Real Estate Investment from an Historical Perspective

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One of the most consistently favorable industries when looking for long term, steady growth, real estate investment continues to find favor, even in the downtimes. This piece from the 1960s offers a look back at this industry.

Quite different from the real estate investment trust, but just as exciting a growth area, is the broad-area real estate investment industry. Here too, the growth is just beginning, with plenty of room to get in on the ground floor. Following is a brief survey of two representative companies in the field.

Regarded by some experts as the most highly integrated construction company in America, the Frouge Company could safely be called a prime capital gain opportunity. Its June 1961 price was approximately 10. And management has estimated that total reported profits may triple as a result of the company's construction for its own account—a program scheduled for the next two years.

Another investment of this new type, Adson Industries, integrates the fields of real estate development, management, public and private construction, and financing. Analysts base their glowing opinion of Adson on the company's ability to participate in urban redevelopment throughout the country as evidenced by their role in the gigantic Title One Project in New York City.

Also indicative of Adson's alert management is their recent purchase of the property over which the Long Island Railroad trackage runs in Kew Gardens, Queens. Adson plans to construct a $10,000,000 apartment complex astride the trackage and has already developed some ingenious engineering solutions to permit economic construction without vibration from underlying trains.

Through its real estate syndication activities, Adson has shared in substantial income-producing properties at very little capital investment of its own. The company augments this type of income through its management division, which frequently obtains the contract to manage the building which Adson itself, builds.

Before investing in real estate, you should have a thorough knowledge of the company's operating philosophies and specializations. Some realty companies, for example, stress broad geographic diversification. Others concentrate in one city. Some specialize in apartment houses, in office buildings, in bowling alleys and country clubs. Some deal only in new construction. Others trade exclusively in existing properties.

Take, for example, two giants of realty growth, the Glickman Corporation and Kratter Corporation. Both these companies believe in "sale-and-leaseback." They prefer to avoid the risks of owner-operation. "The headaches of signing tenants, replacing leases and plumbing fixtures, worrying over a rise in taxes and a hundred other unexpected things all are best left to experts. We want to be experts in making a profit, and we prefer the blue-ribbon safety of fixed annual rentals guaranteed by a triple-A lease-holder."

On the other hand, Uris Building Corporation prefers to operate its own properties, retire the debt quickly, and enhance the equity. Realty Equities, in its non-syndicated deals, also prefers to operate rather than lease. They feel it is the most feasible way to achieve quick improvements and a fast resale.

An example of firms investing directly in diversified real estate operations is the United Improvement and Development Corporation, which represents an exciting new concept of broadly based real estate, mortgage and title insurance activities. It is the only real estate company structured with a diversification of real estate, manufacturing and title insurance divisions under one roof. What's more, it is the only such company with public stature participating in land development in the rapidly growing outlying areas surrounding New York City.

When investing in real estate, understand that the best return comes from long term investing, so be patient and choose your location wisely.

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