Investing in real estate is a complex process for few because there are eight different types of real estate investments that new investors need to understand: Commercial real estate, residential real estate, industrial real estate, mixed-use real estate, retail real estate, REITs, mortgage lending, and sale/leaseback transactions. Residential & commercial are the easiest to deal in. Real estate investment is simple and straight forward as there is a fair exchange of property between the owner and the buyer.
Real goal of real estate investment is to put the money to work today so that the value of your investment grows in the future and you can make profits by selling it in the future. One must make sure that the profit or the return at the time of resale of a property covers the taxes you have paid or the costs such as utilities and insurance etc. also the risks you have taken.
While trying to make a real estate investment, first make a choice if the property is primarily for your personal use or for the sake of investment. Based on your choice you can choose the payment plan and keep your down payment money safe and have better options to invest the money.
For a new investor there are two choices – real estate and stocks. Both have their merits and demerits but it depends upon the personal choice and the personality of the investor.
Then there are REIT’s a blend of real estate and stocks, one of the most popular ways to own real estate. REIT’s is a short for real estate investment trust. REIT’s can be traded just like stocks through a brokerage account though the taxation policy on dividends is different from the dividends from stocks.
Real estate investment involves bigger amounts of money and risks should be taken care of. When you are going for a first major investment then you must keep your eyes wide open and then make decisions.