Let’s learn the basics and start putting your money to work for you.
Real estate investing, of any kind, can be intimidating if you’re unfamiliar with the big picture. Sure, it sounds as easy as playing Monopoly—buy properties, avoid bankruptcy, and generate rent so you can buy more properties—but without knowing the risks and some investing fundamentals, you could lose a lot more than just a game.
There are a few ways an investment property can generate income. Whether you’re thinking of purchasing a multi-family property, a commercial location, or an additional residence to sublease, your investment property should be pulling in money from at least one of the following methods.
Your property’s value will fluctuate over time due to changes in the real estate market, the surrounding land value, or any upgrades/renovations you put into your investment. The reality is, property values don’t always increase and it’s important to look into projected inflation rates. Is the rate of inflation projected to exceed the current rate of long-term debt? If so, that may be the perfect opportunity to finance the purchase and just sit and wait for inflation to increase.
Rent is the most common type of cash flow income and can come from multi-family dwellings, office buildings, rental houses—you name it. While factors such as taxes and insurance are beyond your control, you can calculate the cash flow with relative certainty if you’re conservative and account for maintenance and vacancies.
While not as lucrative as long-term appreciation and monthly rent checks, investment properties have the ability to make money with special services and business activities. Think: paid parking garages, vending machines, and on-demand, location services. Owning an investment property has tax benefits as well and can actually help offset income from other areas of your life.
Contact us today to learn more about our efficient lending options. We want to help you achieve your financial goals with a private money loan that meets your individual needs.