Basically, people invest in real estate with the objective to minimize risk, preserve capital and earn a profit. Real estate investments offer relatively higher yields, greater leveraging opportunities, greater income tax sheltering strategies and a higher degree of personal control than most other types of investments.

The investment opportunities you might face in real estate include open land, vacant lots, farm acreage, industrial properties, houses, apartment buildings, stores, shopping centers, office buildings, clinics, recreational projects, mineral deposits, securities, mobile-home parks, condominiums and airspace. Competition for the dollars available for investment is high, and each opportunity has its own particular advantages and disadvantages.

Purposes of Investing
There may be several reasons why you are currently investing or considering investing in the small-cap commercial real estate market. In the following sections you will learn more about the preservation and possible enhancement of the capital you invest, how to earn a profit

Investing Capital
A primary reason for investing in real estate is the preservation and possible enhancement of the capital invested. On average, owners have enjoyed rising property values over the years. Consequently, the capital value of the investment is preserved. It is precisely for this reason that real estate investments are described as hedges against inflation.

Earn a Profit
Fundamentally, all investors in real estate seek a profit on the money they invest. For real estate investors, these profits assume two forms. The income stream from the tenants' rents should generate one kind of profit. The gross amount of rent should be adequate to pay for all of the fixed and variable operating expenses of the property, with enough remaining to show a return on the investment.