Real estate investment means investing (buying) into a property (land) by an investor for the sake of making a profit out of it. Therefore, such land is not in use for residing by the investor. The property for real estate investment includes tangible (immovable) properties such as buildings, land, or any other infrastructure. 

What is Real Estate Investment?

What is Real Estate Investment? Real estate purchasing (land or building) as an investment rather than as a permanent residence is referred to as real estate investing. Here is the definition of real estate investment: any immovable but transferable infrastructure, building, land, or other tangible property. Investment in Real Estate is the most secure investment.

Real Estate Development                

Real estate development is a subspecialty of real estate investing that involves improving real estate property as part of a real estate investment plan.

Example of Real Estate Investment

Some main examples of real estate investment include the following. 

• Agricultural land
• Any commercial plot
• House
• Office building

What Does a Real Estate Investor Do?

1. He may renovate his purchased property and then sell it with an added profit on it. His profit amount for reselling includes the expenses he has had on the renovation of his property. 
2. On the other hand, he may keep the property and put it on rent to keep earning a monthly or yearly profit from the rent. 

Types of Real Estate Investment

It is essential to know the types of investment before moving on. Different categorization is according to the use of the property. As such, there are seven types of Real Estate Investments.

1. Land
2. Commercial real estate
3. Industrial real estate
4. Residential real estate
5. Fix and flip properties
6. Retail space
7. Mixed use

Let us find what each type of the above investment means.

Land 

Any unused area being used for grazing or farming is considered real estate.

Commercial real estate

A complex of properties or office buildings is divided into several smaller units. These are rented out or utilized to operate a variety of companies.

Industrial Real Estate

It is a huge property that is used to construct factories, warehouses, distribution facilities, industrial plants and other similar structures.

Residential real estate

This type of real estate comprises houses like single, double, triplex, fourplex, township, bungalow, cottage, villa, farmhouse, mansions and other types of homes. It doesn’t matter if it is a newly built home or one that the owner plans to resell.

Fix and Flip Properties 

These kinds of real estate property are those residential properties that are in bad condition and are offered at a reduced price. Such properties are purchased by investors then they are renovated and repaired. Then they are resold at a high price.

Retail Space

Retail space is a real estate property where individual apartments or many units are in a prime location. These properties are utilized as shopping centers, cafes and restaurants, showrooms, chain outlets, and for other similar uses. 

Mixed use

It simply refers to a single high-end real estate initiative that consists of the many kinds of properties which are mentioned above. It is to guarantee reducing the risk of failure of the project and variety. 

Characteristics of Real Estate investment

Are you seeking the answer for what are the characteristics of real estate investment? Let us tell you few unique characteristics of real estate.

Durability

Real estate investments will last a century and accumulate profit for successive generations. Unlike other assets, real estate has no fixed maturity. You can sell a terrific opportunity in a few days or keep it for decades if you see one.

Lack of Transparency 

Specific markets, such as stocks and commodities, are regulated to ensure maximum transparency. Investors get access to real-time market data and can make adjustments to their portfolios right away.

Real estate works uniquely. When an investor buys a property, there’s a chance the seller is hiding information or isn’t aware of any issues.

Manifoldness

Every property is unique in location, physical structure, and financing, so all real estate is local.

As a result, investors can take advantage of their local community knowledge to build and manage a highly profitable real estate portfolio. Because of the variability of real estate, the most successful investors have a team in each geographic location of their real estate investments.

Illiquid

Real estate is illiquid since it is difficult to sell without suffering a significant loss in value.

When it comes to real estate investing, though, a lack of liquidity is a desirable thing. Real estate’s illiquidity helps to make it a regular, appreciating asset class for long-term investors.

 It is essential to know the types of investment before moving on. Different categorization is according to the use of the property. As such, there are seven types of Real Estate Investments.

Pros and Cons of Real Estate Investment

  Now it’s time to find the possible pros and cons of the real estate investment.

Advantages

• In real estate, you may get the benefit of purchasing a property at a below-market price. There could be several reasons like for example, if the seller is in a hurry and wants to sell his property urgently, it could be a profitable bargain for you.
• If you do not use the property for living purposes, then giving it on rent helps generate steady cash flow in the form of monthly rent payments.
• Real estate investment saves you from additional taxes. So one advantage of real estate investment is that it provides you with a depreciation tax shield.
• There is no need to pay income tax on the purchased property when it raises its worth unless you plan to sell it.
• The real estate investment is a fruitful bargain as, with time, the worth of the property increases.

Disadvantages

• No doubt, there happens an increase in the wroth of the purchased property. But in reality, it is dependent on an extended period.
• Real estate investment is a gamble. There are clear chances of losing money in this business as well.
• When you keep the property for long and wait for the increase of its worth, sometimes you need to keep fixing many issues that you encounter like seepage, leaks, renovation of falling plaster, etc.; in turn, you have to spend money side by side on its up-gradation.
• In some instances, the government imposes rent controls, which cannot help you to gain profit, as you are unable to increase the rent.

CONCLUSION

Well, looking at the whole scenario including the pros and cons, it can be said that where this real estate investment can be a bit risky, there at the same time it has more advantages. It certainly can provide your upcoming generations their desired life.