Investing in real estate involves the acquisition, holding and sale of real estate rights with the expectation that cash inflows will be used for potential future cash outflows, generating a favourable rate of return on that investment. Click find out how for more details.
Real estate investments offer the advantage of leveraging a real estate property heavily, more advantageous than stock investments (which usually require more investor equity). In other words, you can use other people’s cash with an investment in real estate to magnify your rate of return and control a much larger investment than would otherwise be possible. In addition, with rental property, you can virtually use the money of other people to pay off your loan.
But, apart from leverage, investing in real estate offers investors other benefits, such as returns from annual after-tax cash flows, equity accumulation through asset appreciation, and after-tax cash flow upon sale. Plus, non-monetary returns such as ownership pride, ownership security that you control, and diversification of portfolios.
Of course, capital is required, there are risks associated with real estate investment, and management-intensive investment property can be real estate investment property. Real estate investment, however, is a source of wealth, and that should be sufficient motivation for us to want to get better at it.