Real estate investment involves the commitment of funds to property with an aim to generate income through rental or lease and to achieve capital appreciation. Real estate refers to immovable property, such as land, and everything else that is permanently attached to it, such as buildings. When a person acquires real estate, s/he also acquires a set of rights, including possession, control and transfer rights.Understanding real estate investment is crucial because it usually involves a substantial investment and a long-term one. Moreover , the real estate market can be unpredictable. This is particularly important when one goes beyond buying a home to actually “investing” in real estate. There are a number of ways in which an investor can participate in the real estate market.
If you are eyeing property for tax benefits and higher rental income, you can wait for some more time. No doubt, property prices are being corrected by 10-15%, but the trend is at an early stage. With urban centres facing the challenge of excess supply over demand, another 10% correction from the current price level is not ruled out. Also, the interest rate is likely to stabilize in the next 9-12 months as inflation should turn more manageable by then. That would also mean more stability in home loan rates which have begun to inch towards the 13% level after the recent round .

One can opt for real estate investment with an aim to rent the property out to a tenant. The owner (landlord) earns a continuous stream of rent from the tenant, but is responsible for paying the mortgage, taxes and any costs associated with maintaining the property. The owner also benefits from capital appreciation. The landlord runs the risk of not finding a tenant and could suffer negative monthly cash flows, with mortgage payments and maintenance expenses still to be borne. As compared to owning stocks and bonds, rental real estate requires a significant amount time and effort to be devoted by the landlord.

Real estate traders hold properties for only a short span of time (less than four months), aiming to sell them at a profit. This process is called flipping properties. Investors aim at purchasing significantly undervalued or very hot properties. Such owners may or may not invest money into improving the property before putting it back on sale. A bear market could result in substantial losses for a real estate trader, since the investment is large.Once you decide to buy an investment property, decide how to finance the property. Home loans or mortgages are normally offered by banks, credit unions or building societies. These institutions offer you a loan for a percentage of the purchase price, with the property secured as collateral for the loan. Loans or mortgages are normally secured with either fixed interest rates or variable/ floating interest rates based on the interest rates fixed by that country’s central bank or finance ministry.