Real Estate Investing

Real estate has proved itself as a lucrative investment opportunity. There are various ways to invest in real estate and each of these ways has advantages of their own. Approximately two-third of Americans has their own home. This provides them independence and also provides them capital appreciation over a period of time. Now day's investors can take a passive role as partners of a limited partnership or become shareholder in a real estate investment trust. This allows investors to hold a part of a large piece of real estate thus the investor gets the property as well as investment management.

Real estate is a good form of investment and offers high cash returns than alternative investments. The investors should also look at the fact that the real estate is not a liquid asset but the real property acts as a hedge against inflation. Real estate had been offering tax advantages in the past but by the change in the tax structure things have changed but in some cases tax benefit still do exist. Low interest rates in the current decade have enhanced the benefits from real estate investments. The mortgage rates are as low as 6% thus the investors can borrow cheaply. The investor can own property and if the rate of capital appreciation turns out to be more than the rate of mortgage then he ends up better off. A successful real estate investing includes identifying property that produces the type of income the investor needs.

Profits can be realized from real estate in a number of ways.

• Excess of cash from rents over cash expenditures
• Real estate is used both to avoid and shelter income from taxation
• The owner of the property also gets capital appreciation

o On sale of the property
o Realized by borrowing on equity

There are also chances of losing money by real estate.

• Loss on sale or trade
• Where cash is insufficient to meet required cash outlay