Blackbook Sample.docx

1.1 INTRODUCTION-INVESTMENT In finance, the benefit from investment is called a return. The return may consist of a profit from the sale of property or an investment, or investment income including dividends, interests, rental income etc., or a combination of the two. The projected economic return is the appropriately discounted value of the future returns. Investors generally expect higher returns from riskier investments. When we make a low risk investment, the return is also generally low. Investors, particularly novices, are often advised to adopt a particular investment strategy and diversify their portfolio. Diversification has the statistical effect of reducing overall In general, to invest is to distribute money in the expectation of some benefit in the future – for example, investment in durable goods, in real estate by the service industry, in factories for manufacturing, in product development, and in research and development. However, this article focuses specifically on investment in financial assest. An investment is an item or asset acquired with the goal of generating income or appreciation. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit. Investment can be defined allocating money to assets with the hope that in the future it would provide some benefit such as generation of income. Property and gold are some common examples of the traditional type of investment. The value of property, gold, mutual funds and shares bought today may see a significant increase in the future. In the financial industry, investments can be bifurcated into two broad categories, namely traditional and alternative. Stocks are also known as equity shares, which are issued by the business organization to the general public for raising funds. Stock entitles the shareholder the ownership of the company. In the exchange of money which the business organization receives, the shareholder receives stock certificates. This is one of the oldest and safest ways to save money in which a fixed amount is kept aside with financial institutions like banks for a fixed number of days, months or years. The rate of return on the money differs with the different timelines which the investor chooses. The investors go for various other options beyond stocks and bonds which are investing in acquiring jewellery like gold or other precious stones and metals. Cryptocurrency is another emerging investment option in the modern day. Thus, investment turns out to be the most important financial decision which each individual or organization has to take in order to yield maximum benefits or profits from the money which is lying unproductive.

Investment Definition in terms of Economics: According to economic theories, investment is defined as the per-unit production of goods, which have not been consumed, but will however, be used for the purpose of future production. Examples of this type of investment are tangible goods like the construction of a factory or bridge and intangible goods like 6 months of on-the-job training. In terms of national production and income, Gross Domestic Product (GDP) has an essential constituent, known as gross investment.

Investment Definition in terms of Business Management: According to business management theories, investment refers to tangible assets like machinery and equipment and buildings and intangible assets like copyrights or patents and goodwill. The decision for investment is also known as capital budgeting decision, which is regarded as one of the key decisions.

Investment Definition in terms of Finance: In finance, investment refers to the purchasing of securities or other financial assets from the capital market. It also means buying money market or real properties with high market liquidity. Some examples are gold, silver, real properties, and precious items. Financial investments are in stocks, bonds, and other types of security investments. Indirect financial investments can also be done with the help of mediators or third parties, such as pension funds, mutual funds, commercial banks, and insurance companies.

Investment Definition in terms of Personal Finance: According to personal finance theories, an investment is the implementation of money for buying shares, mutual funds or assets with capital risk.

1.2. TYPES OF INVESTMENT There are many types of investments and investing styles to choose from. Mutual funds, ETFs, individual stocks and bonds, closed-end mutual funds, real estate, various alternative investments and owning all or part of a business are just a few examples.

Stocks Buying shares of stock gives the buyer the opportunity to participate in the company’s success via increases in the stock’s price and dividends that the company might declare. Shareholders have a claim on the company’s assets in the event of liquidation, but do not own the assets.

Holders of common stock have voting rights at shareholders’ meetings and the right to receive dividends if they are declared. Holders of preferred stock don’t have voting rights, but do receive preference in terms of the payment of any dividends over common shareholders. They also have a higher claim on company assets than holders of common stock.

Bonds Bonds are debt instruments whereby an investor effectively is loaning money to a company or agency (the issuer) in exchange for periodic interest payments plus the return of the bond’s face amount when the bond matures. Bonds are issued by corporations, the federal government plus many states, municipalities and governmental agencies. A typical corporate bond might have a face value of $1,000 and pay interest semi-annually. Interest on these bonds are fully taxable, but interest on municipal bonds is exempt from federal taxes and may be exempt from state taxes for residents of the issuing state. Interest on Treasuries are taxed at the federal level only. Bonds can be purchased as new offerings or on the secondary market, just like stocks. A bond’s value can rise and fall based on a number of factors, the most important being the direction of interest rates. Bond prices move inversely with the direction of interest rates.

Mutual funds A mutual fund is a pooled investment vehicle managed by an investment manager that allows investors to have their money invested in stocks, bonds or other investment vehicles as stated in the fund’s prospectus. Mutual funds are valued at the end of trading day and any transactions to buy or sell shares are executed after the market close as well. Mutual funds can passively track stock or bond market indexes such as the S&P 500, the Barclay’s Aggregate Bond Index and many others. Other mutual funds are actively managed where the manager actively selects the stocks, bonds or other investments held by the fund. Actively managed mutual funds are generally more costly to own. A fund’s underlying expenses serve to reduce the net investment returns to the mutual fund shareholders. Mutual funds can make distributions in the form of dividends, interest and capital gains. These distributions will be taxable if held in a non-retirement account. Selling a mutual fund can result in a gain or loss on the investment, just as with individual stocks or bonds. Mutual funds allow small investors to instantly buy diversified exposure to a number of investment holdings within the fund’s investment objective. For instance, a foreign stock mutual might hold 50 or 100 or more different foreign stocks in the portfolio. An initial investment as low as $1,000 (or less in some cases) might allow an investor to own all the underlying holdings

of the fund. Mutual funds are a great way for investors large and small to achieve a level of instant diversification.

ETFs ETFs or exchange-traded funds are like mutual funds in many respects, but are traded on the stock exchange during the trading day just like shares of stock. Unlike mutual funds which are valued at the end of each trading day, ETFs are valued constantly while the markets are open. Many ETFs track passive market indexes like the S&P 500, the Barclay’s Aggregate Bond Index, and the Russell 2000 index of small cap stocks and many others. In recent years, actively managed ETFs have come into being, as have so-called smart beta ETFs which create indexes based on “factors” such as quality, low volatility and momentum.

Alternative investments Beyond stocks, bonds, mutual funds and ETFs, there are many other ways to invest. We will discuss a few of these here.

REAL ESTATE Real estate investments can be made by buying a commercial or residential property directly. Real estate investment trusts (REITs) pool investor’s money and purchase properties. REITS are traded like stocks. There are mutual funds and ETFs that invest in REITs as well. Hedge funds and private equity also fall into the category of alternative investments, although they are only open to those who meet the income and net worth requirements of being an accredited investor. Hedge funds may invest almost anywhere and may hold up better than conventional investment vehicles in turbulent markets. Private equity allows companies to raise capital without going public. There are also private real estate funds that offer shares to investors in a pool of properties. Often alternatives have restrictions in terms of how often investors can have access to their money. In recent years, alternative strategies have been introduced in mutual fund and ETF formats, allowing for lower minimum investments and great liquidity for investors. These vehicles are known as liquid alternatives.

