There are tremendous options in which anyone can invest his or her money, and as you know or may need to know, every investment focuses on increasing the invested capital and securing the future at the same time. All with its accommodated risk factors

But when it comes to investing in the real estate business, the case is different. Simply put, real estate is an IDEAL investment.

Here are a few facts you may need to know about investing in the real estate business

INCOME: Real estate business is a positive cash flow machine. Investing in real estate properties generates a constant flow of income for every investor, either monthly, or yearly, and you don't have to worry about a constant source of income anymore.

DEPRECIATION: Simply put, depreciation is a non-cost accounting method to take into account the overall financial burden incurred through real estate investment.

Look at it from this perspective, the value of a brand new car starts to depreciate the very seconds you drive off from the car lot. But in the real estate business, the Internal Revenue Service (IRS) allows you to deduct this amount yearly against your taxes.

Having said this, the depreciation of a real estate investment property is determined by the overall value of the structure of the property, and the length of time, i.e; the recovery period based on the property type - either residential or commercial.

EXPENSES: From a general perspective in real estate property investment, all expenses incurred are deductible. The cost for utilities, insurance, the mortgage, the interest and the property taxes you pay. For instance, if you use a property manager or if you're repairing or improving the property itself, all of this is deductible.

To be honest, real estate investment comes with a lot of expenses, duties, and responsibilities to ensure the investment property itself performs to its highest capability. Because of this, the contemporary tax law generally allows that all of these related expenses are deductible to the benefit of the investment real estate landowner.

If you were to ever take a loss or purposefully take a loss on a business investment or investment property, that loss (expense) can carry over for multiple years against your income taxes. For some people, this is an aggressive and technical strategy. Yet it's another potential benefit to investors of real estate lands and properties.

APPRECIATION: Appreciation simply means the growth of the value of an investment, and it is one of the key reasons for investing in a business and a very powerful way of growing your net worth.

From a trusted source, many homes in the city of San Francisco are several million dollars in today's market, but back in the 1960s, the same property was worth about the cost of the car you are currently driving, or even less!

Over the years, the area has become more popular and the demand that ensued caused the real estate prices in the city to grow exponentially, compared to how it was a few decades ago.

People that were lucky enough to recognize this, or who were just in the right place at the right time and continued to live in their home have realised an investment return in the 1000's of per cent.

That's exactly what appreciation is all about. Which other investment can bring about this kind of return without drastically increased risk? The best part of real estate property investment is that someone is paying you to live in your property, paying off your mortgage, and creating an income for you each month or year, along the way throughout your course of ownership.

LEVERAGE: The idea is to use a small amount of your money to control much more expensive assets. Essentially, you are leveraging your down payment and gaining full control of an asset that you would normally be unable to purchase without the loan itself.

Leverage is more acceptable in the real estate sector and inherently less risky than leverage in the stock world - where this is done through means of options or buying "on Margin". Leverage is very common in real estate, otherwise many people would only purchase property when they have 100% of the cash to buy it.

Looking at it from this angle, about ⅔ of every purchase is done with some level of financing, so the majority of buyers in the market enjoy the power that leverage can offer when it comes to real estate investment.

For instance, if a real estate investor is to buy a house worth $100,000 with a 10% down payment, he is leveraging the remaining 90% through the use of the associated mortgage.

Let's now assume the local market improves by 20% over the next year, therefore the actual property is now worth $120,000. When it comes to leverage, from the standpoint of this property, its value has increased by 20%. But compared to the investor's actual down payment of $10,000.

This increase in property value of 20% means the investor doubled his return on the investment made, which is also known as the "cash on cash" return. In this case, that is 200%, because the $10,000 is now responsible and entitled to a $20,000 increase in overall value and the overall potential profit.