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PROAPOD
®Real Estate Investment Softwarewww.proapod.com
4 Investing Elements Crucial to Real Estate Investors
 James R Kobzeff 
Real estate investing involves acquisition, holding, and sale of rights in real property with theexpectation of using cash inflows for potential future cash outflows and thereby generating afavorable rate of return on that investment.In other words,real estate investing is about making money (and the more the merrier). Consequently, real estate is not purchased, held, or sold on emotion. Real estate investing is not alove affair, but all about a return on investment. Therefore, prudentreal estate investorsalwaysconsider the following four elements of return to determine the potential benefits of purchasing,holding on to, or selling an income property investment.
1. Cash Flow
This is the amount of revenue from rents and other income less operating expenses and debtservice (loan payment). Real estate investing is all about the investment property's cash flow because you're purchasing a rental property's income stream. When purchasing arental income property, always be sure that the numbers you rely on later to calculate cash flow are truthful andcorrect.
2. Appreciation
This is the growth in value of a property over time—or the future selling price minus original purchase price. Understand, however, that what real estate investors will pay for your propertytomorrow depends heavily on its income stream. So make a determination about the likelihood of an increase in income and throw it into your decision-making when purchasing a property. Becausethe more income you can sell, the more you can expect your property to be worth.
3. Loan Amortization
This signifies a periodic reduction of the loan over time that leads to increased equity. In other words, if you owe $100,000 today and just $95,000 next year, because you owe $5,000 less loanrepayment, therefore you've added $5,000 to your equity.
4. Tax Shelter
This signifies a legal way for real estate investors to use investment real estate to reduce annual or ultimate income taxes. No one-size-fits-all, and the prudent real estate investor should check with atax expert to be sure what the current tax laws are for the investor in any particular year, butinvestment real estate typically enables real estate investors to write off interest expense, loan points, and cost recovery (depreciation).
©2009 James R Kobzeff. All rights reserved.
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