Again With The Four Benefits of Real Estate Investing

abcs.jpgBBQ Capital is constantly adding readers.  How do I know this?  By the internal stat counter.  So one of the issues I like to revisit over and over and over and over again is the 4 Benefits of Real Estate Investing.

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Cash Flow Before Taxes.  Simple enough.  You take all of your income, subtract all of your expenses and what is left over is your cash flow before taxes.  For your Cash-On-Cash return you simply divide that number by the total amount of dollars you have put into the income property.

Principal Reduction.  Again, fairly simple.  Take the total amount you put towards debt service and subtract that portion that was interest.  What’s left over is the amount your tenant’s put on your rental house’s mortgage towards your retirement.

Depreciation.  This is a bit more complicated.  Especially if you accelerate your deprecation.  But in short, it’s an amount the government allow you to write down your investment property each year…so long as the depreciation schedule is in effect.  Do not overlook this benefit.  It’s major.

Appreciation.  What’s the property worth now.  Subtract what you paid for it.  That’s your appreciation. 

3 Comments

Filed under 4 Benefits of Real Estate Investing

3 responses to “Again With The Four Benefits of Real Estate Investing

  1. rerevealed

    I think it should be structured so your four tips make a word/acrostic like C.R.A.M. (Cash flow before taxes, Reduce principal, Appreciation, Milk depreciation) so slow people like me can remember off the cuff what the 4 benefits of real estate investing are!

  2. LOL. I’ve never thought of it that way. 🙂

    And you are not nearly as slow as you say. In fact, you are one of the sharpest ladies I know.

  3. rerevealed

    Aww, thanks Chris!

    Readers- don’t forget to CRAM!

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