Modern day analysis of real estate treats real estate capital as a capital asset meant for the stream of benefits it generates. This makes real estate a special case of modern capital budgeting. Its analysis makes use of discounted cash flow techniques and attaches risk adjustment to the property.Property as an investmentInvestors, either indirectly or directly, purchase rights to a stream of future cash flows that are expected to be generated by the investment. The flow of cash is expected from rental income, using the property as loan collateral, cash savings through offsetting taxable income with tax deduction losses from the real property interest, even from net profits upon resale of the property interest.Cash flowsAnticipated cash flow depends on the amount the investor is prepared to pay for a specific property and amount of time expected for the cash flow and how much the investor will receive and when. This depends on the degree of confidence with which expectations are held and the tolerance of risk by an investor bearing risk. Lastly is the attractiveness of alternative investment opportunities.Passive and active investorsAn investor acquires direct title to real estate in which they invest and either takes the option of managing its operations themselves or hires professional property management firms to handle day to day operations of the property. The difference between passive and active investors is the making of decisions regarding the day to day operations of the real estate that directly affects the operating results. Like approving lease, selecting on site management personnel or negotiating maintenance contracts.Investment in equity and debtDistinctions should be made between investing in real assets such as land and buildings, and in real estate related financial assets such as mortgage backed promissory notes. The two involve exchanges of specific and immediate assets for unforeseen expectations of future cash flow, depending on expectations yield and risk may differ drastically.Estate investment performanceA comparison between returns on real estate investment and those on the stock bonds, or other assets are unreliable because real estate investment yields data that are sparse and contradictory. The difference is that unlike stock and bond markets minute b minute trading data generate enough information to crash a computer but real estate yield indices typically are generated using quarterly appraisal estimates.Concepts and definitionsIn real estate investment the investor’s perspective requires a different view from that which he is accustomed to. The investor should develop a perception of the real estate value as a portfolio asset and compare this with an estimate of the probable price at which the property can be acquired.