Real estate is composed of many components. In case of real estate for residential purposes, the choices are endless. It includes homes of all kinds; independent houses and residential real estate or fancy condominiums. Real estate does not imply the building alone. It also includes the land on which the building stands and other immovable elements of the property like trees, garages and swimming pools. Sometimes real estate consists of plain land - a site where you are free to design and build the home of your dreams! Real estate is really any fixed structure and the land it stands on!
Another significant component of real estate is commercial real estate. These include properties which are meant exclusively for generating revenue. It includes spaces meant for retail businesses or even designated spaces for office use. Commercial real estate also includes land and buildings meant for the setting up of industries and of course land and buildings used for running hotels, restaurants and the like. Apart from these, residential properties specifically designed to house multiple families as tenants are also classified under the heading of commercial real estate. Typical examples of this type are long stay homesteads and retirement communities offering accommodation on rent!
Real estate has been traditionally considered a safe bet in terms of investment. It is viewed as a hedge against inflation and a long term asset. What’s more, the asset class is considered to be far more transparent as compared to esoteric markets in equity and commodities. But it is also said to come with its own typical problems like the inability of being liquidated at short notice, in case of financial exigencies. But it is still chased by investors who are desirous of acquiring an asset that will be inherited by their descendants.
While real estate has always had its share of faithful investors, a recessionary economy offers unique opportunities to traditional investors as well as new converts. A crash in the stock market is seen as an indicator of consumer pessimism and risk aversion across asset classes. The money waiting on the side lines then rushes towards relatively safe havens of real estate and commodities like gold and oil. This rush accelerates further, often fueled by falling interest rates and attractive valuations in the real estate markets. Moreover a failing economy sounds the death knell for debt repayments, leading to slip ups in mortgage payments resulting in rampant foreclosures. These homes are almost then available for close to a song. Sellers also rush to sell their properties to guard against further erosion of value and prices.This scene represents a golden opportunity for entrants to the real estate market. Immediate demand exists for their properties in terms of rental homes and the payback starts almost immediately.
