How is real estate considered an investment?

Answer 1

real estate is a commodity that people "invest" money in. Investment by definition is the "laying out money or capital in an enterprise with the expectation of profit". With respect to real estate investors pay for the ownership rights in real property with the expectation of achieving a profit. Profits can be obtained in numerous ways with real estate: appreciation, capitalization rates on rentals, cash flow properties, or improving the condition of a property for pennies on the dollar and "flipping" or reselling the asset for a profit. In addition, real estate is an investment that through the loan process allows investors to leverage the bank's money. Where else can you put little to no money down and be able to utilize what is arguably most peoples single largest asset. Therefore, real estate is an investment that can generate tremendous returns. Look at Donald Trump. As with all investments, investing in real estate has significant risks associated with it and should a tremendous amount of due diligence should be performed and/or hiring a professional is recommended before putting your money at risk in a highly volatile arena. If you need additional information you can contact me at http://www.southcountyhomes.com or http://www.morganhillhomes.com for more on real estate and investment strategies and information.