All real estate investors have the same mission: to make money! There are few different methods you can use to create income from your properties, which is why it's important to build a robust portfolio in order to reap numerous benefits. In this post, we're sharing four ways to accumulate wealth via rental real estate!
- Cash flow - This strategy brings in passive income every single month by renting out your property to tenants. This is my favorite strategy, and the basis of my buy and hold business. The best way to create consistent cash flow every month is by purchasing properties that produce a high return on investment.
- Appreciation - This strategy entails your property increasing in value over time. Appreciation can be a great way to make money, but it’s not as instantaneous as it used to be. Before the market collapse, people would buy properties and quickly sell them for a huge profit! This strategy was possible because of the faulty pricing system. That’s no longer the case, but appreciation can still help you make money. If one of your properties appreciates, leverage it!
- Loan amortization – When you secure a loan with a bank, you’re given an amortization schedule that outlines the lifetime of your payments. If you read those documents closely, you’ll realize that the first few years of your mortgage, you’re paying almost exclusively interest. But if you’re a real estate investor, your tenant is paying that interest while simultaneously helping you build equity.
- Tax shelter – For savvy investors who own thousands of properties, the tax implications of real estate outweigh the other benefits. Owning income property can offset the income from taxation, as well as other investments. The tax code is written to incentivize investors and business owners, and real estate provides some of the best benefits available.