Real estate has been around as a means of investment since ages, so somehow the Wall Street has found a way to make real estate into a publicly traded instrument. Following this there is another way to invest in real estate through Real Estate Investment Trust (REIT). This is created when a corporation uses different people’s money to buy and operate various income properties. REITs can be bought and sold on the exchange market just like all the other trading stocks. However, a company must pay out 90% of its profits in the form of dividends to make sure that it maintains its status as a real estate investment trust. There is a significant benefit associated with it which most likely convinces many people into investing their sums. By paying out 90% of its taxable profits as dividends the company avoids paying the corporate income tax whereas the usual companies have to distribute profits after the deduction of tax as dividends.

If you are bullish on the economy, real estate is a great place to park your money.

Real Estate Trading involves traders who are aggressive in nature. These traders do not typically buy and hold the properties and rent them instead they hold the properties for a short period of time and then sell it further in view of making profits. These traders particularly avoid laying extra money on these houses that they are about to sell as this creates a negative cash flow and has to be deducted from the profit which in results in a reduced gain on disposal of the property. Normally the traders do not hold the properties for more than 3 to four months of period. This technique is referred to as the flipping of the properties. The traders try to target those properties that are particularly undervalued or are overvalued in a certain market. To make profit without having to alter the property; this flipping is called a short-term manner of cash flow.

There is another class of traders among these people who actually believe in purchasing the properties at a reasonably low price and then putting extra money on the renovation of the property and then disposing it to other parties. This is a longer term investment compared to the above mentioned property flippers. The only problem with this kind of property trading is that it involves a large sum of readily available cash for renovations and requires a lot of time which results in investor buying only one property at a time.

The last one has a greater advantage over the other as the value of the land appreciates over time. Waiting patiently for the property to regain its true value might prove fruitful in the near future for the investor. By going through the historic trends, it has hence been proved that the value of the housing has always appreciated in the long run.

There are plenty of other ways in which you could invest in real estate but these are one of the few that are most common among people.

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