Real Estate Investment

Today I am going to discuss another aspect of investment i.e. Real Estate Investment.Our last discussion was about investment in stock where we discussed the various sides of the investment in stock. Today our aim will be to clarify the various issues of real estate investment. Now, again the first question is that …

What is real estate investment?

Real Estate Investment is the investment of funds in the property in order to generate return either by rental income or lease income. Real estate means immovable property such as land and building. Understanding real estate investment is a very important task to be performed as it needs a quite a large amount and it is a long term investment with the unpredictable market scenario. Whenever you buy stock of any company, generally you are looking for the increase in the value of stock or dividend income at theend of specified period. If you invest in real estate then you have more than two ways of superior return on your investment. Let’s discuss how you can earn from real estate investment.

Cash inflow through rental income:

Stock usually provides you return in the form of dividend and properly maintained rental property will pay you a handsome return in the form of rental payment. The study shows the return average return from real property is more than the average return from dividends. The investors of real estate seem to have more control over the risk and cash flow.

Appreciation in value of the property:

It has been found that the value of real property appreciates over the time. Though the increase in value depends on some criteria such as location, demand for the property etc.

Improvement in property:

When your property is paying you good rental incomes at the same time you can upgrade your property and add value to the property by certain renovation in order to make it more valuable if you want liquidate tour investment.

Inflation effect:

The fixed mortgage will remain constant for the time specified. If the inflation causes the rise in construction cost of the property then it also helps to rise the rent of the property The population growth creates a demand of housing.

Mortgage pay off:

If you are paying off mortgage then the equity must be increasing. Then you can use your equity for loan. Then you can utilize the amount of loan for further investment.