REAL ESTATE INVESTMENT

Real Estate is a promisable investment portfolio for an individual

Investing in real estate is becoming increasingly popular over the last fifty years and has become a common investment vehicle. Buying and owning real estate market is the way to go for simple understudying but in my article I will go behold this when we talk about the profitable real estate.

The normal practices are buying a property and renting it out to a tenant. The owner is responsible for paying the mortgage, taxes and costs of maintaining the property. The landlord will charge enough rent to cover of the aforementioned costs. However these calls for patience and with time the property appreciate in value leaving the landlord with a more valuable asset.

Real Estate Investment Groups

If you want to own a property but don’t want the hassle of being a landlord, real estate investments group maybe the solution for you. A company will buy or build a set of apartment blocks and then allow investors to buy them through the company, thus joining the group. A single investor can own one or multiple units of self-contained living space, but the company operating the investment group collectively manages all the units, taking care of maintenance, advertising vacant units and interviewing tenants.

In exchange for this management, the company takes a percentage of the monthly rent.

There are several versions of investment groups, but in the standard version, the lease is in the investor's name and all of the units pool a portion of the rent to guard against occasional vacancies, meaning that you will receive enough to pay the mortgage even if your unit is empty. The quality of an investment group depends entirely on the company offering it.

REITs

A Real Estate Investmnet Trust (REIT) is created when a corporation (or trust) uses investors' money to purchase and operate income properties. REITs are bought and sold on the major exchanges, just like any other stock. A corporation must pay out 90% of its taxable profits in the form of divideds, to keep its status as an REIT. By doing this, REITs avoid paying corporate income tax, whereas a regular company would be taxed its profits and then have to decide whether or not to distribute its after-tax profits as dividends.

Real Estate Trading (flipping properties)

Real estate traders buy properties with the intention of holding them for a short period of time, often no more than three to four months, whereupon they hope to sell them for a profit.

It is based on buying properties that are either significantly undervalued or are in a very hot market.

Pure property flippers will not put any money into a house for improvements; the investment has to have the intrinsic value to turn a profit without alteration or they won't consider it. Flipping in this manner is a short-term cash investment. If a property flipper gets caught in a situation where he or she can't unload a property, it can be devastating, because these investors generally don't keep enough ready cash to pay the mortgage on a property for the long term. This can lead to continued losses for a real estate trader who is unable to offload the property in a bad market.

A second class of property flipper also exists. These investors make their money by buying reasonably priced properties and adding value by renovating them. This can be a longer-term investment depending on the extent of the improvements. The limiting feature of this investment is that it is time intensive and often only allows investors to take on one property at a time.

Leverage

Most "conventional" mortgages require 25% down, however, depending on where you live, there are many types of mortgages that require as little as 5%. This means that you can control the whole property and the equity it holds, by only paying a fraction of the total value. Of course, your mortgage will eventually pay the total value of the house at the time you purchased it, but you control it the minute the papers are signed.

We have managed to look at a few of real estate investment and within them there are countless variations of real estate investments making a careful choice and weighing the costs will give you the expected benefit there in.