Benefits of Real Estate Investing- By: Alex Oakley
Positive Cash Flow
Obviously; this is very important to beginning real estate investors, heck, it's important to any real estate investor. No one becomes a real estate investor to be in negative cash flow, that's just common sense. If you keep the property in good shape, you can manage the mortgage, and the other bills stay relatively constant, then you should be able to generate a monthly positive cash flow. It is ideal if you have crunched the numbers and you know exactly how much room you have in your positive cash flow. Having a bit of a cushion is very important if you want to stay in the black.
Appreciation is another one of the investor's favorite words. Appreciation is great because you can do nothing to your property and the value increases. Generally property values go up over time. If you have chosen a good location to buy your investment property odds are that your property will appreciate really well. In some areas property values will go up dramatically. The key is to do your homework and try to find out where those areas are. The longer you keep your property, generally speaking, the more money you will make, not only in rental payments but in appreciation.
Depreciation can also be a good thing, especially when you are talking about taxes. Depreciating investment property can lower the amount of taxes that you have to pay. It is wise to have an accountant on your real estate investment team to keep you informed on the ways that you can save money on your taxes.
Some investors have multiple properties that they use for not only for rental income, but also as another place to live. Some have vacation homes that they stay in for a few weeks out of the year and then rent them out the rest of the year. Some investors have kids that are in college, so instead of having the kids live in a dorm, they buy a house nearby for the student to live. After their child graduates they can either sell the property at a profit due to appreciation or they can keep it as rental income.
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