Four Types of Real Estate Investing

Real estate investing involves buying, selling, renting, managing and operating the real estate properties, the land on which the properties are built and other real estate owned by a person or group. There are three phases involved in real estate investment; acquiring real estate, transforming the real estate into effective use and disposing the real estate. The first phase involves purchasing real estate, which may be either vacant land or any building constructed out of the real estate. The second phase involves converting the real estate into effective use, which may include using the land for business purposes or living in it permanently, while the third phase deals with disposing off the real estate. Real estate investing can also involve the financing of real estate, such as mortgages, liens or advances.

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Many investors make money from real estate investments through mortgage-backed securities. These securities are offered by the government or mortgage companies to protect the mortgagors’ interest in federal government programs and other sources of financial help. Mortgage-backed securities are traded on stock markets. There are several ways of investing in mortgage-backed securities. The investor can buy mortgage-backed securities in an auction, through a dealer or through a self-directed IRA.

One of the reasons why many people engage in real estate investing is because they can earn a good profit, even in times of recession or depression. Real estate investing is not a sure thing. One should know how to invest and when to sell a property to earn some profit, but one must also learn how to manage the investment properly. One must also be aware that although these four types of investment opportunities are widely available, there are also other, more risky, options.