Real Estate

Most likely when you think about investing in real estate the first thing that comes to mind is your home. Truly, that is one of the largest investments the average investor will purchase. However, there are other types of real estate investments to consider adding to your portfolio. The most common type of real estate investment is income-producing real estate. Small income-producing real estate properties can include apartments, duplexes, family homes, or mobile homes. Large income-producing real estate properties are usually bought by high net-worth individuals and institutions (like life insurance companies, real estate investment trusts (REITs) and pension funds). Real estate is typically considered a supplementary investment used to build on a primary portfolio of stocks, bonds, and other securities. One of the main differences between investing in a piece of real estate as compared to stocks or bonds is that it’s an investment in the physical materials as well as the land the structure is placed on. This makes real estate unlike most stocks in that you can see and touch your property. Tangibility, although giving an investor pride, also has its downside. Real estate requires hands-on management. You’ll never need to have a plumber come out to repair your stocks! In addition to property purchasing as an investment, you can actually invest smaller amounts in real estate ETFs, real estate mutual funds, or in stocks of public companies that work in real estate. So if you’re not ready to buy a home or income-producing real estate, you can still invest in this sector and diversify your portfolio accordingly.

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