Introduction to Real Estate Investment

Running head: INTRODUCTION TO REAL ESTATE INVESTMENT
Introduction to Real Estate Investment
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INTRODUCTION TO REAL ESTATE INVESTMENT
Contents
Introduction:....................................................................................................................................2
Answer 1:.........................................................................................................................................2
Answer 2:.........................................................................................................................................5
Part a:...........................................................................................................................................5
Part b:...........................................................................................................................................7
Part c:...........................................................................................................................................8
Part d:...........................................................................................................................................9
References:....................................................................................................................................10

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INTRODUCTION TO REAL ESTATE INVESTMENT
Introduction:
Investment is one of the primary options available to the people in any country to earn
income. United Kingdom is not an exception to the above as most people in the country looks for
better vehicles to make investment. The objective of all investors are mainly to maximize return
on the amount of investment by assuming minimum amount of risk. A brief discussion on the
properties as an investment option in the country shall be made in this document.
Answer 1:
Qualities of property as an investment vehicle:
Investment allows individuals and organizations to earn significant amount of income on
the spare amount remaining in the hands of the individuals and the organizations after meeting
necessary expenditures. There are number of investment vehicles available to the individuals as
well as the organizations in the UK to earn income. Such vehicles include investment in shares
of companies, investment on debt securities of companies, investment on government bonds,
investment in fixed deposits of banks and financial institutions, investment in properties (real
estate) and others investments. Different investment vehicles have some similar and some unique
characteristics (Omokhomion, Egbu and Robinson, 2018). The investors must take into
consideration these characteristics before determining the suitable products of investments to
achieve their desired objectives. Thus, the final decision as to the particular investment vehicle
that an investor shall chose to invest will be mainly dependant on the objectives of the investor.
For example an investor who is willing to take significant amount of risk in order to maximize
his investment will never chose government bonds, debt securities, fixed deposits and other such

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INTRODUCTION TO REAL ESTATE INVESTMENT
stable investment options which provide low but stable rate of return on investment. Similar old
pension earning individuals in the country will not be willing to take any excessive risk to earn
high rate of return on their investment. Hence, such people will obviously chose more
conservative investment options such as fixed deposits, government bonds and other such
investment options (van Loon and Aalbers, 2017).
Property is an aggressive investment vehicle which require significant amount investment on the
part of the investors thus, one of the main characteristics of property investment is the
requirement of funds. Investors who invest in shares of companies, in government securities, in
government bonds, in debt securities of companies, in fixed deposits and other investment
options can invest even with low amount of funds. However, in order to invest in properties the
investors require significant amount of funds. With modest funds it will not be possible for the
investors to invest in real estate and properties (Crook, Henneberry and Whitehead, 2015).
The properties in the UK are of different qualities and the investors must take all necessary
precautions to ensure that the properties that they are looking to invest in are of substantial
qualities to earn maximum amount of return on such investment. The investment vehicle, i.e.
property in the country has undergone number of ups and downs over the years. Once a gold
digger for the investors has lost significant amount of its moo to provide the investors high rate
of return. It is mainly due to the ever increasing price of investment properties in the country that
has resulted in stagnation of demand in the property and real estate sector (Baum, 2015). As a
result the investors are increasingly finding it difficult to sale properties subsequent to buying
these properties. Thus, investors have become much more conscious of investment in properties
in the country. The prices of properties have showed a sharp increase over the years resulting in
loss of demand for the properties in the country. However, despite significant stagnation in