How an Investment Works

An investment is any item that is purchased with the anticipation that it will generate income or appreciate in value in the future.

The investment is deemed profitable if it exceeds its initial costs. There are various items or assets, that can be purchased as investments.

They include equities, bonds, mutual funds, and real estate. All these asset classes have their individual characteristics and risk factors that make them preferable to a certain type of investor over others.

When you invest in real estate, you’re purchasing physical property such as houses, apartments, or office buildings and leasing the property to tenants.

The main goal is to generate income through rents and lease fees while also building equity over time. You can sell the property at any time if you want to receive a lump sum payment and end your ownership stake in the property.

Besides providing a place for tenants to live, commercial real estate also encompasses warehouses and production facilities, medical offices, and shopping centers.

Commercial real estate investing is usually done through limited partnerships or corporations that own properties and collect rent from tenants.

The sponsors of these opportunities generally have years of experience in operating similar properties and typically take care of finding those tenants, collecting rent payments, and maintaining the properties.

 

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  • Martin Moore

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