Location, Location, Location – Historical Look at Real Estate as Investment

by David Jenyns on March 13, 2009

Investment in office buildings and apartment houses usually involves such large sums of money that it is beyond the power of most small investors. Therefore, in recent years, it has become increasingly popular for small investors to turn to real estate syndicates. This historical piece offers some great insight into investing in the 1960s.

The leverage factor, or margin buying in realty investment, means that investors can buy large parcels of properties for minimum cash outlays. Moreover, most syndicate operations afford important tax advantages to investors because of their partially tax-free nature.

Now, something new looms on the horizon: the real estate investment trust. The real estate investment trust is a sort of realty-owning mutual fund. For one thing, the Real Estate Investment Trust Act has placed real estate investment organizations on the same tax footing as regulated investment companies.

The Act exempts from federal income tax all real estate trusts, which distribute at least 90 percent of their net income to stockholders, with at least 75 percent of their income coming from real estate.

Interested in investing in real estate trusts? The laws have changed, but the opportunity may still be there for the savvy investor.

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