True or False: Real estate investors earn returns from both rental income and tax sheltering characteristics of real estate.

The statement that real estate investors earn returns from both rental income and tax sheltering characteristics of real estate is true. Real estate investments typically generate income through rental payments, where investors receive a steady cash flow from tenants. Additionally, real estate has favorable tax treatment in many jurisdictions, allowing for potential tax deductions on expenses such as mortgage interest, property taxes, and depreciation. This aspect, often referred to as "tax sheltering," can enhance the overall return on investment by reducing the investor's taxable income.

Given this understanding, the notion that investors do not earn returns from these characteristics is inaccurate. Therefore, the correct response should affirm that real estate investors indeed benefit from both rental income and tax advantages, making the true statement the right choice. In essence, the relationship between real estate investments, income generation, and tax benefits is a fundamental aspect of why many investors are drawn to this asset class.