The number and variety of investment products that are accessible today is staggering and to the average investor, attempting to understand which one is right for you can be a tough task. There are various risks and rewards that go along with each one. One can feel that in order to understand each product requires an advanced degree, but you can improve your odds of success by doing your research.

You may have heard some investment advisers or institutions talk about a diversified portfolio. Having different types of investments instead of just one type helps to protect your money by diluting the risk. You can think of it in terms of being a multi-legged approach to investing. One prong or type of investment may be composed of stocks, bonds, and savings.

Commodities make up the second type of investment product. These are goods such as oil, gold and silver. They can result in substantial returns but at the cost of very high risk. Commodities are usually left to the experienced investor who has time to closely watch the market because they are very volatile.

Real estate has traditionally been a solid investment but not everyone has the funds to go out and start buying property. To apply the Toronto residential real estate market as an example the average cost of a home is over $300,000 with commercial properties being even more. This is where Real Estate Investment Certificates, or REITs come into play.

These are entities that go out and buy property or interests in hotels, office buildings, shopping malls and even mortgages. REITs themselves come in various forms to suit your investment style. REITs that are invested in physical real estate are called Equity REITs. The rents that are charged generate income. To use Toronto as an example again you may have shopping centers with a Wal-mart, Home Depot, Payless shoes etc. that are all leasing buildings from the property owners. All together these Toronto properties are all generating income from rents for the REIT and its investors. Mortgage REITs, however, comprises of investing, or lending, of mortgage money to property owners or developers. If you can’t decide which one you prefer you can choose to get a hybrid REIT which is a combination of the two.

One risky type of real estate invest is known as an option. This is simply a buyer is making what’s known as an “option for consideration”. The option entails an offer to buy real estate if certain conditions are fulfilled such as financing or inspections. During this period the property is taken off of the market in return for a small amount of money as a deposit. This can be risky because the buyer may be forced to forfeit their deposit if the conditions are not fulfilled. On the upside the buyer could earn a quick and substantial profit if they can quickly sell their option to a third party. To do this right a buyer needs to research the market thoroughly.

It can be confusing at times but the more you know the better off you will be. Long term investing is the key and real estate has proven to be a good vehicle for investors and even with the many possible risks involved it is considered to be the least risky when set side by side with other types of investments. And as such it is vital to include it in your investment portfolio.

Have you been in this business a long time?

Of course the longer they have been in the business the more experience they have but that does not mean that you should completely ignore the rookies.  Newly licensed agents who have competent mentors and good training can do a great job as well.  In fact, they tend to have more time on their hands and can concentrate on you.

On average what is your list to sales price ratio?

This is perhaps one of the best indicators of the agent’s ability.  A good buying agent should have the ability to negotiate a selling price lower than that on the list.  If you are looking for a listing agent, his record should indicate that he is able to sell houses at a price very close to that listed.

Based on my specific needs, what is your best marketing strategy?

If you are looking to buy a house you need to find out how he is going to look for your new home, how many homes he will see prior to finding one that you can look at, and if you will have other buyers competing for the same property.  Additionally, find out how he plans on handling more than one offer and if he will present the offer to the selling agent personally.

If you will be selling, then you want to know how the agent is planning on selling your house, if he has a direct mail campaign and how often the agent advertises. In addition, find out where the advertising is done and ask to see a flyer if that is part of the marketing strategy.  Online marketing is perhaps one of the most powerful marketing strategies therefore be sure to ask how the agent markets on the Internet.

May I please have references?

Ask for references and check them out.  Let the Toronto real estate agent know that you will be contacting them with further questions.  Be sure to ask about the relationship between the agent and the references given to you.

What three things make you different from the competition?

Everyone knows what their strengths are and any agent worth his salt will not be hesitant about answering this question.  Most people are looking for assertive, communicative, analytical, friendly, honest, easily reachable agents who are also excellent negotiators.

What are your charges?

Keep in mind that all fees related to a real estate deal are negotiable.  Usually the percentage commission is between 1 and 4 percent separately for the seller and the buyer.  As an example you may have a listing agent charge 3% for the buyer’s agent and for himself, making a total of 6%.