property_investmentSo its been a while since I did a Simplified Sunday installment. Why? To be quite honest, its getting harder to find time with more projects in my personal life piling up. Since I have time today, I thought I would share a topic that can be widely utilized to tapping into financial gains.

Owning a property is one of the biggest pieces you can hold in your investment portfolio. Even the primary home you live in right now, if you own it, is an investment. You bought the home at a price you though was fair at the time and hoped that over time, it would appreciate in value – just like any other stock you trade on the markets! Lately, people have learned that buying a home is not always a guaranteed investment, its not always going to go up in value, and just like stocks, some people end up buying too high and are forced to sell low. Its part of the game.

There are different types of methods to invest in properties and for the most part, this will be geared to the smaller, individual investor. These income generating properties are bought by people like you and I, in the form of smaller apartment buildings, duplexes or even a single family homes or condominiums that are rented out to tenants for a profit.

Real estate highly tangible, you can see and touch it your property which differs from owning a piece of stock in a company like Apple (AAPL). This can instill pride of ownership, but being tangible also has its downside because real estate requires hands-on management (mow lawn, remove snow, unclog the sink!).

When you decide to invest in real estate, you need to decide what kind of exposure to the real estate market you seek. Different exposures produce varying levels of risk and return.

The first type is the most common type, the private market. In the private market, you would be purchasing a direct interest in one or more real estate properties. You would own and operate the piece of real estate yourself , and you would receive the rent payments. For example, if you were to purchase an apartment building that was leased to one or more tenants who pay you rent, you would be participating in the private real estate market.

The other type is a public market. Here, you are investing in a public company that holds properties. These are known at REIT’s (real estate investment trusts) and are something many people look at for a more simple way of investing. It requires no real hands on experience as you are just buying shares in a company that will buy and sell properties for profit.

I know this is the start, but will continue next week with the second installment of this topic.

Happy Investing!

Aman, MBA

Related posts:

  1. Simplified Sunday #1 – How to start off investing – Part 1
  2. Simplified Sunday #6 – How to start off investing – Part 6
  3. Simplified Sunday #3 – How to start off investing – Part 3