Atlanta title pawn may purchase residential real estate addressed a primary need: shelter. Investors may also choose to invest in real estate to generate current income, capital appreciation, or a combination of these objectives. There are several ways to invest in real estate, both direct and indirect.
Direct Investment in Real Estate
Methods of direct investment in real estate include the purchase of raw land, residential rental property, and commercial property.
Purchase of Raw Land:
One investment option is the purchase of raw, undeveloped land. Raw land can generate both current income and price appreciation. For Example, an investor may purchase land and use the land to grow crops for sale, or rent the land to someone else to farm. Raw land also has the potential for price appreciation. For Example, an investor may purchase wooded land close to a popular real estate development in the suburbs. As the suburb grows, the real estate may become a prime location for additional home construction. As with other types of real estate purchases, the location of the land is an important consideration.
There are three important considerations when purchasing raw land: zoning restrictions, wetlands, and pollution exposures.
-Zoning restrictions are local limitations placed upon the usage of property for a certain purpose.
-Wetlands are swamps, marshes, bogs, and other areas that are subject to saturation by water. Federal law and some state laws restrict the usage of property that has been designated wetlands.
-Investors should also consider pollution exposures when purchasing land. Land should be inspected before purchase to check for hazardous materials.
Purchase of Land with Structures:
A second real estate investment alternative is the purchase of land with structures. The structure could be a home, duplex, apartment building, or a structure designed for commercial purposes. The structure can be used to generate rental income and may also appreciate in value. Purchasing residential or commercial rental property creates a number of responsibilities for the purchaser. The owner is responsible for repairs and maintenance, property taxes, finding tenants, and insurance. In addition to the risk of physical damage to the property, the owner has a liability exposure.
Indirect Investment in Real Estate
You can invest indirectly in real estate through real estate investment trusts (REITs), mortgage-backed securities, collateralized mortgage obligations (CMOs), real estate mutual funds, and real estate-related companies.
Real Estate Investment Trust (REITs). The first indirect investment method we will consider is real estate investment trusts at Atlanta title pawn.