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Real Estate Investment

Real estate investment where money is used to purchase property for the purpose of leasing or sometimes holding for income or capital growth. Real estate is a very solid investment because investors can make a healthy stream of income and real estate is physical and real as opposed to paper. Since it became possible to privately own property, the real estate market has been booming. The principal of purchasing a property and renting it out is very simple - any person or family needs a place to live, so there's always people looking to live in a property. Purchasing real estate is generally a major investment as large amounts of capital, borrowed or owned by the investor, can be involved. Unlike stock markets, property trends are normally quite slow.

"It's tangible, it's solid, it's beautiful. It's artistic, from my standpoint, and I just love real estate." Donald Trump, owner of Trump World Tower in New York and has a net worth of US$2.9 billion (2007)

Real estate differs from other investments in that you don't need much of the purchase price to purchase a property. Typically, 100% of the purchase price can be borrowed from a bank. Property prices tend to increase smoothly and consistently, it has good tax advantages and investors are able to recover from mistakes.

 

The two major types of real estate are residential and commercial. Residential real estate is more commonly invested in. Residential real estate is people's place of residence. Commercial real estate relates more to businesses, e.g. a corner store or a shopping centre.

Dolf de Roos is my role model in real estate and his book, Real Estate Riches (2001), is one of my favourite books. Dolf was offered a job earning $32000 per year, but unfortunately for his potential employer, he had completed a deal the week before netting him $35000. Consequently, he didn't accept the job, and to this day has never had one. Click here to visit Dolf's website.

"[Property] is the simplest, most reliable, and most consistent vehicle I know to convert even a little financial intelligence into a lot of cold, hard cash." Dolf de Roos

Monopoly is a board game published by Parker Brothers. It is often compared to real life real estate investing. According to Hasbro, Monopoly is "the most played [commercial] board game in the world". Players compete buying, renting and trading properties on a square board with fake money. The aim of the game is to bankrupt the other players by owning the most real estate. As Robert Kiyosaki's Rich Dad said, "The formula for great wealth is found right here on this board. The formula is, four green houses... red hotel."

 

Getting started

It's rather simple to get started. You should look up all the real estate terms like appraisals and collateral. You can watch a few auctions and take a look at a few properties yourself. But most of all, you should put in a good amount of effort. Good luck with your investing!

Bibliography

Faulcon, Gregory. "Investments." Greg Sells Charlotte.com. 2007. 24 Sept. 2007 <http://www.gregsellscharlotte.com/investors.html>.

"Real Estate." Wikipedia. 2007. 24 Sept. 2007 <http://en.wikipedia.org/wiki/Real_estate>.

Posted by Proabffmm on Sunday, December 30, 2007.

 

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