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There are many ways people can invest in today's investment markets. One of the most rewarding ways is by beginning real estate investing. Investing in real estate can prove to be a very good source of income. If you decide to begin investing in real estate you will enjoy some amazing benefits which are favorable to this investment vehicle.

Real estate investment has the enormous potential to give huge returns. You can borrow the money from a bank to finance your real estate investment. Most of the banks are willing to finance 90% of the cost, so you can get into a deal with a 10% down payment. This gives you a 10 times return on your investment. Let's take the example - if you have $10,000 to invest and assume you get 10% return regardless of the investment vehicle you use. If you invest in stock market to buy shares worth $10,000 then at the end of 12 months, your investment is worth $11,000. Instead, if you invest the same money into real estate with 90% bank loan, you earn 10% on the total $100,000 investment and you will endup with $110,000.

As you see from the example, your $10,000 has been doubled using real estate investment, whereas it could only produce an extra $1,000 in the stock market. You can understand the reason for this - your lender's money is working for you too. That is the power of leverage and is one of the greatest advantages of investing in real estate. As you will see, there are many more advantages to begin investing in real estate.

Another incredible reason for getting started in real estate investing is the tax benefits. One of the best tax breaks of real estate investing is the REQUIRED depreciation by the IRS on the property. This represents a "paper loss" when in most cases the property (including the land) is actually appreciating. So in essence you pay taxes on a reported profit figure that is significantly lower than your actual earnings - very nice.

1031 exchange as defined by section 1031 of the Internal Revenue Code is a better tax benefit scheme as compared to others. The essential feature of this rule is that an investor can delay payment of tax on any capital gain from the sale of a property as long as the proceeds are reinvested in other appropriate property. This incentive by the government in effect encourages the investor to remain invested in the market for longer duration.

One of the great benefits of investing in real estate is derived from the flexibility of sale contracts of property. Unlike stock investing, you can be very creative with your offers while buying and selling real estate and you can exchange property for a lot of things other than just cash. This leads to some spectacular win-win arrangements.