Features

Definition: Real estate investing refers to the purchase of property as an investment to generate income rather than using it as a primary residence. In simple terms, it can be understood as any land, building, infrastructure and other tangible property which is usually immovable but transferable.

Features of Real Estate Investing

When we talk about real estate, we can say that it requires a lot of foresightedness and capital investment to expect fruitful returns.

Let us now understand the characteristics of real estate investment one by one:

• Tangible: Real estate or properties are one of those investments which have a physical existence and can be touched and seen.
• Immune to Inflation: When economic inflation creates a negative impact on the value of other investments, investing in real estate is a fruitful option. It is the only investment which results in value appraisal in adverse situations.
• Allows Use of Leverage: The financial institutions are attracted towards funding for real estate because of its real or physical existence.
• Uncertain Maturity Period: Real estate investment does not have any fixed maturity period like in other investments such as fixed deposits and bonds. It is the owner who decides whether to hold the property or sell it.
• Value Enhancement: Investing in properties can provide dual benefit to the investors. On the one hand, real estate generates rental income, and on the other hand, its value keeps on increasing in the long run.
• Low Liquidity: One of the essential features of real estate is that it is a capital asset. Therefore, it cannot be frequently bought or sold like stocks or equity.
• Needs Management: Real estate investment is buying a physical asset which involves the expenditure on its maintenance. The investor also needs to manage the source of income so generated.
• Universally Acceptable as Collateral: Financing the properties by taking them as collateral is very common among the banks and other financial institutions.
• Profitable Even During Recession: Real estate investments have been considered as one of the safest investments. If done wisely, they yield profit or generate income even at the time of recession.