TYPES OF ESTATES IN REAL PROPERTY

By definition, an estate in real property is an interest in the property sufficient to give the owner of the estate the right to possession of the property. It is imperative to understand the difference between the right of possession and the right of use. The owner of an estate in land, firstly, has the right of possession of the land in addition to the right to use it. Secondly, an easement owner on the other side has the use of the land but not the right to possess it and therefore, the easement is a non-possessory interest in land.

Basically, the Latin translation for the word estate is defined as "status" which indicates the relationship of the estate owner with reference to rights in the property. This establishes the degree, quantity, nature, and extent of interest a person has in real property. Estates in land, in addition to this, are divided into two groups: estates of freehold and estates of less than freehold (also called leasehold estates and non-freehold estates). The two estates can exist simultaneously in land where the owner (lessor) of a property has a freehold estate. Hence, if let say the owner leases the property, the tenant (lessee) has a leasehold estate.

A. ESTATES OF INHERITANCE

Freehold is defined as an interest in land of at least a lifetime and therefore generally is identified with the concept of title or ownership. Freehold estates may be fee simple estates or life estates. Although fee simple estates are practically inheritable, however, most of the life estates are not.

I. Fee Simple Estates

The fee simple estates provide the greatest form of ownership available in real property. The typical ownership in fee simple absolute gives certain legal rights which are usually described as a bundle of rights. The owner in fee simple absolute, in this case, may convey a life estate to another; may pledge the property as security for a mortgage debt; may convey a leasehold estate to another; may grant an easement in the land to another; and may give a license to conduct some activity on the property to another.

For example, if the owner conveyed a lease or an easement to another, the owner’s remaining rights would be a fee simple subject to the lease or easement. The fee simple ownership should not be confused with the quality of title. Ownership in fee means that the grantee owns it forever, not that it is free of title defects. And of course, an owner cannot expect to live forever and therefore the ownership consists of two periods of time, which are from the receipt of title until the owner dies and the period of time after the owner dies. In any case, the owner has the rights of ownership and use during his lifetime and then the ownership shall convey to his heirs (either by will or by the law).

II. Fee Simple Subject To a Condition Subsequent

The fee simple subject to a condition subsequent can continue for an infinite period, as in the case with the fee simple absolute. The fee simple subject to a condition subsequent also can be defeated and therefore is a defeasible (revocable) title. The fee simple subject to a condition subsequent is created by the grantor (the one conveying title) who restricts the future use of the property in some way.

For example, a grantor may convey property with the condition that it can never be used as a landfill. As long as the property is never used for this purpose, the title will continue indefinitely in the name of the initial grantee or any subsequent grantee. Any use of the property for a landfill will violate the covenant (the agreement) in the deed and the original grantor or her heirs may reenter the property and take possession or go to court and sue to regain possession. By doing so, the titleholder’s estate is terminated.

Another example of fee simple subject to a condition subsequent is that a grantor may want to convey a title in the case of the landfill where the owner may be protecting the property he owns that is close to the landfill. This is similar to the case of the college where the grantor may be highly committed to education, but may not want to give up ownership of the property for any other reasons. Perhaps, you may notice that in the case of a fee simple determinable, the estate in the grantee automatically terminates in the event where the designated use of the property is not continued or a prohibited use is undertaken. This is contrasted with the fee simple subject to a condition subsequent, in which the termination is not automatic.

B. ESTATES NOT OF INHERITANCE

Estates not of inheritance are good only for the life of the tenant (freehold) and do not pass on to his heirs, but rather are disposed of by some other method. In addition to being created by an intentional conveyance, life estates also can be created by operation of law. When life estates are created by act of the parties, they are called conventional life estates whereas when they are created by operation of law, they are referred to as marital life estates.

I. Conventional Life Estates (Estate for Tenant’s Own Life)

A life estate is a non-inheritable freehold estate which is created only for the life of the named life tenant (one who holds a life estate). And, questioning what will happen to the estate at the death of the life tenant, well, if nothing else is specified in the conveyance of the life estate, it will revert to the grantor or to his heirs at the death of the life tenant. In this case, the grantor or his heirs would have a reversionary interest and alternatively, the conveyance of the life estate could specify that the estate pass on to someone other than the grantor or his heirs.

