Real estate investing means to buy properties with a high profit potential
The income and capital gains potential are what make real estate investing worthy for almost any portfolio. This web site is my collection of terms and real estate investing concepts explained the way I would have liked to have had them available to me years ago.
Some of the main attractions of
investing in real estate are:
- Income
Positive cash flow that comes monthly or on an annual basis is the expected return. Save the cash to earn interest until you reinvest. - Leverage
It is like the mechanical advantage gained by using a lever pivoting about a support to lift or move a heavy object. Leverage, more than any other investment benefit, is responsible for creating wealth. You do not need your money to buy real estate. Use other people’s money (OPM) to accomplish your own investment objective. If you purchase a $100,000 property by using $100,000 of your own cash, and if the property goes up in value to $110,000, you made a 10% return on your investment. If, however, you had purchased that property with $10,000 of your own cash and the property goes up $10,000, then the
Rate of Return on Investment
is 1,000%.
- Tax Benefits
Interest on mortgage payments may be deductible from your federal tax return, property taxes are deductible, and the cash from refinancing is not taxable. Residential rental properties can deduct the depreciation - the buying price minus the land value for 27.5 years. Usually it is just enough to create a paper loss to offset earned income from a job and get a federal tax refund. - Instant equity
When you locate and acquire a property substantially bellow the property’s fair market value the result will be instant equity. It is the difference between the property’s value and what you paid for it; this immediately enhances your equity (net worth). See
the Accounting for Real Estate.
- Appreciation
Historically, real estate has gone up in value at a faster rate than the rate of inflation. Having real estate in your portfolio means the property value will go up with inflation and some, because the cost of construction and land also rises. - Additional financial and personal benefits
I love controlling my real estate investing business; control financial terms at the time of buying property, manage policies and decisions, fix up the property or leave it in its present condition, rent weekly or monthly, rent furnished or unfurnished. These controls allow for adjusting to economic changes in your area, also allowing you to respond to day-to-day opportunities that may arise. Pride in ownership of your real estate investments and financial results helps. Real estate can be a gratifying career choice that can provide wealth as well, both financially and personally. It is fun. It is exhilarating coming from locating properties, negotiating with sellers, and being responsible for the management of your properties. You meet many nice people in the process of acquiring and owing properties.
Investing in real estate for us is the way of getting out from the "rat race." We figure it out by learning
what is required to be a real estate investor.
and by chance, see next Tip.
Important Tip
The appreciation, the equity in our residence, after four years of ownership gave us money for investing. The extra trick was to make prepayments (payments on top of mortgage payments) to lower the interest paid to the bank. The benefit of enhancing equity in our residence was bigger than lowering the total interest paid, after all.To boost your credit score see tips on
Credit report score increase.
Visit "Investing Ideas Book" page
Receive monthly real life Tips.
Subscribe to "Sharing with You" free news.
Visit “Rental Property Investment” page for timing the housing market
Privacy Policy and Terms and Conditions of Use
Return from Real Estate Investing to Home
|
