One study has shown us that in 2004 alone, 23 percent of all homes were purchased as an investment property. This of course comes as no surprise, taking into account the rise of home prices, and other types of investment property, that we have experienced over the last several years. There are several key ways to profit when investing in real estate.

Flipping a house is when someone buys a house with the intent of selling it quickly for a profit. Sometimes people will keep their investment in order to receive tax incentives and appreciation of the property. It’s important to weigh the costs against these incentives to decide whether it is worth keeping or not.

There is always some risk involved when investing in real estate, but without taking risks, there can be no profits. In general, property values have been on the rise for the past few years, but interest rates have also been increasing, and it is impossible to tell how much they will rise and for how long.

Renting out a property can offset costs, but renting can be time consuming and risky - repairs must be made regularly and finding good tenants can be difficult.

Foreclosures can also be invested in to make a profit, but are risky and require a large investment. They are often difficult to turn into profitable ventures. A foreclosure happens when the owner of the property cannot make regular payments to their mortgage.

Persons on the verge of foreclosure are generally not concerned about making necessary home repairs. Therefore, it is imperative that you plan to devote adequate time, attention and money toward making home repairs and improvements that will increase the likelihood of selling the property. If you do not have the skills to make these improvements yourself, you should find a creditable contractor for the project.

Buying an abandoned or foreclosed property can be lucrative, but steps must be taken to ensure that legal issues have been addressed and that all information is out in the open. First, you will need to make sure the title to the property is free and clear. Typically this is not an issue with foreclosures, but is a more common concern with abandoned buildings. Additional resources in the areas of time and legal fees must be factored in when determining whether the property you are considering purchasing is a good investment.

For anyone wishing to take advantage of opportunities to profit in real estate, but without having to lay out any actual cash, signing one document after another, or stressing over physical property, purely paper investments exist. Because of computerization and the tremendous expansion of investment options back in the ’80s, a number of types of ‘monetization’ of real estate were created. REITS (Real Estate Investment Trusts) are only one of these types. Others exist as well–mortgage-backed securities, trusts, property bonds, mutual funds, and stocks which are geared only towards real estate. Before you invest in any of the aforementioned ‘non-property’ options, be sure to discuss them with your broker.