Real Estate Investing Benefits

Once again, the Four Benefits of Real Estate Investing are as follows:

  1. Cash Flow Before Taxes
  2. Principal Reduction
  3. Tax Benefits/Depreciation
  4. Appreciation

Cash Flow Before Taxes
Take your total monies collected, subtract ALL of your expenses and what you have left is Cash Flow Before Taxes.

Principal Reduction
The amount of principal your loan was reduced by in any given period of time.  If the house is empty, you are reducing the principal.  But if you have tenants in your rental property then THEY are reducing your principal.  Be sure to thank them!

Tax Benefits/Depreciation
Your Net Operating Income minus your interest paid minus your depreciation schedule gives you a number.  Take that number and multiply by your tax bracket.  If it’s a positive number that is your tax.  A negative number is your tax savings.  Cool, eh?

Appreciation
A lot of people think this is where the money is made.  And it can be.  But take my word for it.  You need to make sure whatever property you buy makes sense based on the previous three benefits.  Then if you have hard times you still have positive capital growth.  When we return to good times this will be the icing on the cake that allows you to eat at Ruth’s Chris rather than the Sizzler. 

Kansas City real estate investing needs not to be complicated.  Just know the returns you are after, plug in the numbers and see if they work.  If the numbers don’t work you move on.  If they do work you’ve probably just identified your next investment property. 

7 Comments

Filed under 4 Benefits of Real Estate Investing

7 responses to “Real Estate Investing Benefits

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  2. Keep up the good posts and I’ll keep on linking to you:
    http://lifeofaninvestor.com/real-estate/return-on-investment/

    Although this is pretty basic stuff, it is definitely good to have a reminder of it every once in a while. Although we could find this information a million different places on the internet, it is still a benefit to your regular readers.

  3. LOAI,

    Thanks. We’re up to over 5,000 readers a month now with new ones coming on board everyday. So I thought a review now and again is a good thing.

  4. Nice post, thanks. I’m new here, but I like what I see, keep up the good work!

  5. Sandy – Great to hear from you!

  6. Long and Short Term Rentals Help La Costa “Ride the Storm”
    As a small Marbella Real Estate agency, the last 12 months have been very difficult. Property sales have gone down significantly as over supply and the credit crunch (amongst other reasons) have turned the Spanish property market upside down. Every day we hear of another local Estate Agent which has had to close, and we are not just talking about the smaller agencies, the larger well known Property companies on the coast are also being forced to close branches and lay off staff.
    We are perhaps fortunate in that we provide a “complete property solution” to our clients by offering rental , property maintenance and project management and renovation services. This means that we do not rely entirely on selling property as the rentals and property maintenance provide a steady income stream when there are no sales being made.
    The long term rental market seems to very buoyant at the moment as many people are preferring to rent a property before committing to buying and are also waiting to see if property prices drop. The majority of the enquiries we receive from our website -and other property portals in which we have listed our properties- are for long term rentals with sales leads few and far between. We won’t become millionaires with long term rentals, however, it does help us to pay the bills and keep those ever threatening overheads under control.
    Our main problem at the moment is finding enough good listings to meet demand. We specialize in property in the Rio Real and Los Monteros area and have now rented out all the good properties we had available and are desperately trying to find more properties to satisfy demand, in particular, we have found that three bedroom properties are scarce and have had to turn down clients on various occasions due to lack of this type of property.
    Short term and holiday lets also provide some steady income, especially in the higher occupancy months (May to October). The only problem with this type of rental is that it involves hours of work for relatively small returns as the properties have to be cleaned and maintained and you have to be available 24 hours day in case tenants have a problem with the property they are renting.
    We initially offered short term rentals as an added service to the owners of the properties we manage, however, due to the present market conditions, we have decided to push holiday rentals a little more this year by actively advertising on various specialized web portals and magazines. Although competition is fierce- with many people who purchased property on the coast in order to flip it over for a quick profit now trying to rent them out to try and cover expenses – we are fortunate to have a small but high quality portfolio of properties for short term rental. We have luxury villas that rent out for €6000 a week in the summer, 2 Bed apartments which are literally on the beach, apartments overlooking golf courses. Because of the quality of these properties and the areas they are in, they are considerably easier to rent out than properties in less desirable locations which have been flooded with new construction.
    There is no doubt that we are in for a rough ride until the market picks up again, but until then we will continue to concentrate on the rental side of our business which will continue to provide an interesting source of leads for when property sales start to pick up again.

  7. Carrying out Proper Research Before Buying Property in Spain
    Buying property in Spain, or in any other country for that matter, can be a traumatic experience if you do not do the ground work beforehand. Many people embark on their search for the ideal holiday home or retreat without carrying out adequate research about their chosen area or country. It is no surprise that these potential property purchasers find themselves overwhelmed with information when they go on inspection trips to view properties.
    Sometimes it is even worse because they actually purchase property without actually knowing anything about the area, running in to all sorts of “unpleasant surprises” which make the purchase of their supposed ideal home an absolute nightmare. Obviously, there will always be problems along the way but these can be significantly reduced with some initial research.
    We always recommend that anyone thinking about buying property in Spain take the time to carry out some research. Once you have established the type of property you are looking for, you need to decide what area of Spain you would like to buy in, this is really important because you don’t want to find yourself in a town or Coastal area which does not meet your expectations. Nowadays, with the abundance of information available on the Web, one can collect vast amounts of information without having to leave the comfort of their living room. It is so easy to type a few keywords into Google and obtain the details that could make all the difference.
    There is no doubt that information is power – if you’re fully informed, it will make it a lot easier to narrow down your options. Try and find out about schools in the area, hospitals which are within easy reach, beaches, golf courses, roads and public transport infrastructure…. Once you are clear on the area, you can then begin to look for properties on the internet that match your needs. Searching for properties in areas like Marbella can turn up literally thousands of results. So what’s the best way to go about this? You may notice that many of the properties listed on the Costa del Sol are available from various agents as it is rare that owners grant exclusivity to a single agent. We would personally recommend the use of the largest Spanish portal, Kyero.com. You can find properties listed by more than 1000 agents throughout Spain and can refine your searches to specific locations. Choose one or two agents to contact-the important thing is to find a reputable and well established agent who can provide you with expert local knowledge and a personalized service. If you know anyone who has bought in Spain or has property in the area you are interested in you might want to ask them to recommend an agent as this is one of the best ways to find a good agent.
    With your preliminary research through the internet and a local agent to help you narrow down your search, you stand a very good chance of finding your dream property.
    Researching your chosen market is just one of 10 property buying tips we suggest to our clients. If you would like to read the other 9, please click on the link bellow or just copy the address in your browser: http://www.lacostapropertysolutions.com/index.php?option=com_content&task=view&id=117&Itemid=126

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