Chapter 32: Real Estate and Other Investment Options

$Real estate$ is land and anything attached to it, such as buildings or natural resources.
Buying a house is the most expensive purchase and major investment most people make in their lives.
$Residential property$ is property in which an individual or family lives. * Single-family homes, multi-unit housing, and manufactured homes are forms of residential property.
The most popular residential property is the single-family house. * It is usually on its own lot with its own yard.
Multi-unit houses are usually single buildings divided into various units, with a separate person or family living in each unit.
A manufactured home is usually one of two types. * Prefabricated houses are partly assembled at a factory. * The other type is a mobile home.

Few people have enough money to pay for a house in full. * Most have to finance it with a home mortgage loan, or a long-term property loan. * To buy a house also requires a down payment, which is usually 20 percent.
Homebuyers often obtain a real estate agent to help them find a home. * A $real estate agent$ is a person licensed to arrange the buying and selling of homes and other types of real estate. * Real estate agents usually charge their fees to the seller and not the buyer.
Several factors affect the value of a house, including its size, condition, quality, and location.
The amount of equity you have in a home is very important. * $Equity$ is the value of a piece of property less the amount still owed on the money borrowed to purchase it.

Another reason for buying real estate is to obtain $income property$ , or property used to generate income. * They can collect rent or sell the property for a profit.
$Rental property$ is any type of dwelling unit or other property rented for a length of time
$Undeveloped property$ is unused land intended only for investment purposes.

To $diversify$ means to vary investments in order to spread risk or to expand. * A diversified investment plan (or portfolio) might include real estate, stocks, bonds, and commodities. * It could also include precious metals, gems, and collectibles.
Many people invest their money in precious metals as a hedge against inflation. * A hedge is a means of protection or defense against loss.
$Precious metals$ include valuable ores such as silver, gold, and platinum. * The price of gold rises when people believe that war, political unrest, or inflation may be near.
Precious gems (or gemstones) are rough mineral deposits (usually crystals) that are dug from the earth by miners and then cut and shaped into brilliant jewels. * These gems include diamonds, sapphires, rubies, and emeralds. * They appeal to investors because of their small size, beauty, ease of storage, durability, and potential as a protection against inflation.
Some people like to “play the market” for commodities such as oil, corn, and coffee. * Through a $commodities exchange$ , investors can buy contracts for quantities of a given commodity for delivery at a future date.

$Collectibles$ are items that appeal to collectors and investors. * They can include rare coins and books, works of art, antiques, and stamps.
The Internet has made buying and selling collectibles efficient and convenient, and the number of Web sites for collectors has exploded. * Collecting on or off the Internet can be a satisfying hobby and a good investment. * Nevertheless, a wise collector must always be alert to schemes and scams.
$Fraud$ is the crime of obtaining money or some other benefit by deliberate deception * The safest way to steer clear of fraud is to learn everything you can about the items you collect and to buy and sell only with reputable dealers.