What exactly is RE
I’m currently a senior in highschool and I’m curious as to what exactly RE is. Is it a facet of banking that involves realestate, is it a field that specializes in investing in realestate. (Sorry if this is a retarded question I’ve just never really heard of it before and i want to have options for a potential career)
Ah yes realestate
Shit mb I didn’t m know if it was one field or something
You’re gonna have to elaborate a bit. There’s developing real estate, real estate private equity, debt, equity, brokerage, etc. Real estate isn’t exclusively one role.
Can u explain all of those 😭
Real estate development companies, like the name suggest, develop real estate. They can do single family homes or massive commercial buildings like the Trump tower for example. Real estate private equity companies buy properties (mostly using other peoples money in combination with a little of their own so they have incentive to do well) then they hold them and or renovate them for a certain period of time and eventually sell them to (hopefully) turn a profit. Then there are real estate investment companies that lend money to others for real estate purchases in promise for a return on their investment. Equity is essentially the same as debt except they have lower priority of being re-paid, so there is a higher risk for equity investors, but they also receive a higher return for taking on that risk. Real estate brokerage companies take on clients who are looking to sell their buildings and find buyers for that property. They essentially facilitate property transactions for a fee, which is how they make money. I know this can be super confusing and I also might’ve explained some things wrong so if anyone reads this and I am wrong about something feel free to chime in.
Nevermind
When you think of real estate, you probably think of bricks and sticks that make up the buildings structure. Beyond the physical nature of real estate, it really just a pile of documents.
People who own real estate provide a service to the people who use the physical structure. Consider if buildings did not exist: where would people live at? Where would businesses keep all their machines, people, and inventory?
In exchange for providing this service (physical structure to house people/operate a business), tenants pay the owner of the real estate rent (income for the owner).
It takes a lot of work to erect a building out of the ground or purchase an existing one, it’s a very expensive process that involves a lot of parties (banks, city officials, construction professionals, businesses).
People usually don’t have enough money (or don’t want to use all their money they do have) to buy/build a real estate project, so they go to a bank (a lender). The bank says, “hey, if you commit $100 for this real estate project, we will give you $1,000” (actual numbers vary, this is simplified). Once the building is built or purchased, part of the monthly income from the building (rent paid by tenants) goes towards paying back the bank (debt service).
There are many different classes of real estate and people involved, which all have their own interests; some people want to build it, some people want it to make them money, some people want to use it, some people just want it to look good. The bricks and sticks are just the structure; when you own real estate, you really just own a bunch of paperwork that says “that’s mine” (the deed to a property).
YouTube will teach you a lot more. This is something I wrote on my lunch break in a bathroom stall. Hope it makes sense.
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