1.3.WHAT IS REAL ESTATE Real estate is property made up of land and the buildings on it, as well as the natural resources of the land, including uncultivated flora and fauna, farmed crops and livestock, water and mineral deposits. Although media often refers to the "real estate market," from the perspective of residential living, real estate can be grouped into three broad categories based on its use: residential, commercial and industrial. Examples of residential real estate include undeveloped land, houses, condominiums and town houses; examples of commercial real estate are office buildings, warehouses and retail store buildings; and examples of industrial real estate include factories, mines and farms. Real estate refers to land, as well as any physical property or improvements affixed to the land, including houses, buildings, landscaping, fencing, wells, etc. Real estate is a special instance of real property. Real property, a broader term, includes land, buildings and other improvements – plus the rights of use and enjoyment of that land and all its improvements. Renters and leaseholders may have rights to inhabit land or buildings that are considered a part of their personal estate, but are not considered real estate. Personal property includes intangible assets like stocks, bonds and other investments; it also includes chattels, like computers, furniture and clothes, as well as fixtures like a dishwasher, even if you are renting a home (provided you bought and installed it with the lessor's permission). Residential Real Estate and Home Ownership According to a December 2017 report from real estate website Zillow, the total value of all U.S. homes in 2017 was $31.8 trillion, more than 1.5 times the nation's Gross Domestic Product (GDP) at the time. Home ownership, also known as owner-occupancy, is the most common type of real estate investment in the United States. According to the National Multifamily Housing Council, roughly two-thirds of residents own their home. Often, they have financed the purchase by taking out a particular type of loan known as a mortgage, in which the property acts as collateral for the debt. Individuals shopping for a mortgage to invest in real estate in the form of an owner-occupied home are faced with a variety of options. Mortgages can either be fixed-rate or variablerate. Fixed-rate mortgages generally have higher interest rates than variable-rate mortgages, which can make them more expensive in the short run. Fixed-rate loans cost more in the short-term because they are protected from future interest rate increases. Banks publish amortization schedules that show how much of a borrower's monthly payments go to paying off interest versus how much goes to paying off the principal of the loan. Balloon loans are mortgages that don't fully amortize over time: The borrower pays interest for a set period, five years for example, and then must pay the remainder of the loan in a balloon payment at the end of the term. Also, mortgages can come with heavy costs, including transaction fees and taxes, which are often rolled into the loan itself. Once potential homeowners have proven their eligibility and secured a mortgage from a bank or other lender, they must complete an additional set of steps to make sure the property is legally for sale and in good condition.

Commercial Real Estate Commercial real estate is used for commerce and includes anything from strip malls and freestanding restaurants to office buildings and skyscrapers.

1.4. TYPES OF REAL ESTATE There are four types of real estate: 1. RESIDENTIAL REAL ESTATE includes both new construction and resale homes. The most common category is single-family homes. There are also condominiums, co-ops, townhouses, duplexes, triple-deckers, quadplexes, high-value homes, multigenerational and vacation homes. 2. COMMERCIAL REAL ESTATE includes shopping centers and strip malls, medical and educational buildings, hotels and offices. Apartment buildings are often considered commercial, even though they are used for residences. That's because they are owned to produce income. 3. INDUSTRIAL REAL ESTATE includes manufacturing buildings and property, as well as warehouses. The buildings can be used for research, production, storage and distribution of goods. Some buildings that distribute goods are considered commercial real estate. The classification is important because the zoning, construction and sales are handled differently. 4. LAND includes vacant land, working farms and ranches. The subcategories within vacant land include undeveloped, early development or reuse, subdivision and site assembly.

1.5. How the Real Estate Industry Works Real estate also refers to producing, buying and selling real estate. Real estate affects the U.S. economy by being a critical driver of economic growth. Construction of new buildings is a component of gross domestic product. It includes both residential, commercial, and industrial buildings. In 2017, it contributed $1.03 trillion, or 7 percent, to the U.S. economy. New home building is a critical category. It includes construction of single-family homes, townhouses and condominiums. The National Association of Home Builders provides monthly data on home sales and average prices. The data on new home sales is a leading

economic indicator. It signals how the housing market will do in nine months. That’s how long it takes to construct new homes. The NAHB also reports new home starts, those are the number of home construction projects on which ground is broken. Real estate agents assist homeowners, businesses and investors buy and sell all four types of properties. The industry is typically divided up into specialists that focus on one of the types. Sellers' agents help find buyers through either the Multiple Listing Service or their professional contacts. They price your property, using comparative listings of recently sold properties known as "comps." The can help you spruce up your property so it will look its best to customers. They assist in negotiations with the buyer, helping you get the highest price possible. Here are more sellers' agent services. Buyers' agents provide similar services for the home purchaser. They know the local market. That means they can find a property that meets your most important criteria. They also compare prices, called "doing comps." It allows them to guide you to areas that are affordable. Buyers' agents negotiate for you, pointing out reasons why the seller should accept a lower price. They help with the legalities of the process, including title search, inspection and financing. Real estate agents who want to increase their professionalism become REALTORS®. The National Association of REALTORS® publishes provides monthly reports on the number of homes resold and their average price. It's a better indicator of the health of the overall housing industry than new home construction. That's because new home builders can be overenthusiastic about future sales and overbuild. They can also cut prices to force sales. Individual homeowners must follow the market's supply and demand. They don't have the clout to manipulate the market. NAR provides the current housing market statistics.

1.6. INVESTMENT IN REAL ESTATE Everyone who buys or sells a home engages in real estate investing. That means you must consider several factors. Will the house rise in value while you live in it? If you get a mortgage, how will future interest rates and taxes affect you?

Many people do so well with investing in their homes they want to buy and sell homes as a business. There are many ways to do that. First, you can flip a house. That's where you buy a house to improve then sell it. Many people own several homes and rent them out. Others use Airbnb as a convenient way to rent out all or part of their homes. You can rent vacation homes using VRBO or Home Away. Before you do that, make sure you know what's the current business cycle. You don't want to start potentially risky investing if the real estate market is going to crash. You can also invest in housing without buying a home. You can buy stocks of homebuilders. Their stock prices rise and fall with the housing market. Another way is with Real Estate Investment Trusts, called REITS. These are investments in commercial real estate. Their stock prices lag behind trends in residential real estate by a few years. Real estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development. Real estate is an asset form with limited liquidity relative to other investments, it is also capital intensive (although capital may be gained through mortgage leverage) and is highly cash flow dependent. If these factors are not well understood and managed by the investor, real estate becomes a risky investment. The primary cause of investment failure for real estate is that the investor goes into negative cash flow for a period of time that is not sustainable, often forcing them to resell the property at a loss or go into insolvency. A similar practice known as flipping is another reason for failure as the nature of the investment is often associated with short term profit with less effort.

