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Best Benefits Of Real Estate Investment

Posted by snowgolden on August 6, 2017
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Best Benefits Real Estate Investment

When we talk about real estate, we are basically talking about properties comprised of lands or buildings, some of these properties are lands with natural resources including farm crops and livestock but when we talk of real estate investment, we are far talking of something different from real estate.

Real estate investment is a vast system of operating an investment which is gathered around making cash from physical properties or cash flow somehow from a real property. The real pattern of real estate investment is all based on rents income and not from appreciation. The investment of real estate is being done when a property has been acquired by the landlord, whether a farmland or a house. The landlord gets to someone who is interested in this property (the tenant), and some agreements are being made. The landlord now gives the tenant access to the property at a given time frame and permitted to use the property under some certain terms and conditions provided by the landlord.


Benefits of Real Estate Investment

Below are some top benefits of real estate investment;


  1. Leverage of OPM (other people’s money): When working on real estate investment, it is but obvious to use other people’s money to do it. You can get a mortgage and pay it back sometimes for over thirty years, you can sometimes arrange your deals in a way that no money leaves your pocket. Yet all the benefits get to you. Just imagine an average person trying to buy a property with thirty years loan. Not possible.


  1. Inflation Hedge: The returns of real estate are somehow joined to the rents that are gotten from tenants. Some loans involve provisions for rents increase to have been indicated to rise. In some cases, rents are being added whenever a loan term expires and the tenant wants to be renewed.


  1. Principle pay down: When you are in a place of an OPM (other people’s money), you will obviously have to pay it back with interest. But with each payment you make, you are also paying a bit of principal and getting closer to owning the property. You are building equity with each key payment and thus building wealth.


  1. Diversification of value: The good aspect of modifying your portfolio in terms of asset allocation is well documented. The returns of real estate have relatively interactions with other asset classes (traditional investment vehicles like stock and bonds), which adds to the diversity of your portfolio.




Some highly used real estate investments are as follows

  1. Financial real estate investment: The financial real estate investments are mostly gathered around office buildings. When this type of investment has been highly leased to some tenants who accepted to stay for long-term high loan rates, the income is standard even when relative properties fall.


  1. Real estate retail investing: There are some investors who like to own properties such as traditional malls, or shopping centers. Tenants can sometimes include hair shops, retail shops, and restaurants. In some cases, retail rate is combined with a part of sales in the stores retail to create a motivation to enable the investor to try as much as possible to make the property look good to buyers.


  1. Industrial real estate investment: The properties that fall under the umbrella of industrial real estate can include distribution and warehouse centers manufacturing facilities and storage units.
  2. Real estate of Residential investment: This is when the properties involved in the real estate investment are joined to houses or apartment in which families or individuals live.

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