Real estate isn’t just about finding a good living place, in the meantime it is great way of investment & have become increasingly popular over the last fifty years as common & safe investment option. At the same time real estate proffers with the plenty of opportunities for substantial gains, buying and owning real estate is little more complex than the stocks and bonds. So in this article we have decided to go beyond the home buying the real estate investment in dept.
Basic Rental Properties
First you need to understand that this kind of investment is quite similar to old landownership. Usually a person buys property and rent it to the tenants. The owner, the landlords are responsible for taxes, maintenance and mortgage.
There are certain other aspects of ideal real estate investment. You might end up with a bad tenant who damages the property. This may lead with negative monthly cash flow; it might have you scramble to cover your mortgage payments. Better go for area where vacancy rates are low and high probability of people wants to rent.
There are some fundamental differences between stocks, bonds and rental property is the amount of time you will need to invest. In stocks and bonds you buy few of them and it simply sits there are increases in the value. But in case if you invest in rental property there will be additional responsibilities that come in your way.
Real Estate Investment Groups
You might think of being part of real estate investment groups they are like small mutual funds for rental properties. This provides a good way incase if you are only interested in being landlord without being bothered about other things then this format could really be helpful.
Real Estate Trading
This is the wild side of real estate investment. Like the day traders who are leagues away from a buy-and-hold investor, the real estate traders are an entirely different breed from the buy-and-rent landlords. Real estate traders buy properties with the intention of holding them for a short period of time (often no more than three to four months), whereupon they hope to sell them for a profit. This technique is also called flipping properties and is based on buying properties that are either significantly undervalued or are in a very hot market.
REITs
Much like regular dividend-paying stocks, REITs are a solid investment for stock market investors that want regular income. In comparison to the aforementioned types of real estate investment, REITs allow investors into non-residential investments (malls, office buildings, etc.) and are highly liquid - in other words, you won't need a realtor to help you cash out your investment. (For further reading, check out What Are REITs?, Basic Valuation Of A Real Estate Investment Trust (REIT) and The REIT Way.)
Leverage
With the exception of REITs, investing in real estate gives an investor one tool that is not available to stock market investors: leverage. If you want to buy a stock, you have to pay the full value of the stock at the time you place the buy order. Even if you are buying on margin, the amount you can borrow is still much less than with real estate. Most "conventional" mortgages require 25% down.
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