Real Estate has always been seen as a rock solid investment. Many people dream of making enough money to buy homes left and right, and to be a part of the elite crowd investing in real estate. It has always been the assumption that real estate prices would keep rising, and that too indefinitely.

The last few years have proved exactly why this is wrong. In 2010, there were falls in prices as high as 40 per cent. This is why, having a proper understanding of the investment is a crucial step.

Investing in real estate is not the same as buying a home. Buying a house to live in can not be called an investment. Buying a home hoping the value will rise over the years is hardly the optimal strategy. It is only when you sell the home that the investment realizes.

The best way to treat investments in real estate is just like you would any other investment medium. Just as you sell off stocks when your price point is reached, the property has to be sold. But this is not the practical approach if you are staying at the house.

Remember, that as the price of your house rises, the prices of other housed too will have risen. This will make it necessary for you to move to a smaller house, or move to a cheaper locality. This is the only exit strategy that is viable, if you view the home you are staying in as a real estate investment.