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When to start your real estate investment

Even if you fail to pass licensure examinations for real estate brokers, it is not the end of your real estate investment plans. In fact, real estate brokering may not be the ideal career for most businessmen and professionals who have full time work to do, and there is a world of difference between real estate brokering and real estate investment. Brokering is a good foundation for real estate investment, but it is not a prerequisite. 

The threshold question is always when to start investing in real estate. The issue is complicated by stories of failed real estate ventures and bankruptcies which have fanned fears to all the uninitiated. The short answer to the above question is NOW, regardless of whether the real estate market is up or down as market directions offer many opportunities.

After settling the issue of WHEN, is the question of HOW. Many times, the question of HOW is complicated by wrong perceptions that real estate is reserved for those who have adequate capital and funds to start with. These wrong perceptions sometime prevent real estate investment as too often excessive reliance on comfort zones of capital adequacy actually is the reason of inaction or delayed action.

Read more: When to start your real estate investment

How do brokers earn their commissions?

How do real estate brokers earn their commissions?

All real estate brokers and salesmen, whether licensed or not, earn their basic income from commissions for closing deals and transactions. By facilitating the consummation of a sale, brokers and salesmen typically earn a standard fee of 5% of the total price, payable by either the seller or buyer depending on the stipulations indicated in the Authority To Sell and/or Buy, or any document of similar import.

As a rule, however, only licensed brokers and their accredited salesmen are entitled to the broker's commissions. If you are not a licensed broker, you should secure a notarized power of attorney for you to be entitled to a broker's commission, by way of an exception.

However, the 5% commission is only a standard rule, you can go lower or higher depending on the peculiarities of the transaction. In some cases, brokers stipulate for an overprice clause which may go up to 20-50% of the selling price, although this clause is discouraged for ethical and professional reasons.

Read more: How do brokers earn their commissions?

What about if you fail to pass the real estate brokers' exams?

Yesterday, we said that the BEST foundation of your success in real estate investment is to be a licensed real estate broker. That is obviously an ideal scenario, as we know that not all will become licensed real estate brokers. So what becomes of the many who will be unfortunate enough not to hurdle the licensure exams?

It is not the end though of your career as real estate investor. The most important part of your journey is actually not passing the brokers' exams but attending the review classes where you have the opportunity to familiarize yourself with many real estate terms and concepts. Of course, passing the exams should be the ideal target but if you will fail despite your best efforts, it will not be the end of your real estate plans.

As we progress in this blog, we address both concerns of licensed and "unlicensed" real estate practitioners, knowing for a fact that the latter group is the more dominant in numbers, and sometimes better performers than the "licensed" ones.

Read more: What about if you fail to pass the real estate brokers' exams?

What is the best way to start in the business of real estate?

Whether unemployed, underemployed or employed, real estate investment is a must if you want to have reliable source of primary and secondary income. If you are in business, real estate is always needed if you need capital to expand. If you are a professional, real estate is an excellent source of secondary income. And if you are unemployed or underemployed, real estate may be your best way to earn a decent living. But real estate investment needs adequate knowledge of many fundamental concepts and principles. For one, there are a lot of legal terminologies which a beginner has to familiarize. You also need to know of surveying concepts, working knowledge of mathematics and even statistics and zoning regulations, among others. Your success in real estate needs sufficient foundation, and admittedly it will not be a walk in the park. What is then the best foundation to embark on your journey to real estate success? As a real estate investor and practitioner in the last 15 years, I can say with confidence that the best preparation is to be a licensed real estate broker. How to start it is simple. You only need to go to your nearest Department of Trade and Industry (DTI) office and secure an application form to take licensure examinations for real estate brokers.

Read more: What is the best way to start in the business of real estate?

Finding Real Estate Opportunities

Contrary to popular quick rich schemes, most of those who are successful in real estate did not attain their status overnight. Key to success in real estate is patience in looking for opportunities. There is no rush to force things especially as you will have to look for bargains. In fact, given time and lots of creativity, you may even secure a real estate bargain that will practically be presented to you in silver platter! Yes, as if given to you for 'free', so to speak.

First step will be to broaden your options and choices. For real estate beginners, ideal property to acquire will be housing unit/s to be used as boarding and lodging houses that are ideally located near the urban center in order to ensure abundant supply of prospective lessees. You will have to scout around for foreclosed assets from banks and lending institutions, and check for the condition of the housing units if they will need minimal renovations at all. You will have to check loans balances and terms of payment, and see if the cash flow generated, though minimal, will provide windfalls if the property will be disposed in the next 3-10 years.

Read more: Finding Real Estate Opportunities

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The Managing Partners

ATTY. REY CARTOJANO, REA, REB

RE Consultant License No. 83

RE Appraiser License No. 8232

RE Broker License No. 2127 

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MAYA CARTOJANO, MM, REA, REB

RE Consultant License No. 84

RE Appraiser License No. 8231

RE Broker License No. 2126  

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