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Real Estate Investments

Real estate investments are a smart way to enhance your financial portfolio. Before participating in the game of real estate investing it is important to understand the various types of investment opportunities. In order to be successful, careful consideration must be given to the market and the goals you wish to achieve.

While there are numerous real estate investments options, there are only two ways to make money. The first technique involves purchasing real estate such as single dwelling homes, commercial properties or vacant land. These properties can be rented, sold or traded for profit. The second technique involves investing in shares of real estate investment trusts (REIT) or stocks of real estate developers.

Serious real estate investors generally invest in both real estate and REITs. Investors who are new to the real estate game oftentimes find investing in REITs or stocks, a good way to start out. Much depends on the level of hands-on involvement. Investors who do not want to deal with repairs or renovations, obtaining tenants, or maintaining properties are probably better suited for real estate investment trusts or stock investments.

Purchasing real estate for investment purposes requires considerable knowledge. Investors should understand the market and be clear on the goals they want to achieve. When purchasing houses, duplexes or apartments, investors should know what types of tenants they wish to attract. Some investors prefer to purchase high-end real estate and rent it out as vacation property. Other investors prefer to invest in properties which can be used as Section 8 housing.

Rental properties offer the opportunity to yield a good return on investment; however, it can take several years to turn a profit. In today's uncertain market, many investors are purchasing houses solely for the purpose of using them as rent-to-own properties. This technique allows tenants to rent the home and have a percentage of rent monies applied toward the purchase price.

Typically, rent-to-own contracts last two to five years. At the end of the term, the tenant obtains financing and purchases the property using the applied rent as a down payment. The tenant has the option to bow-out of the contract if they are unable to obtain financing or decide they do not want to purchase the property.

In cases where tenants default on rent-to-own contracts, investors can engage in another contract with a new tenant, sell the property, or rent it out. This type of real estate investment is relatively risk-free; however, a legal contract should be executed to ensure the investor has legal recourse if needed.

Other types of residential real estate investments include duplexes, apartments, mobile homes and condos. Residential properties can be used as vacation rentals, seasonal rentals, year-round rentals or house flipping.

House flipping involves purchasing distressed properties in need of repairs or renovation. Distressed properties generally include foreclosure homes or bank owned properties. Oftentimes, these properties have sat vacant for a long period of time.

The primary object of house flipping is to purchase real estate at a cost well below market value, make repairs, than sell the house for profit within a matter of months. House flipping can be a very profitable way to invest in real estate; however, it is not without risk. Should you decide to engage in flipping houses it is imperative to become educated about the area where the property is located. Otherwise, you could sit on the house for a long time.

Commercial real estate investing can yield a high return on investment. Typically, commercial real estate is purchased by a group of investors. Properties which fall into the commercial category include apartment buildings, condominium complexes, office buildings, shopping malls, shopping strip centers, retail shops, restaurants and vacant land.

Most investors postpone investing in commercial real estate until they have a strong background in investment opportunities. Commercial investments are usually more difficult to purchase, manage and sell than residential real estate.

Although the real estate market is currently unstable, history shows real estate investments are generally safer than any other type of financial investment. Opportunities to generate profit through real estate investments are abundant. It is simply a matter of becoming educated about what is available.

We invite you to learn more about real estate investments, distressed properties, house flipping, commercial real estate, and investment techniques in our real estate article library. New articles are added each week, so please bookmark and stop by often!

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Published on November 18, 2008 at 02:37 AM

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