Understanding Real Estate Investing

Real estate investing has a lot of ups and downs, just like any other type of investing. The highs and lows of it can be short-lived and even though you see a windfall of profits come from real estate investments, you can easily lose half your investments in a year or two. However, if you do your research and learn from your mistakes, you can be one of the people who makes a lot of money in real estate.

Real estate investing can be profitable or it can also be very devastating to your pocketbook. Real estate consists of the actual buildings and land on it, its accompanying natural resources like water, minerals or plants; and its intangible assets like the reputation of the property used as residential real estate or the land itself. All these assets can be tied down by one property and if it’s damaged or destroyed, the owner of that land will not have the funds needed to completely repair or replace that property. The cost of repairing and replacing that property can be significant.

In residential real estate investment, the most common types are single family residences, condominiums and town homes. In the commercial sector, the most common types are office buildings and strip malls. Although there are many types, they are usually separated into three main categories: land, building and land-based assets. Building-based assets are those that are used for constructing buildings like apartment buildings, condominiums, office buildings and other forms of residential buildings.