6 Ways Real Estate Makes You Money
Real Estate investing creates wealth. Period.
“90% of all millionaires become so through owning real estate”- Billionaire Andrew Carnegie
Real estate investing is incredibly lucrative because it makes you money in more than one way.
Here are 6 ways real estate investing makes you money:
1. Cashflow– it’s the amount of money you make each month after all of the expenses are paid. It’s the money that hits your bank account quarterly.
2. Equity Pay down– when you buy a property with a loan, your renters are paying down the mortgage, thus creating equity for you!
3. Property Appreciation– your investment property will gain market value over time. Have you ever seen a $20MM property worth less in 5 years?
4. Rent Appreciation– this is the organic rent growth in your market which is the amount of rent rate increases per year. This is usually between 2-3% a year, but in 2021 some markets saw organic rents go up 15%. Check out this article in MultiHousing News talking about it.
5. Forced Appreciation-this is when the property’s value increases due to improvements made to the property and tenants paying more for the upgrades and added amenities.
This raises the net operating income and, ultimately, increases the value of the property.
6. Tax Savings-with depreciation and bonus depreciation, you’re creating phantom losses that shield your money from taxes. Don’t forget that taxes are your greatest expense!