What is real estate investment

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Property that is purchased for the intent of making money is considered a real estate investment. This is property separate from your primary residence. Real estate can include land and any buildings, structures, or other improvements made to the land.

People most often think of real estate investing as purchasing apartment buildings and houses to be used as rental properties. The rent generated becomes income and often will be used towards improvements to the property. In this way the real estate investment gains in value.


Along with residential property, there is also commercial and industrial real estate. Commercial real estate is often seen in strip malls where the owner leases out portions of the property to different tenants who then pay rent. The tenant often will make leasehold improvements which remain if the tenant vacates, this too increases the value of the property. Other examples of commercial property are retail buildings, warehouses, and office buildings.

Industrial real estate is an area of real estate investment that is often forgotten. With this type of real estate, the owner can retain all of the responsibility that comes with ownership, or they can pass some of the responsibility onto the tenant.

For example: The owner leases their land to a farmer whose crop is destroyed by a tornado; if the owner maintains full ownership rights, then they are responsible for replacing the value of the crops.

Some investors choose to have a long-term lease on their land. If that is the case and the tenant constructs a building on the land, the building remains on the land at the end of the lease term. So while tenants are able to have leasehold improvements, they become the property of the real estate investor. Real estate investments can generate a great return by providing a steady income that increases as the property value increases.