Investing in Real Estate

There are three ways that you can become a real estate
investor: first, by buying your own home; second, by buying
an investment property; and third, by investing in a real estate
investment trust (REIT).

Although it’s true that over time, real estate owners and
investors have enjoyed rates of return comparable to the stock
market, real estate is not a simple way to get wealthy. Nor is
it for the faint of heart or the passive investor. Real estate goes
through good and bad performance periods, and most people
who make money in real estate do so because they invest
over many years.

Buying your own home

Most people invest in real estate by becoming homeowners.
Part of the American dream is that the equity, which is the
difference between the market value of your home and the
loan owed on it, increases over time to produce a significant
part of your net worth.

Unless you have the good fortune to live in a rent-controlled
apartment, owning a home should be less expensive than
renting a
comparable home throughout your adult life. Why?
As a renter, your housing costs will follow the level of inflation,
while as a homeowner, the bulk of your housing costs
are not exposed to inflation if you have a fixed-rate mortgage.