Real estate is “Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; the immovable property of this nature; an interest vested in this (also) an item of real property; (more generally) buildings or housing in general. – Wikipedia
Real estate as an alternative investment is not new. Humans. Real estate has been a way of Investment since the Roman age. It is one of the first assets that humans find out as a good investment. Humans need House. But for everyone, it is not possible. Price of Land, Cost of Building and, the time it takes, knowledge make it difficult to build houses. So it was easy to rent or lease a house. So it starts as a business for some people. If you have the home and don’t need part of it, earn from it. It is the base of Real Estate. With time, it develops. If you have Capital, then buy Land and Build and Sell. If not, then acquire some and rent. With industrialization, the form of the business slightly changed or get developed. Now there is one more property we need, and that is Offices. Plus now we need more space, but Land is limited, so we start building the New type of Building called SKYSCRAPER. One more thing Real Estate will teach you is Leverage, but many people forget this and start leveraging their Equity portfolio.
I am calling them an alternative investment and not a regular because a different market is available. Real estate markets in most countries are not as organized or efficient as markets for other, more liquid investment instruments. They are less liquid. But a big plus point with them is that I bought them once. So the Investment may start yielding you. Maybe you don’t realize it, but in any case, real estate is like Equity. The value is increased by Evey fraction of a second. You will not earn anything until you sell it. But when it comes to sources of Investment, Equity and Real Estate are different. The Source of Equity is most of the Time Exchange, but there are no Exchanges for real estate. Yes, Some apps act like Exchanges, but you cannot buy and sell the house and pay money, at least up to now, I don’t know. The return on the Investment is also similar to Equity. Better the property, the higher the value.
One disadvantage with Real Estate is That the price is so high. Even if we called them Hedging against Inflation, a small retail investor can’t buy them for his portfolio. So you do not remain a Retail Investor when you hedge the portfolio with Real Estate. There are many things to write here about real estate investment, but the big thing with which I am going to end is… Our family teaches us how to choose a house but doesn’t teach us how to find good company.