II. Marital Life Estates

A marital life estate is created in North Carolina (United States) by the intestate succession statutes governing the distribution of property of one who dies intestate that is the one who dies without leaving a valid will. This statute allows the surviving spouse to choose a life estate in one-third of the real property owned in severalty (sole ownership) by the deceased spouse at any time during the marriage under certain conditions. If let say that the surviving spouse is entitled to any property of the deceased spouse through a will or intestate succession statutes and the surviving spouse has not joined in the transfer of such property by signing the deed, the surviving spouse must forfeit any interest in the deceased spouse’s property resulting from a will or an inheritance to claim her marital estate. Because of this, only few surviving spouses elect the marital life estate option since it is seldom advantageous for them to do so.

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GLOBAL FINANCIAL INSTITUTION – INTERNATIONAL MONETARY FUND (IMF)

Broadly speaking, the International Monetary Fund (IMF) is an organization which consists of 188 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Besides, the IMF provides policy advice and financing to its members in economic difficulties and also works with developing nations to help them achieve macroeconomic stability. Helping a nation that can benefit from globalization while avoiding potential downsides such as massive movements of capital and abrupt shifts in comparative advantage, including labor, trade and tax policies are the important tasks for the IMF. Hence, the IMF supports its membership by providing:

1. Policy advice to governments and central banks based on analysis of economic trends and cross-country experiences.

2. Research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets.

3. Loans to help countries overcome economic difficulties and fight poverty, mostly in developing countries.

4. Technical assistance and training to help countries improve the management of their economies.

Furthermore, one of the main goals of the IMF as a global financial institution is to ensure the stability of the international monetary and financial system by working together to help resolve crises with its member countries to promote growth and alleviate poverty. As the institution has three main tasks at its disposal to carry out its mandate which are surveillance, lending, technical assistance and training, these functions are underpinned by its research and statistics.

Within the realm of surveillance, for example, the IMF promotes economic stability and global growth by encouraging countries to adopt sound economic and financial policies. In order to do this, the institution regularly monitors global, regional, and national economic developments. As it also seeks to assess the impact of the policies of individual countries on other economies, the process of monitoring and discussing countries’ economic and financial policies is known as bilateral surveillance.

On a regular basis (usually, once every year), the IMF conducts in depth appraisals of each member country’s economic situation by discussing with the country’s authorities and the policies that are most conducive to a stable and prosperous economy; drawing on experience across its membership. At this stage, the member countries may agree to publish the IMF’s assessment of their economies along with the vast majority of countries opting to do so.

Meanwhile, when it comes to addressing how the IMF performs its mandate as a global financing provider, the institution essentially renders its member countries the breathing room that they need to correct their balance of payments problems. A policy program supported by financing, technically speaking, is designed by the national authorities in close cooperation with the IMF. Although continued financial support is conditional on the effective implementation of this program, however, the IMF lending instruments were improved further to provide flexible crisis prevention tools to a broad range of its members with sound fundamentals, policies, and institutional policy frameworks. Whatever it is, the IMF in the most recent years has not only doubled its lending access limits, but also has boosted its financing support to the world’s poorer countries, with the loans provided at a concessional interest rate.

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WAYS TO COPE WITH DIABETES

Often, most diabetic sufferers would rather take medicines than managing the sickness. In the case of Type 2 Diabetes, for example, they would rather take insulin shot in a frequent manner to help their blood glucose levels stay in their target range, even if it does not lower their blood glucose levels enough. For people with diabetes, such infection as well as underlying health condition, or even other forms of stress will further contribute to the rise of their blood glucose levels. This is because part of their body’s defense mechanism for fighting the illness and infection puts more glucose into the bloodstream and prevents insulin working properly. Therefore, knowing how to cope with the illness in the first place will help mitigate the greater risks of suffering from its complications.

