Chances are, when you think about investing in real estate the first thing that comes to mind is your home. For many people, their home is the single largest investment they will ever make. But have you ever stopped to consider that once you purchase a home it becomes part of your overall portfolio of investments? In fact, it’s one of the most important parts of your portfolio because it serves a dual role as not only an investment but also a centerpiece to your daily life.
Though a home is one of the largest investments the average investor will purchase, there are other types of real estate investments worth investing in. The most common type is income-producing real estate. Large income-producing real estate properties are commonly purchased by high net-worth individuals and institutions, such as life insurance companies, real estate investment trusts (REITs) and pension funds.

Income-producing properties are also purchased by individual investors in the form of smaller apartment buildings, duplexes or even a single family homes or condominiums that are rented out to tenants.

In the context of portfolio investing, real estate is traditionally considered an “alternative” investment class. That means it is a supplementary investment used to build on a primary portfolio of stocksbonds and other securities.

One of the main differences between investing in a piece of real estate as compared to stocks or bonds is that real estate is an investment in the “bricks and mortar” of a building and the land it is built upon. This makes real estate highly tangible, because unlike most stocks you can see and touch your property. This often creates substantial pride of ownership, but tangibility also has its downside because real estate requires hands-on management. You don’t need to mow the lawn of a bond or unplug the toilet of a stock!

Source: Investopedia / Bluewaters2u

Link: http://www.investopedia.com/#axzz1ZYVOQzN7

Blue’s Comments:

Lets discuss the rationale for adding real estate to your portfolio. See my Next Blog on under Investment 101 Tab ” Exploring Real Estate InvestmentsWhat Is Real Estate?

Because this is such a huge and broad area for discussion, I am going to break this down in more than one section under Exploring Real Estate Investments..I will call this Part 1.

Quote from above: ” One of the main differences between investing in a piece of real estate as compared to stocks or bonds is that real estate is an investment in the “bricks and mortar” of a building and the land it is built upon. This makes real estate highly tangible, because unlike most stocks you can see and touch your property. This often creates substantial pride of ownership, but tangibility also has its downside because real estate requires hands-on management. You don’t need to mow the lawn of a bond or unplug the toilet of a stock!”.

 

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