In the market, stable industries have been shaken, dot coms have become dot bombs, and tech stocks have plummeted. However, one commodity has stayed the course and remained solid-investment property.
There are many beneficial reasons to invest in real estate:
Real Estate Investment is now treated as a major case of capital budgeting by using state-of-the-art investment
analysis which incorporates the future stream of income it may generate and the associated risk adjustments.
It has been the highlight of the investment literature since the 1970’s when investment theorists extended
techniques such as probability, time value of money and utility into its analysis.
Real estate is basically defined as immovable property such as land and everything permanently attached to it
like buildings. Real property as opposed to personal or movable property is characterized by the right to
transfer the title to the land whereas title to personal property can be retained. The investment in real estate
essentially depends on the risks associated with it, that is to say, even if the venture succeeds when the future
stream of income will accrue to the investor and the alternative investment opportunities. Real estate investment
can be attractive if viewed as a business opportunity; it can generate rental income, using it as collateral to
secure a loan for a business venture, to offset otherwise taxable income through cash savings on tax-deductible interest rate losses, or simply from the profits garnered from its resale. Notable, in this context is the gains
reaped by real estate speculators who trade in real estate futures (by buying and selling purchase options).
Common examples of real estate investment are individuals owning multiple pieces of real estates one of which is his primary residence and others are occupied by tenants from where the rental income accrues. Real estate investment is also associated with appreciation in the value of property thereby having the potential for capital gains. Tax implications differ for real estate investment and residential real estates. Real estate investment is long term in nature and investment professionals routinely maintain that ones investment portfolio should have at least 5%-20% invested in real estate.
Real estate values continue to rise during an unstable economy.
Property can have a higher yield than bonds and other stable investments.
Depreciation of property and deductible expenses may lower your taxes.
Rental property revenue has historically increased at a steady rate.
Rental income can be used to offset expenses.
Need help managing your investment property? Visit Pro-Estate Solutions Property Management.
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