1. CONTROLLING TYPE 1 AND TYPE 2 DIABETES

One of the aims of diabetes management is achieving control of blood glucose, blood pressure and blood fat levels. Good control is very crucial in helping to avoid developing the long-term complications of diabetes. To help control blood glucose levels in the case of Type 1 Diabetes, it is necessary to take insulin which can be administered in different ways, including via a pen, syringe or pump. As for the Type 2 Diabetes, it is a progressive condition and over time, it may be that following a healthy eating plan and being physically active is not sufficient to help control the blood glucose levels. Because of this, if you are someone who has been suffering from Type 2 Diabetes and this situation happens to you; your healthcare expert may advise you to start taking diabetes medication, or even increase and/or alter your dosage if you are already on medication. Bottom line, some people with Type 2 Diabetes in many cases, will need to take insulin very frequently to help control their blood glucose levels.

The table below here is a guide to the blood pressure and blood fat targets which you may refer to, yet, you still need to seek advice from your healthcare expert regarding your individual target levels.

2. MEDICATION

From medical standpoint, blood glucose levels rise when a person is off their food or eating less than usual. Diet and lifestyle changes may not be enough to achieve those blood pressure and blood fat targets hence medication may be required. People with Type 1 Diabetes, for instance, they may need to test blood or urine for ketones if blood glucose levels are 15mmol/l or more. Likewise, they may need to continue taking insulin shot or diabetes medication and adjust the dose accordingly in response to their test results. They may need to take carbohydrate containing drinks such as milk and other milky drinks, fruit juice or sugary drinks such as ordinary cola or lemonade if they are being sick. Also, they may need to eat little and have plenty of sugar-free drinks in case if they have no appetite. Overall, managing diabetes can at times appear to be incredibly demanding and some people who find the kind of support and encouragement from their social circles can be really beneficial in helping them cope with the disease.

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TYPES OF PREEMPTIVE MEASURES FOR KIDNEY STONES

Obviously, part of preventing stones is to find out why or how you suffer from them. Understanding your medical, family and dietary history helps your health care provider find out how likely you are to form more stones in your kidney organ. This is because once your health care provider finds out why you are forming stones, he or she will give you tips on how to prevent them and they may include changing your diet and taking certain medications.

 

1. DRINK ENOUGH FLUIDS EVERYDAY

In case if you are not making enough urine, your health care provider may suggest you drink at least 3 liters of liquid in a day. This is a great way to lower your risk of forming new stones. Knowing how much you drink during the day can help you have a grasp of how much you need to drink to produce 2.5 liters of urine. Therefore, you should try to drink more to replace fluids lost when you sweat from exercise or in hot weather. Although all kinds of fluids count toward your fluid intake, however, it is best to drink mostly low-calorie drinks and this may also mean limiting sugar-sweetened or alcoholic drinks.

 

2. REDUCE THE AMOUNT OF SALT IN YOUR DIET

Most frozen foods and meats including salty cured meats, deli meats (cold cuts), hot dogs, bratwurst and sausages are high in salt and should be eaten moderately. Besides, all types of cheese, breads, salty snacks such as chips, pickles and olives, canned and bottled sauces, rolls and pretzels also fall into that category. This is the tips for people with high sodium intake and high urine calcium or cysteine. Owing to the fact that sodium can cause both urine calcium and cysteine to be too high, your health care provider may advise you to avoid foods that have a lot of salt. After all, some medical experts suggest that people with high level of sodium consumption should not eat more than 2,300 mg of salt per day.

 

3. EAT FOODS WITH LOW OXALATE LEVELS

This may be a good choice for patients with high urine oxalate. Eating calcium-rich foods with meals can often control the oxalate level in your urine. Urinary oxalate can be controlled by eating calcium. However, if doing that and it does not control your urine oxalate, you may be advised to eat certain foods which have less high-oxalate. Actually, nearly all plant foods have oxalate, yet, only a few of them contain a lot of oxalate. These foods include spinach, rhubarb and almonds. Perhaps, it is not necessary to entirely quit eating foods which contain oxalate since it all depends on why your oxalate levels are high in the first place.

