Real Estate Trading: Investment Guide

Welcome back dear loyal readers of Invest In The Stock, we are always very happy and honored to have you here with us again and in increasing numbers. In today’s article we are going to talk about one of the most popular financial markets in this period, that is, we are going to deal with real estate trading.

Thanks to our practical and complete guide, we will see the definition and the main characteristics of these types of investments, which are particularly profitable.

What is real estate trading?

First, let’s try to understand what real estate trading is.

Let’s start from an assumption, the main intention of those who want to invest in real estate is to have an important profit.

And it is usually done by purchasing a property to be used for commercial purposes or to rent it out through a rental lease.

Today, however, there is the possibility, through investment property trading, of making a good profit by selling the property in question within a certain period of time.

This is because in real estate trading without money, the only aim is to buy a property and resell it as fast as possible.

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Real estate trading and flipping, definition

Corsican real estate trading can easily be defined as the purchase of properties with the aim of keeping them only for a limited period of time, and trying to resell them as quickly as possible, thus obtaining the greatest profit.

Superficially, this type of real estate investment might look very similar to the classic buying and selling of buildings and houses, but it is not.

We could draw a parallel between stock trading and traditional stock buying.

Since just like that type of business, it involves speculation in a shorter time period than classic real estate investment, where the movements are almost always with longer maturities.

Flipping properties

Another term to define investment property trading is flipping properties.

Therefore, the word flipping in fact denotes the short period in which the property is sold.

Although very often, the time frame varies according to the circumstances; but usually, these are short periods, a couple of months at the most.

Short Trading Real Estate

Another widely used alternative is the Real Estate Short Trading, a technique that involves earning money on the property without buying it, through the transfer of the preliminary contract.

Basically, anyone who wants to buy the property can transfer the preliminary contract to a third person, who becomes the promissory buyer of the main seller.

It is an investment method that allows you to earn money without actually spending.

For example, a buyer intends to buy a property for 450,000 euros; and after making the preliminary purchase, he looks for a person interested in acquiring the property at the same price and gives him the preliminary contract for an amount equal to about one third of the total, in this case 150,000 euros, so that the passage of the contract is regular .

The consent of all the parties involved is fundamental, and is expressed in advance by the contractor transferred in the preliminary contract, which contains the future transfer.

Real estate crowdfunding

As we have seen previously, becoming a real estate investor at no cost has already been possible for some time, even on the Italian market.

In fact, an alternative method is developing, namely real estate crowdfunding.

But how does it work? Basically, the classic general crowdfunding is a voluntary collection of capital that takes place between savers who decide to support businesses, start-ups and budding companies.

Real estate crowdfunding platforms
The most widespread and well-known online platforms such as Crowdestate, for example, Mamacrowd, allow you to bet on projects in the embryonic stage, to hope for a good return on the shares acquired, once the company has started working.

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The real estate variant of crowdfunding works in a very similar way.

When a free-of-charge real estate investor presents a project (whether it is a new construction or a redevelopment, whether residential or commercial, accommodation or any other type) it is financed with the use of its own liquidity and through a bank loan.

Lately, however, modern and technological entrepreneurs are also turning to real estate crowdfunding, as a valid alternative to bank credit, to cover a large part of the costs.

This can vary between 10% and 30%, and is covered by asking small savers to get financed, essentially believing and supporting their ideas.

What does REIT mean?

Let’s now see what REITs are and how to trade real estate through this alternative.

REITs are in practice trusts that take care of putting investor funds to good use through the real estate markets.

By now, all financially developed states have adopted a legal formula for the classification of REITs.

However, there may still be substantial differences between one legislation and another, even if the basis of the elements remains unchanged.

REITS in Italy

In our territory we do not yet have a jurisdiction for trusts, which are extremely popular in other states.

Basically, a trust is a fiduciary relationship between two parties, one who deposits money or assets and the other who has the task of supervising and using them.

It may happen that in some cases these agreements are made for a third party who benefits from them, to whom these real estate investments and funds are intended.

In the specific case of REITs, all this is extremely simplified, because the trusts are listed on the stock exchange.

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In practice, what you need to do is buy shares and you will automatically become trustors.

After that the money will be used to make real estate trading investments and part of the revenues will be received annually.

Obviously there are very stringent legal safeguards regarding the division of profits and the investments that can be made.

REITS real estate trading

If you want to start investing in properties without buying them, you need to rely on an excellent online broker to start operating, especially in REITs office trading.

For example: XTB, a company listed on the Stock Exchange and regulated at European level, as well as being authorized by Consob.

We at Invest in The Stock would like to recommend this platform, which is one of our favorite brokers, especially for the possibility of investing in stocks and ETFs without paying any commission.

👉 Must read: Investing In ETF, What They Are

Well dear loyal readers of Invest In The Stock, now that you have read our article, you are ready to start trading real estate in the best way.

Invest In The Stock, The Editorial Staff



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