When you buy a stock, the only one way you can make money is if the stock rate in value, and you sell it at the good time and date. With real estate you can make money in different ways, So we discuss 12 point...
1. Rental income:- That one is the important source of profit investors are going for when buying a rental, and does not need an explanation.
2. Buying low:- You turn an immediate profit if you manage to buy a property for under market price value. Think quick sales, foreclosures and awesome negotiation skills.
3. Selling high:- You can make extra money if you stage the property to attract buyers over market price value. With stocks, you always buy and sell at market value. With real estate, you can try to knock the market.
4. Increasing equity:- If you take a maintain to finance a rental, you are increasing your justice with every mortgage payment. I put down 25% on my last rental and with mortgage re-payments an around 34% equity at the moment, those 8.1% of the property value were paid by rents and are growing my net worth every month.
5. Leverage increases returns:- If you put 20% down on a property, you will still receive rental income based on 100% of the property value, making it a great return for your 20%. Say your property is worth $100,000 and you charge $750 in rent with $500 in mortgage, taxes and fees. You have a $250 profit on $20,000 down. That is $3,000 a year, or a cool 15% return on your deposit. Good luck trying to get an almost guaranteed 15% on stocks.
6. Renting smaller units:- I rent 3 rooms by the room, to 3 tenants. I can charge extra if one family was renting the whole place. You can divide your family house into a duplex, triplex and increase the rent of place.
7. Renting to businesses:- Businesses are a many type of term and its rents are generally higher. They are also provide safer if you choose a well known business to rent to.
8. Tax benefits on interest:- Depending on your country of residence, you can often deduce the mortgage interest from the rental income and it create a tax free profit.
10. Tax benefits on improvements:- You can also conclude the cost of the improvements from the rental income, while the added value to the property is yours to keep.
11. Profit from a lump sum on a refinance:- So you bought your $100,000 place, and put $10,000 worth of improvements, that the tenants paid back with rents. The property is now worth $125,000 because your contractor did a great job, you can refinance to get the $25,000 cash and put 25% down on your next $100,000 rental!
12. Profit from extra cash flow on a refinance:- If you are able to re-finance the property to lower your mortgage bill payments while the rent stays the same, you are generating many cash flow every month. You can build a cushion for maintenance, save up for a deposit on a new rental, or have more passive income to live off.
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