Real Estate Investing

Real estate investing is the purchase of real estate property to be used exclusively for investment purposes, with the expectation of a favorable return on the investment at …

Real estate investing is the purchase of real estate property to be used exclusively for investment purposes, with the expectation of a favorable return on the investment at some future point. Successful real estate investors purchase properties as a path to wealth creation, either through the accumulation of equity, dependable cash flow, as a hedge against inflation or asset protection. Before the purchase of the first property, a real estate investor should already have the following in place:

  • sufficient investment capital or quick access to financing,
  • a basic knowledge and understanding of the neighborhood in which the property is located,
  • good people skills,
  • ability to effectively negotiate,
  • access to qualified individuals who can make repairs or upgrades to the investment property, and
  • names of individuals who will form your investment team.

A prudent and perceptive real estate investor will carefully examine the individual and collective characteristics of each prospective investment property with consideration for the location, property price, coupled with potential risk and ultimate yield. A shrewd investor will take into consideration market trends and relevant indices, but understands that these markers are too broad to be applied wholesale, and considers the trends applicable to the locale within which the investment property is located.

Financial growth can be attained through real estate investing in several important ways:

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    1. Cash flow from rental stream
    2. Property value appreciation
    3. Property improvement to increase the value
    4. Purchase of property at below-market prices
    5. Tax benefits in the form of deductions and write-offs

Properties that yield the most favorable returns are single family homes, multi-family properties, duplexes and small apartment complexes. No particular class of property is better than the other, but each investor should exercise caution and due diligence before investing in real estate.

Sources:
http://www.investorwords.com/2599/investment.html
www.trumpuniversity.com/realestate/report/best-investment.cfm#form
www.allbusiness.com/personal-finance/investing-real-estate-investments/2466-1.html

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