Real Estate Investment

Real estate investment has been a major form of investment since the 1970s. It is a major form of capital budgeting and is a very lucrative option for investing. Real estate can broadly be defined as immovable property. Land and things attached to it in permanence, such as buildings, come under the category of real estate. Investment in real estate has its fair share of risks.
But one advantage of real estate is that it gives the owner the right to transfer the title to the land.

Other features of real estate investment are as follows:
It is a lucrative business opportunity
It can be used as a means of generating rental income
The burden of other taxable income can be assuaged through the profits obtained from resale of real estate
It can be used as a collateral for securing loans for other business ventures
Real estate speculators seek profit by trading in real estate futures

Real estate investors often own more than one unit of real estate. The investor uses one unit as his or her residence and accrues rental income from the others. Investment in real estate also involves value appreciation of property over time, which leads to capital gains. The whole program of real estate investment is a long-term process.

Some facts that need to be remembered while investing in real estate are as follows:
An investor must know how and where to find a right seller
Investors must accurately analyze the facts of every real estate deal
At the closure of real estate deals, an investor must negotiate with expertise
Expert knowledge of the risks and benefits of the trade is an essential
Common terms of real estate investment such as cash sales, short sales, lease options, and wrap mortgages need to be thoroughly understood
Real estate investment companies provide good opportunities for real estate investors. They represent both sellers and buyers. Individual investors can benefit the most from the services of such companies. These companies deal with government agencies, vendors, investors, consultants, and brokers.

A real estate investment trust (REIT) invests in pieces of real estate that can reduce corporate income tax. In return, it distributes 90% of its income among investors. Another important player in the real estate business is the investment real estate broker. These individuals help in getting the best real estate deals.

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Last Updated on : 23rd June 2016

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