainly not exclusive to rental income property. For any property sold for more than its original purchase price would benefit from appreciation whether it be a personal residence or office complex.

With investment property, however, the owner doesn’t necessarily have to leave appreciation to chance the way a typical home owner would. The truth about real estate investing is that investors buy the income stream of a rental property.

As a result, the more income stream a landlord can generate, perhaps by lowering vacancies or reducing wasteful expenditures, the more they can expect their property to be worth; and the sooner they can impose these changes, the sooner their rental property is likely to appreciate.

Rule of Thumb

Real estate investing has proven to make money for investors. But it’s not dictated by the same emotional feelings that may lead you to purchase a home for your family. It’s all business. So approach it logically and always run all the numbers carefully before making any real estate investment decision.

Here’s to your success.


Real Estate Investing Produces Extraordinary Profits

Imagine making $5000 a year from real estate investing without recognizing you are real estate investing!

Real estate values are so dynamic. The marketplace is always fluid and changing. The only constant is the eventual escalation of value.

Suppose you had owned that little piece of property in your neighborhood years ago where McDonald’s is located today. If you had owned it for 20 or 30 years, what would your profit be from that sale?

Real estate values fluctuate in cycles and according to a myriad of owner situations. However, the price of real estate almost always goes up.

Let me give you a real-life example. (And if you are old enough, you have your own similar story!)

In 1970 I bought a little house in the Green Hills section of Nashville for $27,000. You know it wasn’t much because of the price. But it was home, and the location was respectable.

In 1978 I sold that house for a bigger house in Green Hills. The sales price for that little house I sold was $67,000.

That’s when the light bulb went off in my head! I suddenly realized that I had profited $40,000 from that little house in only eight years. I hadn’t added any more rooms or a patio. And I hadn’t even painted. I was witnessing first-hand how property values increase, often drastically!

I made a $5000 profit per year from that house, just from living in it.

It was an amazing discovery to me. It had been a reality forever, but it was no longer a vicarious experience in my mind. It was alive, because it was happening to me. And it changed my view of the world. That personal experience led me to start a real estate investing career.

I still live in Green Hills, and I pass that house every day on the way to the post office. That house recently sold for $200,000. Same size. Same location. But a phenomenal increase in value.

Asset growth from $27,000 to $200,000 is pretty astounding. And while the asset growth ratio varies from property to property (and city to city), real estate values generally increase. Even owning and maintaining your personal residence is cash generation right under your nose. I can’t believe I was so dumb not to see it before it became so apparent.

If even home ownership can be so profitable, can you fathom the profitability in real estate investing?