Real Estate means real property consisting of houses and land. It is a legal term that covers land along with anything permanently affixed to the land, such as buildings, specifically property that is stationary, or fixed in location. The Indian real estate sector plays a significant role in the country’s economy. Five per cent of the country's gross domestic product is contributed to by the housing sector. The real estate sector is also responsible for the development of over 250 ancillary industries such as cement, steel, paints etc.
A real estate investment is describes as the commitment of funds by an individual with a view to preserving and increasing capital and earning a profit. To own real estate is not only to posses the physical property but also to require certain legal rights to its continual peaceful utilization and redistribution. A traditional real estate investment is essentially a closed-end find created exclusively for holding real properties.
Real estate investors, either directly or indirectly, purchase rights to a stream of future cash flows that are expected to be generated by real estate. The cash flow might come from the rental income, from cash savings through offsetting otherwise taxable income with tax-deductible losses from the real property interest, or from net profit from resale of the property interest.
The primary reason in investing the real estate is the preservation and the possible enhancement of the capital invested. The capital value of the investment is preserved or increased by appreciation. A real estate investment may build up additional equity for its owner through reduction of the mortgage debt. One of the most important benefit of investing the real estate is the ability to reuse the capital through periodic, tax-free refinancing, while at the same time preserving the value of the investment.
All investors in the real estate seek a profit they invest. Before committing any funds, an investor should analyze carefully the returns available opportunities other than the purchase of real estate.
