Residential Investment Property

Real Estate You Need to Know

Big Yawn

When you first read basic material about real estate, you might ask yourself, "great, but how is all this going to help make me rich?" The answer is: if you want to get rich in real estate, you have to understand what you are buying; if you know more than the other guy, you can find properties that he can not, and you can take command at the negotiating table. This is not a bunch of academic theory - you need to know this stuff if you really want to become a successful real estate investor.

I do not intend to give away my secrets in free tutorials. What I hope to accomplish here is to prove to you that there is a whole world of information that you need to learn to be successful, and that I can teach you in a way that makes sense and that is easy to understand. If these tutorials are successful, you will buy my book; and then I will reveal my methods to you. Shameless advertising? Probably, but this is one way that I can cut through the gaggle of real estate books that promise much but deliver little. I hope in the end you will agree that I promise much and deliver more.

Owning Real Estate

An odd fact about real estate is that the most fundamental aspect of owning land and property is grossly misunderstood by the general public. Sadly, even many real estate professionals do not fully understand the concept of property ownership.

You are about to embark on a career of buying and selling real estate. That is your new path to great wealth. You might want to know what the idea of owning real estate actually means!

Ownership is nothing more than society granting to you the right to use land to the exclusion of others. Through the rule of law, society identifies what aspects of ownership are to be defended and enforced. Property rights are a consequence of community, because a person stranded on a previously uninhabited island clearly has no need to worry about property rights. But as soon as a second shipwreck survivor washes up on shore, the two must start to divide the resources, hopefully in an equitable way. As the island becomes more and more crowded (ships can not seem to avoid that reef offshore!), the definition of rights becomes ever more critical to avoiding conflict. By defining these rights clearly, the growing island society avoids wasting resources fighting over rights, and instead can use those human resources for more productive pursuits and economic gain.

Individuals and Communities

Over time, conventions and laws have evolved in modern societies to balance the needs of an individual against those of the larger community. This means that the rights of ownership come with some constraints so that the actions of individuals on their own land do not adversely impact society at large. The rights associated with ownership are therefore not unfettered, but are tempered by the desire to balance competing needs. You may want to put a grocery store on your property, but are prohibited from doing so because the land is zoned by society for residential use only. "It is my land and I can do what I want with it" is true, but only to the extent that your desired actions are sanctioned by law.

When you buy real estate, what you are really purchasing are the rights to possess and control use of the land, rather than the land itself. At first this seems like a subtle point, and that I am splitting hairs. But this point is critical to understanding real estate. When you buy a car with cash, you own that car absolutely. You own the car itself, not just rights to use and possess the car. Buying the car is no different than going out and buying a T-shirt, except one takes less money than the other. Hopefully it is the T-shirt that costs less. But buying land or real estate is different. You can not grab your acre, put it in your pocket and take it to another state. Land is permanent and immobile, and owning something that is forever and can not be moved is just different than owning something that you can take with you or throw away. The laws recognize this difference. That is why you do not own land like you do a car or your clothes. With land, you own rights. From a practical point of view, you are able to almost do all the things you are used to with ownership. But not everything. Nobody will ever tell you what to do with your T-shirt (except maybe your spouse begging you to wash it). Society has no interest in your shirt. But land is different. The country itself is defined by land. Society has a long-term interest in what you do with your land, and what will happen to the land when you are gone.

Bundle of Rights

Since land ownership is in reality defined as a set of rights, the fundamental basis of ownership can only be understood by examining those rights. The classic analogy used in real estate to describe the rights of ownership is a handful of sticks, where each stick represents a right or stream of benefits. As more are added, the bundle gets larger. But while commonly used, and found in virtually every book about real estate ever written, I find that the analogy is really not terribly helpful, nor particularly imaginative. The more important point is to discover what is included, typically, among the rights of ownership in modern societies.

These rights, summarized below, are explained in detail in my book.

* Right of Possession * Right of Exclusion * Right to Transfer Rights * Mineral and Subsurface Rights * Water Rights

Before buying any property, before making any real estate investment, before embarking on your new career as a real estate mogul, you should fully understand all of these rights of ownership. I walk you through each of these in detail in my book, Beyond No Money Down.

Big Advantage

With a full and deep understanding of what owning real estate really means, you have an advantage over others when looking for property and negotiating a price. You know exactly what you are getting, and therefore, are in a superior position to know what price the property in question is really worth. These concepts are not just some airy academic theory, but truly important to your career in real estate investing. At the same time, they are easy to understand when clearly explained. Understanding the fundamentals is essential to learning the nuances of real estate that will help make you rich. Understand these, and you can rule the roost in any real estate transaction. Knowledge is power, and I give you that knowledge in my book in an easy-to-read and easy-to-understand format.

If you want to learn more about Beyond No Money Down, go to: www.realpropertymillionaire.com

About the author: Dr. Schneider is a recognized expert in building personal wealth, with his best selling books "Beyond No Money Down" and "Trading Futures: Only One Way to Win". Practicing what he preaches, he now lives in a beautiful waterfront home in central Texas, owns and operates his own jet, and travels the world first class giving lectures across the country and across the globe.