1.7. WOMENS TOWARDS REAL ESTATE Real Estate Investing for Women is a community of like-minded women, who want to succeed in real estate investing. We believe that support, training and encouragement are all important factors to success, while forming personal connections in a fun and fulfilling environment. Since women have a natural tendency to tap into their emotions in order to figure out what someone else is going through and use intuition, a ‘gut feeling’, it is natural for a woman to become the best she can be as a real estate investor. We are here to provide mindset breakthroughs and up to date training, which we firmly believe will create longevity and success in real estate investing.

CHAPTER 2 RESERCH METHODOLOGY 2.1. Objectives of the study:    

To study about real estate. To study need and importance of real estate. To study about investment pattern. To study working women invest in real estate.

 To study how to invest in real estate.  To find out risk appetite of women investors.  To find out whether the women investors are looking for long term growth or risk or return or liquidity  To know their long term financial goals  To understand the needs and wants of the respondents with respect to their financial requirements in their life  To have an understanding of the respondents saving pattern  To examine the impact of the real estate sector on the growth of Indian economy.  To identify the factors limiting development of the real estate into womens.  To determine how the real estate sector can contribute massively to the economic development of Indian’s.

2.2. Hypothesis  Hypothesis 1 : Hypothesis 0 : Financially poor or non-working womens were not able to invest their money into real estate. Hypothesis 1 : Poor and non-working womens has invested their money into real estate  Hypothesis 2 : Hypothesis 0: Womens where not satisfy by investing into real estate.

Hypothesis 1: Womens where satisfied by investing into real estate.

 Hypothesis 3: Hypothesis 0: Procedure of investment into real estate was not very complicated; so working women’s didn’t faced various problems. Hypothesis 1: Procedure of investment into real estate was complicated; so working women’s faced various problems.

 Hypothesis 4: Hypothesis 0: Real estate sector has not contributed to the economic growth of India. Hypothesis 1: Real estate sector has contributed to the economic growth of India.

2.3. Significance of the study: The following are the significance of this study: 1. Findings from this study will be a useful guide for the policy makers and the government of the day on how real estate sector can contribute to the nations development and how the housing policies can be implemented effectively to boost economic growth. 2. This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

3. This study will help the Women who want to begin investing in real estate can learn some of the basics of investing in real estate by reading educational materials online, and they can develop a familiarity with the topic by reading about current events and trends in the real estate market. 4. Compared with other types of investments, real estate investing involves a relatively favorable risk/reward profile, with relatively low liquidity (ease of entry and exit). Let's see some of the most important factors to consider when investing in real estate 5. This study helps to examin the mid-to-long-term view, about how the locality is expected to evolve over the investment period. Today’s peaceful open land at the back of a residential building may be developed into a noisy manufacturing facility in future, making the residential valuations less profitable. 6. It is advisable to conduct thorough check about ownership, type and intended usage of neighboring areas, establishments and free land in the locality.

7. The Real Estate sector offers a great potential source of growth for Nigeria. Until now, the understanding of its composition and growth has been somewhat limited to its required use in Nigerian national accounts. Development is a general word that encompasses all aspects of human life, segments and disciplines, which give direction to the state of an economy.

2.4. Scope of the study: The scope of this study on the impact of the real estate sector on the growth of women’s economy will cover the structure and activities of investment of womens in real estate and its contribution to the nation’s economy. The Indian real estate sector has grown significantly. With the sector getting more organised, there has been increased international penetration into the Indian markets and increased service offerings. In this scenario, limiting the sector to only one segment of the population, also limits the available resources and talent base that is needed to take the sector forward. The expansion of companies and the need for talent, prompted the inclusion of more women into the sector. Being a woman in the real estate industry may, at times, be an advantage, as well. With qualities of empathy and persistence present in the DNA of most women, client relationships are honed to a larger extent.

Women tend to be more nurturing, more sensitive and more patient towards client’s needs. Another aspect that women tend to bring into the business, is a more balanced and dispassionate outlook.

2.5.Research Methodology

2.6. Sampling: 2.6.1. Sampling techniques: Simple Random Sample is used for collecting primary data. 2.6.2. Sample Size: For collection of data 50 samples has been selected for the study. 2.6.3. Sampling tools: Graphs, diagrams, charts, tables has been used for data analysis.

2.7. Limitations of the study:  

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The study involves very extensive use of primary data for drawing inferences. There is statistical bias due to non-availability of systematic records kept by the beneficiaries and lapse of memory. Collecting secondary data was time consuming. Difficulties were faced while collecting primary data. As india is a male dominating country its hard to find womens investing into real estate. An interpretation of this study is based on the assumption that the respondents

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have given correct information. This is an academic efforts and it is limited to cost, time and geographical area.

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CHAPTER 3 CONCEPTUAL FRAMEWORK

Real estate is property made up of land and the buildings on it, as well as the natural resources of the land, including uncultivated flora and fauna, farmed crops and livestock, water and mineral deposits. Although media often refers to the "real estate market," from the perspective of residential living, real estate can be grouped into three broad categories based on its use: residential, commercial and industrial. Examples of residential real estate include undeveloped land, houses, condominiums and town houses; examples of commercial real estate are office buildings, warehouses and retail store buildings; and examples of industrial real estate include factories, mines and farms. Real estate refers to land, as well as any physical property or improvements affixed to the land, including houses, buildings, landscaping, fencing, wells, etc. Four Types of Real Estate There are four types of real estate: 1. RESIDENTIAL REAL ESTATE includes both new construction and resale homes. The most common category is single-family homes. There are also condominiums, co-ops, townhouses, duplexes, triple-deckers, quadplexes, high-value homes, multigenerational and vacation homes. 2. COMMERCIAL REAL ESTATE includes shopping centers and strip malls, medical and educational buildings, hotels and offices. Apartment buildings are often

considered commercial, even though they are used for residences. That's because they are owned to produce income. 3. INDUSTRIAL REAL ESTATE includes manufacturing buildings and property, as well as warehouses. The buildings can be used for research, production, storage and distribution of goods. Some buildings that distribute goods are considered commercial real estate. The classification is important because the zoning, construction and sales are handled differently. 4. LAND includes vacant land, working farms and ranches. The subcategories within vacant land include undeveloped, early development or reuse, subdivision and site assembly. Here's more at Land Broker Transactions. How the Real Estate Industry Works:  

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Real estate also refers to producing, buying and selling real estate. Real estate affects the U.S. economy by being a critical driver of economic growth. Construction of new buildings is a component of gross domestic product. It includes both residential, commercial, and industrial buildings. In 2017, it contributed $1.03 trillion, or 7 percent, to the U.S. economy. New home building is a critical category. It includes construction of single-family homes, townhouses and condominiums. The National Association of Home Builders provides monthly data on home sales and average prices. The data on new home sales is a leading economic indicator. It signals how the housing market will do in nine months. That’s how long it takes to construct new homes. The NAHB also reports new home starts, those are the number of home construction projects on which ground is broken.

