Investing in real estate involves the acquisition, holding and sale of real estate rights with the expectation that cash inflows will be used for potential future cash outflows, generating a favourable rate of return on that investment.
Real estate, along with anything permanently attached to the land, such as buildings, has been described as land (or immovable property), and investment is the act of using money to buy property for the sole purpose of holding or leasing income. It is safe to say then (combining both definitions) that investing in real estate includes the acquisition of real estate (or investment in real estate) for income generation, profit making, and wealth acquisition purposes. If you would like to learn more about this, please check out http://highscorehouse.com/advice-for-door-county-real-estate-sellers-show-me-the-comps/.
Leverage In contrast to stock investments (usually requiring more equity from the investor), a real estate investment investment can be leveraged (heavily). You can use other people’s money with a real estate investment to magnify your rate of return and control a much larger investment that is otherwise not possible.
Tax Shelter Investing in real estate offers tax benefits. There are returns on annual after-tax cash flows, equity accumulation through asset appreciation, and after-tax cash flow upon sale.
Non-Monetary Returns Real estate investment provides ownership pride, ownership control security, and diversification of portfolios.
Investing in real estate is not a bed of roses, though. Investment in real estate requires capital, risks exist, and rental property can be management-intensive. On the other hand, the car you drive requires capital, it involves risk driving, and management is definitely required. The distinction is that a vehicle is not a source of wealth.