Investable Assets: Real Estate

Real estate is easy to purchase, convenient to finance, gives tax advantages, improves your lifestyle and is devoid of any insurmountable financial barriers. Hence, Real Estate, even today, remains one of the most advantageous investment options.

What is Real Estate?

Real estate is real property that consists of land and improvements, which include buildings, fixtures, roads, structures, and utility systems. Property rights give a title of ownership to the land, improvements, and natural resources such as minerals, plants, animals, water, etc.

Pros and Cons of Real Estate

Pros

• Recurring Income Recurring income after the rent has been collected and all of the bills have been paid is one of the biggest benefits of investing in real estate.

• Appreciation Real estate historically appreciates when held as a buy-and-hold investment.

Cons

• Professional help required Investing in real estate and getting the property registered in your name is a lengthy procedure.

• Maintenance Cost Even though you buy a property and rent it out to a tenant, the owner is liable to pay the maintenance cost of the property.

Long-Term Investment Duration

Typically, long-term investing means five years or more, but there's no firm definition. By understanding when you need the funds you're investing, you will have a better sense of appropriate investments to choose and how much risk you should take on.

Risk and Reward Level

All over the world, real estate is considered one of the safest sectors to invest in – well ahead of gold, stocks and mutual funds, savings accounts/CDs and bonds. And it's the same everywhere – where the emotional satisfaction of owning your own property is inherently very strong.

Popular Examples

Vacant Land

Farm and ranch specialists have long been quite successful in the real estate business. It is important to understand the specific buying requirements and motivations of prospective buyers and sellers. Generally, the property size and price are quite large, with corresponding commissions.

Residential Properties

Residential property is by far the most popular with both new and experienced agents. That's no surprise—given the 2010 US Census shows more than 116 million occupied housing units. The trick is to do what you like and what holds your interest. You're going to deliver better customer service if you're excited about your niche and especially if you make an effort to hone your expertise.

Commercial Properties

Commercial property can be empty land zoned for commercial use or an existing business building or buildings.

Commercial property valuation requires a more complex accounting method including the income potential of the property, historical revenue, cash flow with owner perks removed, and much more. Without extensive business valuation experience, it's better to enter this specialization carefully and after building experience in the undeveloped land or residential property sectors.

---

Author

Samik Heda