Real estate financing has no definite shape or method to it but ultimately depends on the property type and involved parties to custom tailor how a building will be be paid for. For commercial real estate, lenders are either debt or equity capital suppliers depending on what provides the best returns for investors. I worked last summer at a real estate capital company in which we actively managed two families commercial real estate investment portfolios looking for new deals and finding the best plans to secure the highest possible returns. One creative and unique financing method was on a building that offered an equity investment opportunity but didn't provide the desired return. My boss knew that the company offering the opportunity had other failing properties and needed debt funding for these that the equity funding would have been alocated for. He proposed to offer a separate debt loan to the man which would lower his cost of capital while achieving a return that my boss's customers demanded. Knowing what people really want or need can help seal the deal on financing to the benefit of both parties. As seen in the video, many financing outlets have become scarce from our real estate meltdown. The real estate industry is very cyclical so at times of difficult financing, you must be creative to find ways to make all of the potential projects come to life. Although it may be difficult to secures loans at certain times, there still is a large amount of capital to be provided for real estate through many sources, providing loan terms of 3 to 7 years of debt up to $10 million plus. https://www.capitalsource.com/commercial_lending/lending_products/commercial_real_estate_finance
Without financial intervention in the real estate market, there would be almost no transactions, as almost nobody could afford to save up enough money for such a large one time purchase. Real estate finance is a broad term but relates to the way in which buildings and properties are acquired and funded. There are many ways to be involved one of which is being an investor. The real estate finance sector depends on the constant flow of money into the system by investors looking for a good return. These investors come in the way of personal savers, commercial banks, REITs, pension plans, and life insurance companies. It is a capital intensive market that our economy greatly depends on, hence the government regulations that have been imposed since the thirties. It can be a very profitable sector but it take very specialized knowledge and risk taking personality to jump into the market to earn superior returns. The market went to rock bottom levels in the late two thousands but it is beginning to see positive movements now that the recovery effort is in place. When the real estate finance market fails, there will be many foreclosures on properties that become the property of lenders who don't necessarily want to hold them. These lenders want back the investment they put in so they will try to sell them through a foreclosure sale. This process again requires specialized knowledge but allows people the chance to acquire property cheaply and allows the financial market to continue without complete losses. http://realestate.aol.com/blog/2008/09/10/how-to-finance-foreclosure-properties
A real estate appraisal gives the value of a piece of property based on what the value determinant is going to be needed for. The different value figures are used for buying/selling on the market, lender collateral information, tax determination, property insurance coverage values and for investment analysis among many things. Appraisals are now a very common and routine procedure with real estate as it can save a lot of money and reduce risk in buying a property. There are many methods used such as the sales comparison, income approach, and the cost method, which are all used at different times for different properties. In the following video, Quicken Loans discusses the comparable approach and the purpose of an appraisal.They discuss how both the mortgagor and the mortgagee alike want and need a neutral third party appraisal because of the need for a fair value assessment. The talks of fair assessments comes into play when talking about all of these online appraisal sites such as Zillow.com. It depends who is talking about it, but generally these sites are only a good starting point as they can be as far as 25% off of the fair value. While it may save you a couple hundred bucks to use this site upfront, it could cost you thousands upon the sale of a misvalued property. http://www.bankingmyway.com/real-estate/how-accurate-are-online-home-appraisals
With real estate being such a large part of our economy and everyday lives, we need to ensure that we have a stable method of correctly valuing property and improvements. This is where an appraiser comes in and use their specialized knowledge to correctly value real estate. These appraisers must sit through many hours of training and pass certain tests to obtain certifications in order to obtain the accuracy and consistency needed in the real estate market. According to this article which explores the appraisal career, this segment of the job market will grow slower than the rest of the jobs in general through 2018. This does not surprise me too much as I think the internet will provide much of the information that used to require an appraisal specialist in the way of sales comparison approach. I wouldn't be surprised if there will be a website that you enter your address and a couple adjustment variables and a legitimate appraisal is prepared seconds after you click "OK". http://careerplanning.about.com/od/exploringoccupations/p/real-estate-appraiser.htm Generally people look at jobs and filter them based on pay and how much money you can earn. A beginning salary as an appraiser starts at around forty thousand dollar per year but the main thing to remember is that basically the sky is the limit, within reason, in this profession. There is room to grow your company in this field and contrary to the slow job growth statistic, some say that due to new lender requirements, appraisers are going to be needed more than ever.