Real estate agents assist homeowners, businesses and investors buy and sell all four types of properties. The industry is typically divided up into specialists that focus on one of the types. 

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Sellers' agents help find buyers through either the Multiple Listing Service or their professional contacts. They price your property, using comparative listings of recently sold properties known as "comps." The can help you spruce up your property so it will look its best to customers. They assist in negotiations with the buyer, helping you get the highest price possible. Here are more sellers' agent services. Buyers' agents provide similar services for the home purchaser. They know the local market. That means they can find a property that meets your most important criteria. They also compare prices, called "doing comps." It allows them to guide you to areas that are affordable. Buyers' agents negotiate for you, pointing out reasons why the seller should accept a lower price. They help with the legalities of the process, including title search, inspection and financing. Real estate agents who want to increase their professionalism become REALTORS®. The National Association of REALTORS® publishes provides monthly reports on the

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number of homes resold and their average price. It's a better indicator of the health of the overall housing industry than new home construction. That's because new home builders can be overenthusiastic about future sales and overbuild. They can also cut prices to force sales. Individual homeowners must follow the market's supply and demand. They don't have the clout to manipulate the market. NAR provides the current housing market statistics.

 Real estate Investing Everyone who buys or sells a home engages in real estate investing. That means you must consider several factors. Will the house rise in value while you live in it? If you get a mortgage, how will future interest rates and taxes affect you? Many people do so well with investing in their homes they want to buy and sell homes as a business. There are many ways to do that. First, you can flip a house. That's where you buy a house to improve then sell it. Many people own several homes and rent them out. Others use Airbnb as a convenient way to rent out all or part of their homes. You can rent vacation homes using VRBO or Home Away. You can also invest in housing without buying a home. You can buy stocks of homebuilders. Their stock prices rise and fall with the housing market. Another way is with Real Estate Investment Trusts, called REITS. These are investments in commercial real estate. Their stock prices lag behind trends in residential real estate by a few years. What New Home Statistics Tell You About the Real Estate Market Statistics about new home construction are important leading economic indicators. That means they will give you a heads up on the future of the housing market. Each of these indicators tells a little different story about the health of the homebuilding industry. For example, say home starts are steady, but housing starts decline. That will take a toll on home sales. Many buyers might not want to wait longer than a year. It also means there's a shortage of lumber, concrete, or construction workers. Those shortages could drive up costs, and sales prices. That would further decrease demand for new homes. If mortgages are declining, the homebuilder will end up with an inventory of unsold homes for sale. It also means demand is high, but homeowners can't get mortgages. Rising home starts might seem like an indicator of housing strength. But it might be a bad sign. Declining home closings mean the housing market is weak. The new home sale is the first step in a nine to twelve-month process. If new home sales pick up, then you know closings will rise in about a year. However, all of the remaining three steps must be completed.

A new home sales is when the buyer signs the paperwork and gives the homebuilder a deposit. That's because most new homes are not constructed until there is a buyer. The exceptions are spec homes that are used as model homes. The Census Bureau releases monthly estimates of new home sales. They are given as an annual rate. Two months after the paperwork is signed, the local housing regulators grant the permit. It is an early indicator, but not always accurate. Builders can go bankrupt and never build the permitted units. They can change the number of units built in a multi-family. In fact, 22.5 percent of multi-family permits aren't built, or are changed to single-family units. Finally, developers often receive permits for a large portion of a complex that could take months and month to build. Three months later is the new home start. It occurs when the builder breaks ground. The National Association of Home Builders reports on this monthly. It’s very accurate because the new home start only occurs when the builder is confident enough to break ground. Six to nine months later is the closing. The homebuyer must receive a mortgage before the home can close. If the homebuyer doesn't qualify, the house remains in inventory. If this statistic is lower than the home sale figure, it means the new home market will start to slow down. There are too many homes being built, and not enough qualified home buyers. It can also mean builders will begin lowering prices to clear their inventories. Fannie Mae releases the report on all mortgages.

5 Simple Ways To Invest In Real Estate: 1. Basic Rental Property This is an investment as old as the practice of landownership. A person will buy a property and rent it out to a tenant. The owner, or landlord, is responsible for paying the mortgage, taxes and costs of maintaining the property. Ideally, the landlord charges enough rent to cover all of the aforementioned costs. A landlord may also charge more in order to produce a monthly profit, but the most common strategy is to be patient and only charge enough rent to cover expenses until the mortgage has been paid, at which time the majority of the rent becomes profit. Furthermore, the property may also have appreciated in value over the course of the mortgage, leaving the landlord with a more valuable asset. 2. Real Estate Investment Group Real estate investment groups are sort of like small mutual funds for rental properties. If you want to own a rental property but don't want the hassle of being a landlord, a real estate investment group may be the solution for you. A company will buy or build a set of apartments or condos, then allow investors to buy them through the company (thus joining the group). A single investor can own one or multiple units, but the company operating the investment group collectively manages all the units, taking care of maintenance, advertising

vacant units and interviewing tenants. In exchange for this property management, the company takes a percentage of the monthly rent. 3. Real Estate Trading This is the wild side of real estate investment. Like the day traders who are leagues away from a buy-and-hold investor, the real estate traders are an entirely different breed from the buy-and-rent landlords. Real estate traders buy properties with the intention of holding them for a short period of time (often no more than three or four months) and selling them for a profit. This technique is also called flipping properties and is based on buying properties that are either significantly undervalued or in a very hot market 4. Real Estate Investment Trust Real estate has been around since our cave-dwelling ancestors started chasing strangers out of their space, so it's not surprising that Wall Street has found a way to turn real estate into a publicly traded instrument. A real estate investment trust (REIT) is created when a corporation (or trust) uses investors' money to purchase and operate income properties. REITs are bought and sold on the major exchanges just like any other stock. A corporation must pay out 90% of its taxable profits in the form of dividends to keep its status as an REIT. By doing this, REITs avoid paying corporate income tax, whereas a regular company would be taxed on its profits and then have to decide whether or not to distribute its after-tax profits as dividends. 5. Leverage With the exception of REITs, investing in real estate gives an investor one tool that is not available to stock market investors leverage. If you want to buy a stock, you have to pay the full value of the stock at the time you place the buy order. Even if you are buying on margin, the amount you can borrow is still much less than with real estate. Most conventional mortgages require 20% down. However, depending on where you live, there are many types of mortgages that require as little as 5%. This means you can control the whole property and the equity it holds by only paying a fraction of the total value. Of course, your mortgage will eventually pay the total value of the house at the time you purchased it, but you control it the minute the papers are signed.

