Real estate investing - looking to purchase real estate with the position of gaining a lucrative investment either locally or internationally is a recognized part of any serious investor's portfolio.

Spreading risk means that real estate investors can minimize the downsides of any one market and focus on those investment markets that are either very firm or rising rapidly - especially true for emerging markets. Real Estate ownership, management, rental and/or sale of real estate for profit, and renovation of real estate are fundamental parts of a real estate investment strategies.

Real estate is an asset based investing form with limited fast liquidity relative to other investments but can provide excellent long-term results. Real Estate Investing is very capital intensive and while investors may have to use private fumds is may be that some or all capital required may be gained through the use of raising a mortgage on the real estate in question.

Investors need to understand that capital (liquid funds) may be tied up for some time and this has to be built into any real estate investment forecasting as regards the investment potential. If the capital tied up is required quickly this can lead to strain on the investment which may turn negative.

CAP RATES: Net operating income, or NOI, is the sum of all positive cash flows from rents and other sources of ordinary income generated by a property, minus the sum of ongoing expenses, such as maintenance, utilities, fees, taxes, and other items of that nature (debt service is not factored into the NOI). The ratio of NOI to the asset purchase price, expressed as a percentage, is called the capitalization rate, or CAP rate, and is a common measure of the performance of an investment property.

TAX SHELTERS: Tax shelter offsets occur in one of three ways to assist investing : depreciation (which may sometimes be accelerated), tax credits, and carryover losses which reduce tax liability charged against income from other sources. Some tax shelter benefits can be transferable, depending on the laws governing tax liability in the jurisdiction where the property is located. These can be sold to others for a cash return or other benefit.

Equity build-up is the increase in the investor's equity ratio as the portion of debt service payments devoted to principal accrue over time. Real Estate Equity build-up counts as a positive cash flow from the asset where the debt service payment is made out of income from the property, rather than from independent income sources.

Real Estate Capital appreciation is the increase in market value of the asset over time, realized as a cash flow when the property is sold. Capital appreciation can be very unpredictable unless it is part of a development and improvement strategy. Purchase of a property for which the majority of the projected cash flows are expected from capital appreciation (prices going up) rather than other sources is considered speculation rather than investment.

Investors should look at all the options for real estate investing from the domestic residential market to the international and commercial markets. Using the services of a Broker or Agent will be of benefit during the negotiation process and are not to be underestimated to dealing with the aspect of mediation in bringing both seller and buyer together to form the agreement.