 

4. PRESCRIBED MEDICATIONS

Changing your dietary pattern and increasing your amount of fluids intake may not be enough to prevent stones from forming. In fact, your health care provider may give you certain types of prescribed medications to take to help you with this. And of course, the type of stones and urine tests will help your health care provider decide if you need medications and which one is considered the best. In any case, some medications your health care provider may suggest are as follows:

- Thiazide diuretics. These are for the patients who have calcium stones and high levels of calcium in their urine. Thiazides lower urine calcium by helping the kidney take calcium out of the urine and put it back in the blood stream. When taking thiazides, you need to limit how much salt you eat, as these medications work best when urine sodium is low.

- Potassium citrate. This is for the patients with calcium stones and low urinary citrate, including for those with uric acid and cysteine stones. Potassium citrate makes the urine less acidic or more alkaline (basic). As it helps prevent cysteine and uric acid stones, this particular medicine also raises the citrate level in the urine; helping to prevent calcium stones.

- Acetohydroxamic acid (AHA). This is for the patients who produce infection stones. These stones form because of repeated urinary tract infections (UTI). AHA makes the urine hard for infection stones to form hence the best way to prevent them is to deter repeated UTIs (Urinary Tract Infections) caused by specific types of bacteria, and completely remove the stones with surgery if necessary.

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GENERAL OVERVIEW OF CORPORATE FINANCE

From startups to multinational conglomerates, corporate finance is literally a critical element in guiding companies towards attaining their financial goals, optimizing resources, and maximizing shareholder value. As it involves the planning and financing of investments made by a company as well as the distribution or reinvestment of the income generated, the primary goal of corporate finance is to maximize shareholder value while striking a balance between risks and profitability, which entails both the long and short term financial planning while implementing various strategies, capital investment, and tax considerations.

First of all, when discussing about the field of corporate finance, it is essentially a branch or a part of financial management concerning with how corporations or companies address funding sources, capital structuring, investment decisions, and accounting. It is a broad subject comprised of many topics including capital structure, capital financing, risk management, capital budgeting, and the time value of money. Because the ultimate purpose of corporate finance is to maximize the value of a business through planning and implementation of resources while balancing risks and profitability, it also incorporates the tools and analysis utilized to prioritize and distribute financial resources. Hence, the financial management of a corporation or a company involves two functions, namely are:

1. Resource Acquisition: This function involves generating funds from internal and external sources at the lowest possible cost to the corporation. The two main categories of resources, in this case, are equity and liabilities. Equity refers to proceeds (profits) from the sale of stocks, retained earnings, and returns from investments. Whereas liabilities refer to the commitments from which an entity derives value including bank loans, other debts, product warranties, accounts payables, etc.

2. Resource Allocation: This function refers to investing funds with the goal of increasing shareholders’ wealth over time. The two main categories of investments, in this stage, are current assets and fixed assets. Current assets encompass cash, inventory, and accounts receivables, while fixed assets on the other hand are buildings, real estate, and machinery.

Second of all, corporate finance is crucial because it enables businesses to manage their financial risks, for example, by hedging against stock market or interest rate fluctuations. Due to the fact that some companies can control their exposure to currency risks, corporate finance therefore provides the necessary tools to enable them to make sound financial decisions for growth and success in the long run. Regardless of the size or the type of business operation, each company seeks to streamline its corporate financing for optimal wealth distribution and return generation, which is pivotal for ensuring a company's long-term financial health and sustainability.

Meanwhile, corporate finance helps companies to maximize their shareholder value by increasing profitability and share price. As it helps them to identify and evaluate growth opportunities by analyzing the financial feasibility of new projects as well as assessing the impact of those projects on their financial positions, corporate finance as a result enables companies to also gain a competitive advantage through a string of financial decisions, such as investing in new technologies, mutual funds, real estate, or acquiring and merging with other business entities, which allow them to outperform over their competitors.

