real estate

Includes land and buildings, both residential and commercial. If owned real estate is rented or leased, it can provide an income stream. However, the cash flow is offset by expenses such as maintenance, repairs and taxes. A direct investment in real estate can require a significant amount of cash and involves high transaction costs. All real estate is affected by the economy, interest rates and location. The risk varies by the type of property and location, and it is possible to lose all of one’s investment. Instead of direct investment, many investors opt for real estate investment trusts (REITs), which is easier to buy and sell, but offers fewer diversification benefits relative to stocks.