Buying real estate is about more than just finding a place to call home. Investing in real estate has become increasingly popular over recent years and has become a common investment vehicle.

Although the real estate market has plenty of opportunities for making big gains, buying and owning real estate is a lot more complicated than investing in stocks and bonds. In this article, we'll go beyond buying a home and introduce you to real estate as an investment.

Basic Rental Properties
Probably one the most common and oldest investment techniques out there. A person buys a property and rents it out to a tenant. The landlord is responsible for paying the mortgage, taxes and costs of maintaining the property.

Ideally, the landlord charges enough rent to cover all of the costs mentioned above. A landlord may also charge more in order to produce a monthly profit if the home is in high demand with extra conveniences and facilities. This especially pays out by the end of the loan term, when majority of the rent becomes profit. Furthermore, the property may also have appreciated in value over the course of the mortgage, leaving the landlord with a more valuable asset.

Real Estate Investment Groups
Real estate investment groups are sort of like small mutual funds for rental properties, minus the hassle of being a landlord as compared to owning the property themselves.

A company buys or builds a set of apartment blocks or condos and then allows investors to purchase them through the company, thus joining the group. A single investor can one up to multiple units, but the company operating the investment group manages the units as a collective. This covers taking care of maintenance, advertising vacant units, and interview potential tenants. In exchange for this management, the company takes a percentage of the monthly rent.

Real Estate Trading
Also known as “Flipping” real estate trading is the wild and fast side of real estate investment. These traders buy properties with intention of selling them off within a couple of months for a profit. This technique focuses on significantly undervalued property, or units in a very hot market.

Pure property flippers will not put any money into a house for improvements; the investment has to have the intrinsic value to turn a profit without alteration or they won't consider it. Flipping in this manner is a short-term cash investment.

REITs
A real estate investment trust (REIT) is created when a corporation (or trust) uses investors' money to purchase and operate income properties. REITs are bought and sold on the major exchanges, just like any other stock.

Conclusion
We’ve looked through several types of real estate investment, but within these examples there are countless variations of real estate investments. The potential with real estate investment is huge, but this does not mean that it’s always guaranteed gain. Weigh your choices carefully before diving in.


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