Investment An investment is an asset or item acquired with the goal of generating income or appreciation. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit.

BREAKING DOWN Investment The term "investment" can refer to any mechanism used for generating future income. In the financial sense, this includes the purchase of bonds, stocks or real estate property. Additionally, a constructed building or other facility used to produce goods can be seen as an investment. The production of goods required to produce other goods may also be seen as investing.

Taking an action in the hopes of raising future revenue can also be considered an investment. For example, when choosing to pursue additional education, the goal is often to increase knowledge and improve skills in the hopes of ultimately producing more income.

Investment and Economic Growth Economic growth can be encouraged through the use of sound investments at the business level. When a company constructs or acquires a new piece of production equipment in order to raise the total output of goods within the facility, the increased production can cause the nation’s gross domestic product (GDP) to rise. This allows the economy to grow through increased production based on the previous equipment investment.

Investment Banking An investment bank provides a variety of services designed to assist an individual or business in increasing associated wealth. This does not include traditional consumer banking. Instead, the institution focuses on investment vehicles such as trading and asset management. Financing options may also be provided for the purpose of assisting with the these services.

Investments and Speculation Speculation is a separate activity from making an investment. Investing involves the purchase of assets with the intent of holding them for the long term, while speculation involves attempting to capitalize on market inefficiencies for short-term profit. Ownership is generally not a goal of speculators, while investors often look to build the number of assets in their portfolios over time. Although speculators are often making informed decisions, speculation cannot usually be categorized as traditional investing. Speculation is generally considered higher risk than traditional investing, though this can vary depending on the type of investment involved.

Types of Investment Investments made in the finance industry can be divided into two distinct types namely, Traditional and Alternative. Let us look into each of these types one by one and see what investment categories fall into which type. Traditional Investments Investing in well-known financial products falls into the category of traditional investments. These include bonds, shares, real estate etc. These are categories which are quite popular among investors as active investment strategies to make your money grow. Following are the investment products that fall under the category of traditional investment. 

Bonds A Bond can be understood as an IOU which is issued by an issuer (borrower) and to a lender. Generally, bonds are instruments used by public and private sector enterprises to raise huge sums of money which any bank is incapable of lending. These bonds are then issued in the public market by the borrowing entity and are bought by lenders for specific amounts of money. Thousands of lenders then come together to lend the required amount and the borrowing organization is able to raise capital for its operational or growth purposes. However, since money is being lent to the issuer of bonds, there is also an interest component involved that is paid back to the investor in turn for his/her money. This interest

is paid at a predetermined rate and for a specific period of time. Bonds fall under the category of fixed income securities since the interest on these can be exactly calculated for the time for which the bond is held. Bonds fall under the debt category and are therefore, comparatively safer financial instruments to invest in. However, with all financial tools risk is inversely proportional to returns and as such the low-risk attribute of this tool makes it a low return instrument as well. 

Stocks Stocks or equity are shares that are issued by companies and are bought by the general public. This offers an avenue to companies to raise funds. Stocks entitle a customer ownership of a company. Shares, stocks and equity all imply the same thing. Shares are one of the most popular investment avenues in the world. This is because the returns offered by stocks is generally higher than any other financial instrument. However, to balance out the high return associated with stocks, the risk associated with these products is also quite high. Any business may issues different types of shares based on the financial urgency and need. In exchange for the money, shareholders are issued Stock certificates. Stocks are mostly divided into two basic types, common stocks and preferred stocks.

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Small saving schemes Small savings is another popular savings tool in the Indian financial market. The name itself suggests that these tools are meant for saving money in small amounts. The idea behind this financial tool is to enable the habit of saving in people from almost all economic sections. Some of the most common small savings tools are Sukanya Samriddhi Scheme, EPF (Employees Provident Fund), NPS (National Pension Scheme, Kisan Vikas Patra, Personal Provident Fund (PPF) etc. Almost all small savings schemes are initiated and facilitated by the government so as to enhance the spread and penetration of savings schemes in the country. Let us look into some of the most prominent schemes out of these. Employees Provident Fund Employees Provident Fund is another small savings scheme that is primarily offered by your employer. This includes salaried individuals of both private and public organizations. Any company with a workforce of more than 20 employees is mandated to register for the EPF scheme. Around 12% each month is deducted from the salary and contributed towards the EPF account of an employee. This EPF account is maintained by the Employees Provident Fund Organization, commonly known as the EPFO. The amount deposited towards EPF is eligible for tax exemption under section 80C of the Income Tax Act. Sukanya Samriddhi Scheme Sukanya Samriddhi Yojana is a special scheme which has been launched by the central government to facilitate the financial wellbeing of girl child in the country. This scheme can be availed by parents or legal guardian of a girl child and an amount as low as Rs.1000 per annum can be deposited under the scheme. The account matures only after the girl child reaches the age of 21. Premature withdrawal is allowed only after the girl reaches the age of 18 years and has financial need pertaining to wedding or education. National Pension Scheme National pension Scheme is one of the most popular schemes for ensuring a regular pension amount to individuals working in both the private and the public sector. NPS is offered to individuals either as part of their corporate perks or is availed by individuals on their own.

The amount set aside towards NPS is eligible for tax rebate under section 80C of the Income Tax Act. The scheme offers withdrawal of deposited amount only once the account holder reaches the age of 60 years. The corpus withdrawn on maturity is absolutely tax-free. 

Mutual Funds Mutual funds are financial instruments that are professionally managed and that invest money on behalf of any investor, in different securities. These mutual funds are classified into various types based on the type of securities that they invest in. Some of the most popular mutual fund types are balanced funds, stock funds, open-ended funds etc. These funds are classified based on their percentage allocation in different securities. So, an equity fund invests purely is equity and is a high risk high return product while a debt fund invests purely in debt and money market instruments and is hence a low risk low return financial product.

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Fixed Deposits As the name itself indicates, fixed deposits are financial instruments that are one of the oldest and safest ways to save money. These are not necessarily active investment tools, but are rather a passive way to save and earn returns. A fixed amount of money is kept aside with a financial institution for a fixed number of days or months or years. In turn, interest is earned on this money. The rate of interest differs with the deposit tenure and also with the banking entity. Similar to fixed deposit is the concept of recurring deposit. However, the only point of difference in the two investment tools is that while a lump-sum amount needs to be fixed in case of fixed deposit, a smaller amount needs to be deposited at regular intervals in case of a recurring deposit. Hence, customers who do not have a large chunk of money to fix in a single go can opt for a recurring deposit wherein money is usually deposited monthly for a specific deposit tenure. The rate of interest earned on recurring deposit is similar and comparable to that earned on fixed deposit.

