Real estate investment involves the purchase, ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development. Real estate is an asset form with limited liquidity relative to other investments (such as stocks or bonds that openly trade on financial markets). It is also capital intensive (although capital may be gained through mortgage leverage) and is highly cash flow dependent. If these factors are not well understood and managed by the investor, real estate becomes a risky investment.
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Real estate investment involves the purchase, ownership, management, rental, and sale of properties for profit. A specialized branch of this field, known as real estate development, focuses on improving properties as part of an investment strategy. Compared to other assets like stocks and bonds, real estate has lower liquidity, meaning it cannot be quickly converted into cash. It is also capital-intensive, often requiring mortgage leverage to secure funding. Additionally, real estate investments are highly cash flow dependent, making effective management crucial to minimizing risk. For investors who understand these dynamics, real estate can be a lucrative long-term asset. However, without proper knowledge and financial planning, it can become a risky venture.
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