You probably might have come across this word, ‘Real Estate’; and probably you might have just ignored it as one of the many English words you may not need in your vocabulary database. However, after a short while and if you really would like to grow wealthy and escape the pangs of poverty, ‘Real Estate’ might just be the best word you ever came across.
Real estate simply means land and any structure or building that is erected on it. So, when you look around, what you see is real estate: the land and the buildings.
Real Estate investment on the other hand is the commitment of funds in real estate with the aim of getting returns. This involves acquisition of the property or land (mostly through purchase), developing it, managing it and then generating income from it.
There are two major ways of generating income from real estate:
I. Through rental income,
II. Through capital gains.
Rental income is what the tenant pays when they occupy your property for given period of time – usually paid monthly.
Capital gains on the other hand is the increase in value of your property, such that you are at a position to sell it at a higher price than you bought it.
When investing in the real estate market, you have two major areas you can decide to specialize in or combine:
I. Residential property – where you rent out property for residential purposes,
II. Commercial property – where you rent out property to be used for business purposes.
Real Estate is a darling to the experienced and wealthy investors due to its regular flow of income and its less susceptibility to fluctuations. The assured capital gains also entice many investors to venture into real estate. However, the real estate market is less liquid and it calls for patient investors only.
When venturing into real estate, you could choose from among the following as your investment strategy:
I. Real Estate Renting,
II. Real Estate Groups,
III. Real Estate Investment Trusts,
IV. Real Estate Trading.
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