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Real Estate Property rates are soaring with every passing day which has made real estate a hot investment avenue for investors. Buying, selling and leasing of property offers substantial returns to investors. Appreciation of property makes real estate a good investment tool. With urbanization gaining ground rapidly, real estate prices in certain major cities like Mumbai, Bangalore, New Delhi, are skyrocketing. This has made these places hot hubs for real estate investors. Most investors take loans from banks to purchase real estate and then lease out or sell the same property to enjoy returns offered due to appreciation in price of the property. IMPORTANCE OF INVESTMENT FOR WORKING WOMEN’S While equities, insurance and debt instruments are the basic components of any asset allocation mix, a working woman's ideal portfolio will also depend on her risk appetite and financial goals While there are many roads to wealth creation, the one sure rule is that there are no shortcuts. You not only need to get started as early as possible but also have to be prepared for continuous and monitored investing. While it is ideal to start your investment journey right from the time you bag your first job, typically in your early 20's, that's a time for new beginnings when splurging tends to take the front seat. So, most people tend to start building their asset portfolios in their 30's.

Although this is a period peppered with milestones like getting married, moving towards parenthood, et al, all of which significantly hike up one's financial responsibilities, the prime focus of your investment strategy should be to build a comfortable nest egg. While this advice is gender agnostic, it is particularly important for women to pay heed to it and ensure financial security for herself and her loved ones. Keeping that in mind, here are the best investment options for a working woman in her 30s: PPF and NPS Public Provident Fund (PPF) is probably one of the best retirement investment schemes, offering complete tax-free benefits as well as a steady interest income. It is an ideal risk-free option where you can deposit up to Rs 1.5 lakh a year and earn an interest rate of 8% currently. The interest keeps compounding annually and credited at the end of every years. While it does not offer quick returns, it does provide long-term stability and decent returns after a span of 15 years. You can extend the tenure further in blocks of five years after the initial lock-in period. Another tax-efficient long-term investment option is the National Pension Scheme (NPS), a concoction of equity, fixed deposits, corporate bonds, liquid funds and government bonds. It offers completely tax-free benefits under section 80C of the Income Tax Act to the tune of Rs 1.5 lakh, plus you can claim an additional tax-free deduction up to Rs 50,000 under Section CCD (1B). Moreover, under NPS, you have the option to invest in equities depending on your risk appetite. The one year market return for Fund option E is around 9.5%, while the same for 5 years is 11%. Equities Buying mutual funds through the systematic investment plan (SIP) route has long been a favourite with investors, again for long-term investment. And equity-linked investment schemes (ELSS), a diversified equity mutual fund product that allows tax-saving under Section 80C of the Income Tax Act, are one of the most ideal investment options for young working professionals. In the past five years, the average return from the top 10 ELSS stands at almost 20% so even the introduction of 10% long-term capital gains (LTCG) tax on equity earnings does not dent its appeal. If you have the appetite for higher risk and are willing to put in extensive research, you can also consider investing in stocks. However, keep in mind that 2019 is election year. "As the first half is going to be highly volatile, investors should focus on sectors that have a high defensive component, and better earning capability such as consumer goods, auto, banks or IT," according to Gautam Duggad, Head-research, Motilal Oswal Securities. Life Insurance One of the biggest mistakes made by thirtysomethings with dependents is not buying life insurance, and working women in this demographic are probably guiltier than most others. "In its simplest form, life insurance means protection against risks in life. These risks also exist in a woman's life, sometime even more than a man's life," said Souvik Jash, Appointed Actuary of Aegon Life Insurance Company Limited. Yet, data from Insurance Regulatory and Development Authority of India (Irdai) show that only 90 lakh women bought life insurance policy in 2017-18 while 1.91 crore policies were purchased by men in the same period.

No, it's not enough to have your spouse invest in a retirement policy. Just one life insurance policy between a couple means that you have to be prepared for a transition from a double income family to a single income one down the line. Investing in adequate life cover is also crucial for single women with dependent parents for the same reason. "One basic rule of thumb is that the death benefit on your policy should equal 7-10 times the amount of your annual salary. But, like any rule of thumb, that isn't always particularly accurate. While you are calculating the right insurance amount to suit your lifestyle, one must consider certain factors that direct the premium that you need to pay," Jash added. Remember, the earlier you join the life insurance bandwagon the better it is for you since the premiums only get more expensive as you get older. Nicotine and tobacco usage, personal medical history, family medical history, like heart disease or cancer among immediate kin, lifestyle, job profile and driving record are some of the other factors that come into play in determining the premium amount. Health Insurance Studies show that women not only live longer than men but also utilize more medical services due to a greater likelihood of chronic disease and disability apart from reproductive care. Hence there is a strong case for working women to take a separate health insurance policy, instead of settling for coverage as a dependent in a family health plan. Furthermore, there is the maternity benefit to look forward to. Expenses for a normal delivery alone cost anywhere between Rs 15,000 and Rs 1.5 lakh, without accounting for unexpected occurrences that may need urgent medical intervention and, hence, further expenditure. Without a health policy in place, such out-of-pocket expenses can do a number on a family's budget. Other Debt Investments Apart from PPF, debt covers options such as bank fixed deposits, small saving schemes, bonds and debt mutual funds. While it's certainly not a good idea to binge on such low risk, low returns options, an ideal asset portfolio will make place for them to ensure assured income at fixed intervals. Also, to prepare for unforeseen events, the first thing you should do is set up a contingency fund, a corpus that can take care of three to six months' of expenses. You can put this money in a liquid fund as it gives better returns than money in a savings bank account. Proper asset allocation is key to all kinds of financial empowerment. Even the highest-returns generating assets like equity funds can be of no use unless you do prudent asset allocation. Here's an easy way to figure out an age-appropriate asset allocation mix: Your allocation to debt funds must be equal to your age. Put another way, to find out what proportion of your investment needs to be in equities, just subtract your current age from 100. So the portfolio of a 35-year-old woman ought to be composed of 65% of equity funds while the balance 35% should be in debt, insurance and cash (less than 5%). But, of course, this is not a one-size-fits-all policy and your ideal asset allocation mix will factor in your risk appetite and financial goals. After all, if many of your goals are short term, you can't risk having such a big chunk of your portfolio in equities. But even conservative investors should not go below the 60% equity allocation mark in order to maximise returns at an age when you are able to afford more risk. The older you get, the safer your portfolio will have to be.

