Question

Discuss real estate as an investment. What are investors really purchasing when they invest in real estate?

Answer 1

Real estate has been an investment option since many years. Earlier investment in real estate was done in order to build a house on that piece of land. The investment was aimed at long term. The purpose was to build a house in future on that piece of land. However, now the goals of people have changed with the change in their financial condition. Now people invest in real estate not only to have a house but also to use it as a source of earning money. This can be done by renting the property or by buying and selling of property. A person may wish to give a particular piece of land on rent and earn money from the tenant. If a person does not want to give his/her property on rent then they may hold the property for a few months and then sell it to another person when the demand of the property is more and the price is comparatively higher. Investment in real estate is actually investment in the volatility of the land prices. Thus, real estate investment is a good investment option when the prices of land are in good condition.