Real estate is one of the five core assets that every investor should consider adding to their portfolio. It provides unique cash flow, liquidity, profitability, tax advantages, and diversification benefits. Real estate investment encompasses a wide range of operational, investment, and financial activities centered around earning money from the property or cash flows associated with a tangible asset.
Real Estate Valuation
Real estate tends to appreciate in value, often due to market changes that increase demand for the property in its area or due to inflationary effects. This can also occur because of upgrades you’ve made to your investment to make it attractive to potential buyers or renters.
Real Estate-Related Income
Real estate-related income is generated by brokers and other industry specialists who earn money from commissions when buying and selling properties. This also includes property management companies that retain a percentage of rents for operating the day-to-day functions of the properties.
Sub-Investment Real Estate Income
Sub-investment income related to real estate can come from significant sources. This includes vending machines in office buildings or laundry facilities in low-rent apartments.
These operations act as sub-businesses within a larger investment, allowing you to earn money from a semi-transient customer base.
Cash Flow Income
The purest and simplest form of real estate investment is all about cash flow from rents rather than appreciation in value. This type of investment focuses on buying and operating a property so that you can accumulate a stream of rental income. Cash flow can be generated from apartment buildings, office buildings, or rental homes.
The investor/owner acquires a piece of tangible real estate, whether it is undeveloped farmland, land with a house, land with an office building, land with an industrial warehouse, or an apartment. They find a tenant who wishes to use this property, and a rental agreement is entered into between the tenant and the property owner.
Managing Return on Investment for Rental Properties
Investing in Residential Real Estate
Commercial Real Estate Investment
Industrial Real Estate Investment
Retail Real Estate Investment
Mixed-Use Real Estate Investment
The Lending Side of Real Estate Investment
Sub-Specialties in Real Estate Investment
Real Estate Investment Trusts (REITs)
Strategic Investment: Your Home
Risks of Real Estate Investment
Source: https://www.thebalancemoney.com/what-is-real-estate-investing-4842112
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