People invest in Phoenix real estate because it provides multiple ways to make money. Today, we’re talking about the five revenue streams a real estate investment can offer.
Achieving Cash Flow
Many people see cash flow as the main goal of property investment. They want to be sure the investment pays for itself and provides a monthly income.
Building Appreciation
Investing in real estate also allows your asset to gain appreciation. Investors know they will buy the property, have someone else help pay for it, and at the end have something that has a higher value.
Reducing the Mortgage
Most people don’t consider this as a benefit to real estate investing, but you’ll see your mortgage balance go down while you rent out your property. Most of the payment may go to interest, but after three, five, or 10 years, a big chunk of the mortgage will be paid off. This is another great way to add value to your bottom line.
Acquisition Benefits
What you pay will impact your investment return. People will pay market value for a property, and that’s fine. But if you pay more than the market value, you’ll lose money immediately. When you pay less, you immediately have equity established. Investors always want a good deal and look for the best deal possible. It adds to your bottom line when it’s time to sell.
Depreciation Benefits
Depreciation is a bit more complicated. But, if you have a $300,000 property with $25,000 of land value that can’t be depreciated, you still have $275,000 left to depreciate. The government says you can take that property and divide it by 27.5 years for depreciation purposes. In this example, that’s $10,000 a year you can write off. That tax write off comes off your income, and you don’t have to pay taxes on it. Depending on your tax rate, you could save several thousand dollars. Multiply that by two, five, or 10 properties, and you’re sheltering a lot of income.
In the end, property investment is a great way to go and there are multiple ways to benefit. If you have any questions about investing or Phoenix property management, please contact us at Service Star Realty.
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