Advantages of Investing in Real Estate: When most people hear the word “investment,” the may cringe a little. With that term comes visions of risks and losing money to bad decisions and bottoms falling out of businesses. While there will always be risks when it comes to investing, there are some benefits to investing in real estate. Before getting into any investment, it’s important to do your research and understand exactly what you’re getting into. The internet is a great place to start, but talking to someone who is involved in the investment process, either as a professional or an investor (or both!), is a great way to get all the information. They can share secrets that they learned through experience. After you’ve done some initial information gathering and feel confident in finding some real estate to invest in, here are some benefits you may encounter: 

I. Relatively SafeAgain, no investment will ever be risk-free, but investing in real estate can be safer than some other options. This is especially true if you are in the right area, then you can find yourself making a profit and your money will be invested safely. Thinking about investing in real estate? If you are a first-time investor, you might find that the entire process can be quite daunting, especially when it is time for you to choose the property to buy.

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While it can be helpful to have a real estate agent help you to complete the purchase, it’s wise to start looking for a property on your own as well. Sometimes, an agent can put extra pressure on you to make a purchase even if you are not a hundred percent sure about the property. Therefore, it is important that you are able to make an unbiased opinion of all the properties and neighborhoods that you believe are within your budget and other important factors.

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Let’s check out some of the most important things to look for in an investment property.

 The Kind of Neighborhood Before you go looking at properties, it’s wiser to first decide on the neighborhood where you want to buy a house. Why is that important? First of all, it will influence if not dictate the types of tenants that you’ll get as well as your rental price and vacancy rate. For example, buying a property in a university area means that your potential tenants will mostly be students or university professors. If you rent out to students, it’s highly probable that you’ll face vacancies during summer.  Proximity to Schools If you are considering investing in a family-sized home, then you should also assess the educational facilities in the area and how close they are to the property. Take note that even if your property looks good, if there are no good schools around, the value of your investment may be affected. You may be more concerned about the cash flow that you’ll get monthly, but should you decide to resell, the overall value of the property will be very important.

 Amenities in the Area You should also not forget to look around and see what the neighborhood offers in terms of amenities. Are there restaurants around? How about a gym or a grocery? What other perks are there? Areas with better amenities, both public and private, attract more tenants, too.  Job Opportunities Nearby As an investor, you want to make sure that your property will attract the right kind of tenants. One way to ensure that is by choosing a rental property that is in an area with growing employment opportunities.  The Physical Aspect of the Property Generally, the best investment property, if you are just starting out, is either a condominium or a single-family dwelling. As much as possible go for a property that wouldn’t need much maintenance and is likely to attract long-term renters. This is a property that is likely to fetch a higher rent, too. You don’t have to wait for a real estate agent to present you with options for your first investment property. It takes a lot of work and patience but doing the research yourself does have its benefits. And as long as you know what you should look for, then you have a really great chance of finding a property that will prove to be an excellent investment.

II.

Financing option:

Commercial real estate mortgage loan A mortgage loan is the main type of financing available for a commercial real estate purchase. The interest rate is important to consider, but other terms can also be critical to the success of the purchase. One of the most important terms is the loan-to-value ratio—the portion of the property’s value that the bank will finance. Banks generally offer to finance 75 to 100% of the value of commercial real estate, depending on the building’s condition, resaleability and other factors. Any shortfall must usually come from your company’s working capital or your personal funds. A higher loan-to-value ratio means more money remains in your company in the near term to invest in growth or cover cash shortages.  A second variable is the amortization period. This usually ranges from 15 to 25 years for commercial real estate. A longer amortization period may be preferable because it means more money stays in your company’s hands now.  A third very important consideration is the bank’s flexibility in terms of loan repayment. For example, you may be able to get a holiday on principal payments for one or two years post-transaction to absorb the cost and disruption of the move. Or, if a cash shortage occurs later, flexible terms could allow you to make interest-only payments for several months. Note: The bank may also be able to roll some or all of the cost of renovations into the mortgage loan, particularly if they add value to the property. An example could be a green retrofit to make a building more environmentally efficient. 

2. Working capital loan Working capital loans are short-term loans, often amortized over about five years. They’re meant to help your business pay for investments in its growth, and are handy for both real estate purchases and leases. For example, you can use one to ensure your business doesn’t experience sudden cash shortages during a move to a larger space. It’s common for businesses to significantly underestimate moving and renovation expenses, leading to strains on working capital. A working capital loan can also help you cover the costs of buying equipment, hiring sales staff or doing a green building retrofit. Working capital loans are generally unsecured. You can sometimes negotiate a principal holiday for the first six to 12 months of the loan. 3. Leasehold improvement loan A leasehold improvement loan is a short-term loan (often amortized over about five years) that you can use to pay for renovations to a leased space. Depending on the value of the improvement, a bank may accept the improvement as collateral for the loan, which could result in a lower interest rate than that for an unsecured loan. You can sometimes negotiate a principal holiday for the first six to 12 months of the loan. 4. Equipment loan If you’re planning to buy equipment for your new space, an equipment loan may be useful. Such a loan is usually amortized over the life of the equipment—typically, five to 12 years. The equipment acts as security for the loan. 5. Demand loan A demand loan has no fixed maturity date. You can renegotiate it as your business situation changes, giving you added flexibility, or you can pay it back in full or in part at any time, without penalty. As well, the lender can require repayment of the loan at any time. Demand loans can be useful for paying for a move, buying equipment or covering a temporary cash shortfall. 6. Line of credit This is a short-term, flexible loan that you can tap quickly during a sudden cash crunch or to pay for renovations. 7. Vendor financing An eager property owner may offer vendor financing to a buyer to ensure the sales goes through.

III.

Appreciation

According to the U.S. Census and national property sales statistics between 1940 and early 2010, the median home value has more than quadrupled over the past 70 years. This includes data from the housing downturn beginning in 2007. One study tags the annualized appreciation rate for part of this period--from 1978 to 2004--at 8.6 percent. This figure omits the recessionary value losses post-2006, but also leaves out the double-digit gains post-WW

II and from 2004 to 2006. All the figures have one common factor: housing has always appreciated over the long term.

IV.

Leverage

Leverage is a significant advantage of real estate investment. It allows you to earn appreciation off of the bank's mortgage to you. If you buy a property for $500,000 with 20 percent down, or $100,000, and the property appreciates 3 percent a year for 10 years, the property will be worth $650,000. The 3 percent annual return rate on the property's value represents an annualized return rate of 15 percent on your investment of $100,000. So even in times of modest appreciation, your actual return is strong. With a 20 percent down payment, it will be five times the home appreciation rate. If you've taken out an FHA loan with only 3 percent down, it will be like winning the lottery. A 3 percent annual appreciation rate will translate into a 100 percent rate of return on your down payment.

V.

