Amongst all the investment options available in commercial sector Real Estate is now becoming one preferable business.
This is because the main benefit of real estate investment is its ability to generate and maintain cash flow. After mortgage payments and making other operating expenses, cash flow is the net income from Real Estate investment.
The benefits of investing in real estate are numerous. With well-chosen properties investors can get definite and predictable gain, excellent returns, tax deduction advantages and diversification and it is possible to leverage real estate to build wealth and get maximum interest. If the investor has vast experience in all property sectors, from management, investment, short term and long term lettings and property sales then there is strong chance to earn much.
Real Estate investors can also enjoy numerous tax breaks and deduction. In general a real estate investor can deduct a large sum of money of owning, operating and managing a property. Rental income, appreciation and any profits generated by property business dependent activity are the areas in which investors make money. Values of properties tend to increase over time, and if you have made a good investment you can have a good financial gain when it is time to sell. Rising rents over time also lead to higher cash flow.
Scarcity of land is the most common myth propagated by real estate investors. According to them there is only a limited amount of land in the world which also coupled with the fact that population of the world is increasing every day. That’s why the land prices of the world will continue to rise perpetually. Since there will always be a shortage of land.
We can divide the income from real estate into two. Active income and passive income. Intense focus on daily basis is required by Active investors to make money.
House flipping and Stock Market Investing are common options in active investing.
House Flipping:
When the investor buys a house, repair and remodels it and then sells it by himself or rent out the house and become the landlord. This is called House Flipping.
Stock market investing:
In stock market investing Active investors must pivot in and out of “hot stocks” to turn a fast short term profit.
Passive investing:
A passive investor can generate an income stream that reliably provides value with minimal work. Without having any extensive knowledge, education or skill it is a long haul approach to make money. But it requires patience and much less time commitment than active investing.
Actually investment in Real Estate has high risk in it. Tolerance and sharp intellect is required to make fast investment decisions. As quick decisions made in hurry can bring you huge profits as well as sometimes can cause loss.
