INTRODUCTION TO REAL ESTATE INVESTMENT

In general, property is something that can be owned. By definition, real estate is defined as land and all natural and human-made improvements attached permanently including air and mineral rights. To own real estate be it land or buildings is not only to process the physical property, but also to acquire certain legal rights to its continuing use and redistribution. To put it mildly, when we acquire real estate, we also acquire an accompanying bundle of rights in the property we own – the rights of use, possession, control, enjoyment, and disposition which includes the rights to pass the property on by means of a will.

To begin with, the ownership and control of real estate is a fundamental part of our lives. This is because in reality, we depend on our property to provide us with shelter and to satisfy other basic needs. In our own country, for instance, some of our essential needs can be fulfilled in various ways. Due to the fact that technological achievements have advanced our standards of living, hence, there is no need to be individually dependent on the ownership of land for the fulfillment of our basic needs. In other words, we can either rent or own a property (e.g. house or apartment) that is serviced by utility companies and financed by lending institutions. We can work in office buildings, manufacturing plants, and shops. We can also purchase our goods in stores, play in parks, and consume the products of far-off farms.

Nowadays, many people have the buying power or financial capability to go one step beyond using real property to supply only their basic necessities. These individuals, in addition, also acquire real estate as an investment which represents the conversion of their hard work efforts into a tangible and valuable asset. When it comes to the realm of real estate investment, it can be described as the sheer commitment of funds by an individual with a viewpoint to preserving, increasing, and earning capital or profit. In any case, we all make investments of various kinds throughout our lives whereby we invest time, energy, and money in educating ourselves and our children, in obtaining good health care, in purchasing vehicles, in accumulating savings, and in pursuing other necessary ventures to ensure that we have a better quality of life.

Furthermore, real estate investment does represent the forgoing of some present comforts (the enjoyment that we give up at the moment) in anticipation of future benefits. Forgoing instant satisfaction, although often painful for example, is necessary in the accumulation of an individual’s savings which is essential to the acquisition of investment property. As it sometimes requires something as important as money, a real estate investment on the other side also involves the application of personal time and effort.

Although the said hands-on approach to an investment is practically challenging, however, investment in real estate extends beyond our day-to-day activities and concerns us with the commitment of free money – the money accumulated in excess of funds required to secure life’s necessities. After all, the above hands-on approach to a real estate investment is called "sweat equity", while the free money is often called "discretionary fund" which can be viewed as money available for investment.