Finance is a branch of economics that deals with the management of money and other assets. The management of credit and banking and the commercial activities of providing funds and capital for investment also fall under the umbrella of finance as a subject. Finance is the pivotal feature of any business organization, which has the utmost responsibility of raising funds for its corporation with practicing a stable balance between risk and profitability.
Real Estate Finance can be defined as a branch of finance, which deals with investing money or wealth in real estate. Real estate finance deals with the allocation, generation and use of monetary resources over time, which is invested in the real estate business.
Like any other aspect of finance, real estate finance also has risks associated with it and the effective management of assets, which will maintain or increase in value over time, i.e. the investment yield of the project.
Real estate investment essentially means investing in immovable properties such as land and everything attached to it such as buildings, also known as properties. The difference between a real and personal property is that the there is the right for the transfer of title to the property in question whereas right to personal property or ownership to personal properties cannot be transferred.
Real estate investment can be viewed as a handsome business opportunity as real estate can be pledged as collateral to secure a loan for a business venture, to offset otherwise taxable income through cash savings on tax-deductible interest rate losses or rental income can also be derived from a real estate property.
A common example of real estate financing is an individual owning multiple pieces of real estate of which one can be used his primary residence and the others can be rented out. Profits can be reaped from real estate financing as a result of appreciation of real estate property prices. This is known as capital gains from real estate financing.
