Real Estate as an Investment

Real estate provides returns through rental income and property appreciation.

Ways to invest in real estate:

Primary residence — builds equity; not purely an investment but builds wealth

Rental properties — direct ownership; rental income + appreciation; requires management

REITs (Real Estate Investment Trusts) — publicly traded companies owning real estate; liquid, diversified, no management required

Real estate syndications — pool money with others; passive; accredited investors

House hacking — live in one unit of a multifamily; tenants pay your mortgage

The 1% rule (rental properties):

Monthly rent should be ≥ 1% of purchase price for cash flow

$200,000 property → needs $2,000/month rent

Cap rate: NOI ÷ Property value. Higher cap = better return but often higher risk or lower quality market.

Leverage in real estate:

$50,000 down on $250,000 property (20% down)

If property appreciates 10% → $25,000 gain on $50,000 invested = 50% return on cash

Leverage amplifies both gains AND losses

Reference:

Wikipedia: Real Estate Investing

https://en.wikipedia.org/wiki/Real_estate_investing