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Real Estate Investing

Terrance Harrington
January 29, 2016
160

Real Estate Investing

This presentation discussed the advantages and disadvantages of real estate investments.

Terrance Harrington

January 29, 2016
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Transcript

  1. 1 Real Estate Investments What You’ll Learn §  Explain the

    different types of real estate investments. §  Discuss the advantages and disadvantages of real estate investments.
  2. 2 Business and Personal Finance Unit 3 Chapter 11 ©

    2007 Glencoe/McGraw-Hill Collecting §  Q: Are collectible action figures a smart investment for retirement? §  A: Although collecting can be an enjoyable and sometimes profitable pursuit, collectibles are not a mainstay of retirement planning. It would be best if you focused your retirement planning efforts on building a diversified portfolio that may include stock and bond investments. You could still use collectibles as a small part of your portfolio, but their returns are very unpredictable. 2
  3. 3 Business and Personal Finance Unit 3 Chapter 11 ©

    2007 Glencoe/McGraw-Hill Why do you think so many Americans invest in real estate? 3 Main Idea Real estate investment opportunities vary widely. Consider the advantages and disadvantages of each type of investment opportunity. Real Estate Investment
  4. 4 Real Estate Investments Real estate has always been a

    favorite investment for Americans. Unlike stocks and bonds, a piece of property is something you can: §  See §  Touch §  Take pride in If you are new to the real estate market, you may be confused by all the different choices you have. Real Estate Investment
  5. 5 Real Estate Investment Direct Real Estate Investments Real estate

    investments can be either direct or indirect. Direct investments include: §  Single-family houses §  Duplexes §  Apartments §  Land §  Commercial property direct investment an investment in which the owner holds legal title to the property he or she has purchased
  6. 6 Real Estate Investment A Home as an Investment Home

    ownership is most Americans’ largest financial asset. Owning a home is a good investment because: §  Home prices have risen steadily over the years. §  Most homeowners have mortgages, which can provide certain tax benefits. Second homes, or vacation homes, also provide tax benefits.
  7. 7 Real Estate Investment Commercial Property Some examples of commercial

    property include: §  Duplexes §  Hotels §  Office buildings §  Stores Many investors start by purchasing a small commercial property. Then they buy larger properties as the equity in their original investment increases. commercial property land and buildings that produce rental income
  8. 8 Real Estate Investment Land While land investments often promise

    tremendous gains, they also pose enormous risks. For example, you might not be able to sell your property at a profit, or even at the price you paid for it, if: §  Construction in general slows. §  Business activity declines. Unlike an apartment building, land in urban areas usually does not produce any income.
  9. 9 Real Estate Investment Indirect Real Estate Investments If you

    want to invest in real estate but do not have enough money to purchase property on your own, you might want to consider an indirect investment. Indirect investments include: §  Real estate syndicates §  Real estate investment trusts §  High-risk mortgages §  Participation certificates indirect investment an investment in which a trustee is appointed to hold legal title to the property on behalf of an investor or group of investors
  10. 10 Real Estate Investment Real Estate Syndicates or Limited Partnerships

    A real estate syndicate invests in real estate. A syndicate may be organized as: §  A corporation §  A trust §  A limited partnership A real estate syndicate offers you and the other partners a variety of benefits. syndicate a temporary association of individuals or business firms organized to perform a task that requires a large amount of funds
  11. 11 Real Estate Investment Participation Certificates If you are looking

    for a risk-free real estate investment, then participation certificates might be a good choice for you You can buy participation certificates from these federal agencies: §  Government National Mortgage Association (Ginnie Mae) §  Federal Home Loan Mortgage Corporation (Freddie Mac) §  Federal National Mortgage Association (Fannie Mae) §  Student Loan Marketing Association (Sallie Mae) participation certificate (PC) an investment in a group of mortgages that have been purchased by a government agency
  12. 12 Real Estate Investment Real Estate Investment: Pros and Cons

    Before you invest in real estate, you will want to weigh the advantages and disadvantages.
  13. 13 Real Estate Investment Advantages of Real Estate Investments The

    advantages of certain types of real estate investments include: §  Hedge against inflation §  Easy entry into commercial property ownership §  Limited financial responsibility §  Financial leverage financial leverage the use of borrowed funds for direct investment purposes
  14. 14 Real Estate Investment Disadvantages of Real Estate Investments Some

    of the possible disadvantages to real estate investments include: §  Illiquidity §  Declining property values §  Lack of diversification §  Lack of a tax shelter §  Management problems Property management can be a full-time job, and many investors are not willing to take on that much responsibility.
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