Tax Write-Offs

If you own property--either your personal residence or investment property--you will benefit from tax advantages. As a home owner, you are entitled to deduct your mortgage interest and are exempt from taxes on the first $250,000 if you are single, or $500,000 if you are married, of profit from the sale of your home so long as you have lived there at least two of the last five years prior to the sale. There is no limit on how many times you can take advantage of this exemption. If you own investment property, you can depreciate the building and its capital improvements. Depreciation allows you to subtract the cost of the asset evenly over its useful life from your income on the building and, to some extent, from your personal income. In some cases, depreciation makes it possible to actually profit from the building but not pay any taxes.

VI.

Cash Flow

The great thing about rental income is that you earn it 24 hours a day, seven days a week, 365 days a year, whether you are awake or asleep, working or on vacation. If you have a full-time job, the rent supplements your income. When you have enough of it coming in, you can quit your day job.

VII.

Real Estate Can Be Easier to Understand

When you start investing, it can be difficult to understand everything you need to know to make a profit. Many types of investments rely on abstract concepts and complex algorithms, which are especially difficult to understand. Real estate, on the other hand, involves the purchase of physical property and most people are familiar with real estate to some degree. Investing in real estate can be much easier to understand than complex investments developed by mathematicians.

VIII.

Real Estate Is Improvable

After you buy a stock, you hold it for a period of time and hopefully sell it for a profit. The success of the stock depends on company management and their corporate success, which is out of your control. In contrast, real estate investments are directly under your control. Though you can’t control demographic and economic changes, or acts of God, you can control many things relating to the physical property and tenants. With good management

of your overall real estate portfolio, you can tangibl y improve the value of your investment and build wealth.

IX.

Real Estate is a Hedge Against Inflation

Real estate is one of the few assets that reacts proportionately to inflation. As inflation goes up, housing values and rents go up. Though real estate in general is a good hedge against inflation, rental properties that are re-leased every year are especially effective, since monthly rents can be adjusted upward in inflationary periods. For this reason alone, therefore, real estate is one of the best ways to h edge an investment portfolio against inflation. X.

Real Estate Properties Exist in an Inefficient Mar ket

Unlike the stock market, the real estate market is full of inefficiencies. There is a lack of transparency relating to individual property values and also the strength of different markets, which means that real estate investments have the potential for very high profits. Real estate investors who do their research, especially with help from industry experts, can find great real estate bargains.

XI.

Real Estate Can Be Financed and Leveraged

Of course, you can technically purchase stocks and other assets using debt, but this can be very risky because the financing is not to purchase a hard asset. Real estate, on the other hand, is a market where products are usua lly bought with debt. Real estate investments purchased with hard money or a mortgage can be structured in ways that are rather safe and affordable, so that large purchases can be made with a relatively small initial investment. The result is the purchase of a hard asset that appreciates year-over-year, and paying for it primarily with other people’s money.

XII.

Tax benefits.

Let me ask you a quick question: if you earn $100,000 at your own business and I earn $100,000 through rental properties, who get’s to keep more? That’s right: I do. Because the government rewards rental property owners. Not only is the cash flow received from your rentals not subject to self-employment tax, the government offers tax benefits including depreciation and significantly lower tax-rates for long-term profit.

XIII.

Control.

I don’t like my destiny tied to a board room on Wall Street or a nervous CEO in Silicon Valley. This is why I choose to invest most of my income in real estate, knowing that I am the one who is responsible for my success or failure.   

If I want a better deal, I need to hustle to find it. If the rental market gets more competitive, I can compensate by increasing my advertising. If values drop, I can choose to wait it out or improve the property to drive the value back up.

In other words, I get to control the situation, and my financial future, with my own two hands. And that suits me just fine. Don’t think that just by owning some rentals you are instantly going to begin building wealth. Real estate is powerful - but only if you work it right. You must learn how to find great deals, how to evaluate a real estate investment, and how to finance any properties you want to buy. Additionally, you must treat it like a business and nurture it as it matures. It's likely not going to be totally passive up front, but as millions of individuals throughout history have discovered, the payoff is well worth the journey.

DISADVANTAGES : I.

Real Estate Has Higher Transaction Costs

When purchasing shares of a stock, the transaction cost for the trade is very low, often just a few dollars. But when purchasing real estate, the transaction costs are considerably higher. Unlike other types of investments, real estate transaction costs can significantly affect the value of the investment and make it more difficult to turn a profit.

II.

Real Estate Has Low Liquidity

Many investments are highly liquid, and can be bought and sold for a profit in a fraction of a second, as with high-frequency stock trading. But real estate investments are comparably illiquid, because properties can’t be quickly and easily sold without a substantial loss in value. Real estate investors must be prepared to own a property for months and years, especially if it will be leased out.

III.

Real Estate Requires Management and Maintenance

Once an investor purchases a property, it must be rehabbed, maintained, and managed. Financing payments, real estate taxes, insurance, management fees, and

maintenance costs can add up quickly, especially if the property sits empty for extended periods of time.

IV.

Real Estate Markets Have Significant Inefficiencies

As we’ve already discussed above, the market’s inefficiencies can be advantageous to investors. But here we want to also mention the disadvantages, which can be illustrated by investors purchasing properties sight unseen at auction. The most aggressive investors purchase real estate based on minimal information, and don’t know whether they’ve made a good deal until paying for the property and then inspecting the property. Likewise, investors with r ental property deal with fluctuating demographics and volatile economies, which can either add or take away from their bottom-line profits. Real estate investing involves dealing with market inefficiencies, which can be mishandled to result in financial ruin.

V.

Real Estate Creates Liabilities

Real estate investing involves taking on a great deal of financial and legal liability. All the disadvantages mentioned above add to the liability a real estate investor takes on when purchasing, financing, rehabbing, leasing, managing, and maintaining a property. Even though investment properties may be in a corporation, there are often personal guarantees associated with the business, and the risk of losing the income and profits generated by the company.

VI.

Legal Difficulties

Investing in real estate has the potential of being very confusing because it requires that you are fully aware of the laws in each jurisdiction that you own property. Some jurisdictions may even enforce land ceilings which can make the investment risky. The legal difficulties can become much more complex if the investor is investing in commercial real estate.

VII.

Maintenance Cost

The cost of maintaining the property can cause the investor to lose money on the investment. In larger cities, property taxes can be so high that it will be very difficult to resell the house at a higher value. If the owner of the property is renting out the units, maintenance costs can take large chunks out of the income stream. If the owner does not personally know the tenants before renting out the units, they run into the risk of renting the space out to someone who will not take care of the unit, causing the owner to put large sums of money into repairs. Furthermore, other costs such as electricity and heating will also add up.

VIII.

Property Taxes

Before investing in real estate, the investor should always factor property taxes into their valuation of the property. In larger urban cities, property taxes can be significant and may cause the investor to lose a big chunk of their profit. Property taxes will vary depending on which city or state the property is purchased in. Therefore, the investor should always consult with city officials before investing in property.