1: real estate definition
2: how real estate works
3: stocks vs real estate
4: example of real estate
Opening information:
Real estate breaks into two words real and estate. Real means fact where it exists in a world that is not imagined or thought it.
Estate means the land area which is a seen property or capital item. Which is owned by some person and where it’s also exchanged from person to person.
Real estate means the area of land or property of things that exists in the world as physical things, it could be able to touched and seen.
this article contains information about what is real estate in the stock market, and how real estate works in the stock market. And what is the difference between real estate and stocks, finally example of real estate.
1: real estate definition
Before the stock market, people more believed in real estate.
Because real estate is the things of land or property. which is given greater growth when compared to any other investment.
Even in the business, the amount invested is not suddenly taken out of the business. So it’s completely difficult for even a business to have the kinds of growth compared to real estate.
Say, you have invested in your business which is $100,000. Once you buy all the materials that are necessary for your business. If the business profits are very low, it takes a long time to take your initial invested capital out of your business.
But when comes to real estate if you bought the land and sell the land after three 3 or 4 years your investment money would be get doubled.
When the stock market started to exist in the real world after 1934 with the authority of the SEC, it showed investors it was a more risky and very fast way to make money than any other thing on the planet.
However, people started to realize that the stock market is not an easy thing to make money in because the stock market made 90% of the people lose money in trades.
Not because no one can able to make money on the stock market but because the majority of people lack the knowledge and understanding of the stock market.
So instead of believing in stock investment, people started to believe more in real estate because of low risk. Now you know real estate means the lands or property of physical things. let’s see how real estate works.
2: how real estate works
The person who started a business as real estate, which grows the business to multi-million dollars.
The person who made their industry worth multi-million dollars would also make their industry go public.
And which industries shares are also owned by the hundreds and thousands of investors in the stock market.
The profits of the real estate company would be distributed among their shareholders equally in the stock market.
On the other hand, when it’s not a stock market particular person owns the real estate, where he or she is the only owner of the particular estate.
He would receive cash flow using his area of lands or property by rent or lease to other person and on the other side, the property owner would also receive the capital gains once he sold the estate. But there is a difference in the stock and estate.
3: stocks vs real estate
Where the stocks hold a certain value behind them. which is ownership of the particular company or any debt instruments to pay interest like bonds. Where it’s also divided into millions of pieces.
But real estate is the land of area or property of the house, organization extra. which hold value like stock but not ownership Rights and are distributed to millions of Investors.
To make you more clear about the real estate function, let’s dig into the example of real estate.
4: example of real estate
Let’s say you have owned 70 real estate which is worth 102 million dollars.
To raise the capital for your real estate business you need more money to invest and grow the industry. you made the company go public.
Being a publicly traded Company you distribute the 2000 shares to the general public on the stock exchange.
The total shares of the company would be 4000 shares and you hold 2000 shares and the other 2000 shares are held by public shareholders.
Now no matter how much you grow and build the real estate industry in the future. before you issued the 2000 shares You owned 102 million dollars worth of 70 real estate but now you only own 35 real estate which is worth 51 million dollars.
Even if you face loss in the companies it not only affects you it also affects your 2000 shares shareholders equally depending on how much percent of the company you own.
Non-Market rule: #100170