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Real Estate Investment Objectives:
Cash Flow - Real estate investments structured with enough down payment,
will generate a positive cash flow. As time passes, in most markets, even a
highly leveraged, negative cash flow property can turn into a positive cash
flow investment.
Leverage - Through the use of borrowed money (OPM - Other People's Money),
combined with a small amount of money of your own, you can control real
property. The best leverage most of us can obtain in the stock market is
50%. In real estate, it is not unusual to obtain 80%, 90%, and even 100%
leverage. With leverage usually comes risk, and with risk comes potential
for investment reward.
Appreciation - It depends on the market. Real estate is a growth asset and
often the largest part of the return is the equity gained through
appreciation.
Tax Benefits - Investors are allowed to write-off (within income
limitations) all operating expenses, interest on loans secured by the
property, property taxes, and the "non cash expenditure of depreciation.
Gain from the sale is treated as capital gain and investors have the option
of exchanging which, if done in accordance with the tax laws, can result in
no recognized gain, thus no immediate cash tax consequence..
Equity Build-up - This results from the periodic pay down of the principal
amount of the loan. Even if there was no appreciation over the life of the
loan, the property owner would end up with a free and clear property which
generates rental income.
Said another way, real estate is the IDEAL investment (Income, Depreciation,
Equity Build-up, Appreciation, Leverage).
Susan Eidler Number1Expert.com
e-pro, recs
KSL real estate company
760 341 3172
susan@deserthomes4you.com
www.deserthomes4you.com
[ ..More About La Quinta Investment Purposes ]
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