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There are many avenues through which people can get started investing these days, and one of the most profit yielding investments is real estate, which can generate a very handsome income indeed. If you are considering beginning real estate investing, you can look forward to some stupendous gains that are associated with this investment alternative.

One of the biggest advantages of investing in real estate is financial leverage. If you get loans for real estate investing from banks, you typically can get it with 10% down payment as your contribution, which means your returns would be magnified 10 times. If you, let's say, have $10,000 to invest and all asset class give a return of 10% per year, then investing these $10,000 in stock would result in $11,000 at the end of the year, with a gain of just $1,000. While on the other hand investing the same $10,000 in real estate worth $100,000 (with $90,000 as bank loan) would result in $110,000 with a total gain of $10,000.

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.

Another incredible reason for beginning 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.

A great tax benefit is the 1031 exchange. This exchange is defined by the IRS Code. This exchange permits investors to delay the payment of capital gains taxes if the gains are later reinvested in another property that meets the codes guidelines. The government wants people to stay in the real estate market and reinforces this with this tax benefit.

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.