REAL ESTATE INVESTMENT
Real estate investment, like any investment, involves fundamental theories and techniques to succeed. Most investment vehicles offer return on investment, and return of investment. But in today’s investment market, even return on and of investment is risky. No other type of investment offers as much to the investor as real estate.
The primary advantage in investing in real estate is leverage, in which the investor can use a small portion of his or her capital, and borrow, or leverage the difference in the price. Secondly is income, which is achieved from rental of the property, among other sources, such as vending machines. The third advantage is appreciation, with price growth very nearly assured. While the market conditions current in September, 2009, may cause some doubt about depreciation, real estate prices over the long term always go up. An attractive advantage in real estate investing is tax savings, because interest on your debt is deductible against rental income, operating expensed are deductible, closing costs on the acquisition of the property are amortized over the holding period, and likewise are deductible, and some of the income is sheltered through depreciation.
One investment advantage unique to real estate investment is mortgage reduction, achieved as rental income pays down the debt. It is complicated and very rare when any other investment vehicle can provide the investor the advantage of debt reduction. There are many other types of investments, including bank savings, life insurance, stock market known as equities, bond market known as debt such as treasury securities, junk bonds, and so forth, and tangibles such as art, wine, gemstones, and other similar items. None of these investments have the advantages of the real estate investment.
The ability to invest in real estate provides great flexibility. There are many types of investors, including individuals, partnerships such as general partnerships or limited partnerships, corporations, limited liability companies, and syndicators. Pooling assets so numerous individuals are able to join together to purchase larger properties is easily accomplished.
There are many types of properties, just like there are many industries represented on the stock exchange, including residential, and non – residential. Each of these types further segments into single tenant and multi tenant types of properties. Further still, properties segment into retail, office, industrial, and agricultural.
Finally, the investor can be also be a speculator, meaning the goal no longer lies in income, and tax savings, and even debt reduction, but lies totally in price appreciation. The speculator has a long and notorious reputation in real estate investment history; however, converting vacant land to profits is a perfect representation of the American ingenuity.
Although investment in real estate is illiquid, meaning that property does not quickly convert to cash, the overall yield can be quite higher than the yield achieved in alternative investments, the real estate market is generally more stable than capital markets, and the sum of the advantages of real estate investment should make real estate a part of the investor’s overall portfolio.
McGinnis Commercial Real Estate Company is able to help the real estate investor sort through all of the questions and requirements of investing in real estate. Our company can help the investor match his or her goals with opportunities. In business for over 30 years in the local market area, McGinnis Commercial Real Estate is trained and experienced in real estate investment, and our goal is enable the investor to repeat as our client maintaining a long term relationship. Call us today and we can help you convert your dreams into investment reality.