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ALTERNATIVE TREATMENTS FOR ACID REFLUX (STOMACH ACID)

Most of the prescribed medications used to treat acid reflux (stomach acid) have gone through rigorous testing and studies to establish safe and effective use. While these medications can practically help alleviate the sickness, however, a person can also try some traditional remedies to treat or lessen the symptoms of acid reflux (stomach acid).

 

1. ACUPUNTURE

This is a type of traditional Chinese medicine that has been around for thousands of years. It uses small needles to stimulate healing. There was an older study showed that acupuncture had positive effects on decreasing stomach acid which can help reduce acid reflux symptoms. Electro Acupuncture (EA) is another form of acupuncture which uses electrical current along with the needles. Although research remains limited in this area, however, one study found that using needleless EA was associated with reduced acid reflux symptoms. Bottom line, the result of electro acupuncture and a proton pump inhibitor (a type of medication) according to the findings of one study above showed a significant improvement on the patients’ conditions.

2. GINGER

Some previous studies suggested that ginger may help with nausea, vomiting, and other symptoms. Although research also remains limited in this area and more studies are necessary to confirm these benefits, however, some researchers based on the existing evidence suggest that a daily dose of 1,500 milligrams despite it is possible that a higher intake could have adverse effects.

3. HERBAL TEA

Some drinks including coffee and alcohol may increase the symptoms of acid reflux. Herbalists may recommend different types of herbal teas to help improve digestion and ease symptoms such as dizziness or nausea. That being said, some of the popular herbal teas which can help with the treatment of acid reflux (stomach acid) are:

- Chamomile tea.

- Licorice tea.

- Green tea.

- Fennel tea.

- Fruit teas.

After all, it is best to avoid mint teas as they may trigger the illness.

4. BAKING SODA

Baking soda is an antacid and acts as an acid neutralizer. Some people are take baking soda to temporarily neutralize their stomach acid, providing relief from acid reflux symptoms. In case if you want to try this at home, dissolve 1/2 teaspoon in a 4-ounce glass of water. However, it is important to be aware of the fact that baking soda can also cause unpleasant side effects such as gas, bloating, nausea, and diarrhea.

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SEO TECHNIQUES: ON-PAGE Vs. OFF-PAGE

In general, Search Engine Optimization or popularly known by its acronym "SEO" has been around for nearly as long as the internet exists. Since the early periods, many organizations have utilized it to reach new audiences, drive traffic to their websites, spread knowledge, and escalate growth. Over the years since the existence of internet, SEO has become a sophisticated and technical practice informed by web user behavior. With that being said, today’s incarnation of content digitalization employs both on-page and off-page techniques to ensure high-quality websites to make it to the top of search engine result pages.

 

ON-PAGE SEO

The On-page SEO, technically speaking, is the practice of optimizing content on website pages so that they rank at the top of Google and can be easily searched by users. As it focuses more on how to create valuable content so that it looks SEO-friendly, it uses content and technical elements to improve the overall quality of a page. Simply put, the more On-page SEO optimization you do, the more traffic you will drive to your website and the more relevant that traffic will be.

Next, when discussing further about its implementations, there are quite a number of technical aspects of a webpage that can be optimized with On-page SEO to increase your site ranking such as:

- Title tags.

- Headings.

- URL structure.

- Alt text for images.

- Site speed.

- Internal links.

- Meta descriptions.

- Responsiveness.

All those technical aspects must be maximized properly. For example, the meta description you write must comply with applicable SEO rules for which there must be keywords placed and cannot be too long. This has to be performed so that users can find your website instantly on the Google search engine. Not only that, other technical facets such as URL title, title tag, etc. must also be optimized effectively. By placing internal links that are embedded in one piece of your content which will lead to other content on one website, this in turn will slowly increase your website's visibility in search ranking.

Furthermore, relevant and optimized headings are essential when it comes to the implementation of On-Page SEO. Headings are basically the titles you give to your content, and these should be in H1 format for the best results. As they should focus on relevant and descriptive words while you can optimize them with relevant keywords, do not stuff them. Hence, in order for you to break up your content, you can also use subheadings (H2 through H6) by following the same best practices, yet, try not to repeat keywords or phrases throughout your post.

