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.

As you see from the example, your $10,000 has been doubled using real estate investment, whereas it could only produce an extra $1,000 in the stock market. You can understand the reason for this - your lender's money is working for you too. That is the power of leverage and is one of the greatest advantages of investing in real estate. As you will see, there are many more advantages to begin investing in real estate.

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.

Perhaps an even better tax benefit is the 1031 exchange as defined by section 1031 of the Internal Revenue Code. Essentially this allows investors to delay paying any capital gains taxes when a property is sold as long as the proceeds are reinvested in an appropriate property. The government is basically encouraging investors to stay in the market with this fantastic incentive.

There is a unique advantage of beginning real estate investing in the fact that, unlike in stock market, you do not need to have standard offers and contracts. You can virtually bargain anything and everything for your property, resulting in some stupendous gains for everyone involved.

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.