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 become a real estate investor you will enjoy some amazing benefits which are favorable to this investment vehicle.

First of all, real estate investing has the enormous benefit of financial leverage. Even if you get loans for real estate investing from a bank you can often get into a deal with a 10% down payment which means your returns are instantly magnified 10 times. So let's assume you have $10,000 to invest and you get 10% return on your investment regardless of the vehicle. If you put it into the stock market you will buy $10,000 worth of shares and after 12 months your investment is worth $11,000. If you put that same money into real estate with a 90% loan you earn 10% on the full $100,000 investment and finish with $110,000.

Compared to stock investing, real estate investing gives ten times more returns. Mind boggling, isn't it? Before you start to wonder, "How on earth is that possible?", let's answer it for you. When you take a loan for buying a property, it works towards maximizing your returns by the concept of "leverage". Though there are several other reasons for real estate investing, leverage does make investing in real estate lucrative to potential investors.

The tax benefit that one can avail is another good reason for becoming a real estate investor. The REQUIRED depreciation by the IRS on the property provides one of the best tax breaks by showing a "paper loss" on the property when in most cases the value of the property is appreciating. The juicier part of the story is that one pays taxes on a reported profit figure that is significantly lower than the actual earnings.

The 1031 exchange defined in section 1031 of the Internal Revenue Code of United States figures on top of the list of tax benefits available to US citizens. Under this, the people selling their property don't need to pay capital gains tax if they choose to reinvest the proceeds of that deal into another real estate investment.

Flexibility is one final benefit of beginning real estate investing. Sale contracts can offer flexibility. Creativity can be used when writing your offers, unlike the stock market. Contracts can include exchanges beyond the traditional cash for property. This can create a greater return and a win-win situation for the buyer and seller.

Beginning real estate investing is one of the most profitable investment options available today.See, how does real estate investing work: assume that you invest $10,000 in a down payment on a house, which represents a 10% down payment and you borrow the remaining 90% from the bank. If you earn a 10% return, you will finish with $110,000. There are even more reasons to become a real estate investor, like flexibility of the sale contracts and tax benefits, because depreciation allowed on property by IRS decreases the tax liability, but the value of property appreciates in the market.