Meanwhile, one of the most critical elements of On-Page SEO is none other than your content because this is what brings traffic to your website. As mentioned, today’s web users are looking for relevant, interesting, engaging, and informative content that can fill their need or offer them a solution. In other words, people must consume the content you have created as authentic as possible, which can come in a number of popular types, such as:

1. Blogs.

2. Videos.

3. Info graphics.

4. Podcasts.

5. EBooks

6. Case studies

7. Reviews

8. Instructional articles

9. And many more.

Above all, the content you create is something that others must be able to link to it which in this case; you should avoid creating content that requires a login, copyrighted material, and certain slide shows.

OFF-PAGE SEO

Aside from the technical elements which are the On-Page optimization, the Off-Page SEO concentrates more on the external factors. It is basically a series of activities carried out to optimize your website from the outside. The so-called Off-Page SEO, on the other hand, refers to the way of promoting your website by executing the practice of link building, backlinks, and so on. Just as the keyword stuffing used to be an acceptable practice, filling your webpages with irrelevant backlinks however will get you penalized rather than being promoted. Although search engines take into consideration the number of your backlinks as well as the number of your referring domains, still, the quality of your content is far more important than quantity. Therefore, a single quality backlink from an authoritative site is worth more than 10 or even 100 of low-quality links.

Last but not least, writing content that mentions influencers in your field or perform some blogging activities to promote yourself as an expert in your realm is another example of the Off-Page SEO. Although building quality backlinks are the backbone of the Off-Page SEO strategy, there are other techniques you can use to increase site authority and encourage more links, such as:

1. Adding your business website to local listings and internet directories including things like Google My Business, Yelp, Yellow Pages, and other local listings.

2. Getting involved or participating in discussions on sites like Quora while answering questions from others and this will render you an opportunity to introduce them your website.

3. Submitting content to various sharing sites including images, audios, and video sharing sites like Flickr, Instagram, Pinterest, Soundcloud, Dailymotion, YouTube, and so on.

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LEARNING HOW TO READ A COMPANY’S FINANCIAL STATEMENTS

Before you decide whether or not if you should invest in stock market, here are a few questions that would help you make a better decision and push you to think very carefully.

- How much cash does the company already have?

- How much revenue has the company made since it was started?

- How much revenue does the company expect to make in the future?

- Does the company have any debts?

Then, once you have done asking yourself with the above questions, the next step for you to start is by looking at the company’s financial statements. Learning how to read Financial Statements is similar to learning a new language. If you want to order a better dish in a Spanish restaurant, you will probably need to speak Spanish to read the course of menu. This is similar with a company’s business. If you want to find a good stock to invest in, you will need to learn how to speak the language of finance and read their financial statements. Just like learning any new languages other than your mother tongue. It is difficult at first, yet, the more you practice the more fluent you will become.

Broadly speaking, all companies need to keep track of their finance which means that they are keeping track of all the money coming in and going out, as well as other transactions that do not necessarily involve the exchange of money. At the end of each month, quarterly (three months), and year, a company will prepare financial statements which literally are the summary of all its financial transactions in that given period. In the case of a company that is publicly traded where its shares are sold on a stock market, for instance, it is required that the company prepare and file quarterly and annual financial statements so that the government and the public can see how the company is doing.

Actually, there are a lot of parties who will be keen to have a look at the financial statements of a company. First, the company’s management and board of directors will use the financial statements to track performance. The financial statements typically show how the company has done in the past and will help management to make better decisions about the future. Second, Lenders or the so-called creditors such as banks that have provided loans to the company may also want to see its financial statements. Some loans may have certain requirements, such as the company’s debt-to-equity ratio "cannot be more than either 0.3 or 0.4" in order to receive that loan, or the lender may just want to see how much cash the company has in order to estimate how likely it is the company will be able to pay back the loan and interest in a timely manner.

