Investing in Real Estate

The types of investments in real estate include home ownership, rental properties, land, and indirect investments in real estate through a limited partnership and real estate investment trusts (REITS).

The most common type of investment in real estate is home ownership which generally is the largest individual investment carried out by most families.

Home ownership
Buying a home could be the greatest only expense that you could make, but this expense differs from others that you make. Few people have enough cash money to absorb the total cost of a house. Moreover, they make down payments and borrow from the balance of financial institutions using the property as collateral in the mortgage loan.

Assuring a mortgage loan from a financial loaner requires that applicant have the financial means to make repayments in monthly amounts of interest and principal, as also be able to cover the insurance, real estate taxes and the maintenance of the property.

Home ownership offers significant benefits in taxes and opportunities to become wealthier and appreciation of capital. Through long periods, the majority of homes are valued and the prices tend to be kept through inflation.

Tax benefits are due to the possibility of being able to deduct your interest expenses over the home mortgage and in the real estate taxes of the taxed income at a Federal level.

These deductions result in a lower imputable income and tax payment to the Federal government. Besides, interest expenses over a home mortgage are not subject to inclusion in the computing of the alternative minimum tax (AMT). Because a part of each monthly payment of the mortgage payment is applied to repay the mortgage loan, the home owner is reducing the mortgage balance with each monthly payment and increasing its equity position, which is another way of savings.

The disadvantage of home ownership is that house prices decline and you have to sell your house when the property market is depressed and you end up losing money.

Home ownership also can diminish the mobility due that it is not easy to sell your home and at the same time move to another place in a short period of time.