Here’s a quick illustration of a company’s debt-to-equity ratio, and how to calculate it is by "dividing a company's total liabilities with its shareholders’ equity".

On the other hand, investors are very interested in seeing the financial statements. They are making decisions about whether to buy or sell stock in the company and thus they need to know how the company is doing to help inform their decisions. When it comes to a company’s financial statements, there are three types that you need to learn how to read them before you decide to invest or buy its shares.

Firstly, it is a balance sheet. The balance sheet basically shows a snapshot of the company’s assets (its resources that it expects to create value in the future), liabilities (the loans and other obligations due to others), and owners’ equity (also known as shareholders’ equity or stockholders’ equity – the stake that the owners or investors like yourself have in the business).

Secondly, it is an income statement. The income statement practically demonstrates how much revenue the company generated over the year, how much it cost to sell its main products, how much it cost to pay its employees over the year, and how much it owed in interest and taxes for the year. On a very basic level, if the company makes more revenue than it spends in costs, it is a profitable business. However, if the company’s costs are greater than its revenues, then it is not a profitable business.

Thirdly, it is a statement of cash flows. The statement of cash flows technically illustrates how much cash came into the business and how much cash went out of the business. It is important to note here that when we use the term cash in the financial world, we mean not only the currency bills like you normally think of such as dollars or euros, but also checks, electronic transfers, as well as the balance in the bank account. In fact, most businesses will do a lot of their transactions through electronic means (e.g. mobile banking, wire transfers, etc.); yet, they are still considered as the amount of cash which flows in and flows out.

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THREE MAIN PURPOSES OF INVESTING IN REAL ESTATE

It is not uncommon to notice that the vast majority of people would rather invest their retirement savings in some combination of stocks and bonds, typically through some kind of mutual funds. Despite the fact that this renders them a great opportunity to diversify their sources of earnings or the so-called investment portfolios, they are often shocked to discover the value of their investment has tumbled whenever there is an unprecedented change in the market conditions. Investing in real estate is no different, yet, the value of property acquired normally increases every single year, particularly against the ever growing populations where the land becomes scarce.

 

1. TO PRESERVE CAPITAL

Obviously, the ultimate reason for investing in real estate is the preservation and the possible enhancement of the money invested. A real estate owner may build up additional money through reduction of mortgage debt. Generally, real estate owners have enjoyed rising property values over the years. Consequently, the equity or the value of money invested is preserved and increased by appreciation. This is precisely the reason behind why real estate investments are described as the investment which hedges against inflation. Although the problems associated with tenants are legendary, prevalent and endless, however, they often improve the properties that they occupy to enhance their living environment. As a result, the betterment of the property they make tend to increase the property’s value and is often left behind by the time when they move.

2. TO EARN PROFITABILITY

Fundamentally speaking, all investors in real estate have one ultimate purpose to put their money in for the sake of gaining profitability. By definition, an investment of any kind is a commitment of funds with the intention of preserving a "capital/equity/money" and earning a profit. From the viewpoint of real estate investors, these profits assume two forms. First, the income stream derived from the tenants’ rents should generate one kind of profit. Second, the gross amount of rent should be adequate to pay for all of the fixed and variable operating expenses of the property with sufficient remaining to show a return on the investment. After all, before committing to make any investment of real estate property, an investor should analyze thoroughly the returns of investment from opportunities rather than simply acquiring the assets.

 

3. TO ENJOY TAX RELIEF

Unlike any other form of investments, the income stemmed from the rental real estate can be sheltered enormously to diminish the income tax liability and thus enhancing the bottom-line return. Often, after all income from a rental property is accumulated for the year, the expenses incurred to grow this income will possibly be deducted. As these expenses include all operating costs such as management fees, utility expenses, repairs, maintenance, advertising, bookkeeping and so forth, the interest paid on existing real estate loans is usually deductible as a consequence of the amount of depreciation. Hence, the gross income derived from rentals is effectively reduced to a net amount that is then subjected to the imposition of income taxes at the taxpayer’s pocket.

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