Publicado por Dany De Leon
When investing in real estate, the goal is to put your money to work today so you have more money in the future. The profit, or return, you make on your investments must be enough to cover the risk you take and the taxes you pay. There are other costs of owning real estate, such as utilities, maintenance, and insurance.
1. Real Estate Appreciation
This is what happens when a property rises in value due to a change in the real estate market. For instance, the land around your property could become scarcer or busier (for example, if a major shopping center were to be built nearby). Or, perhaps you made upgrades to the property that make it more attractive to buyers. Real estate appreciation is a tricky game, because it is not easy to predict. It is riskier than investing for cash flow income.
2. Cash Flow Income
This type focuses on buying a real estate property, such as an apartment building, and operating it. You then collect a stream of cash from tenant rent. Cash flow income can also come from other types of real estate besides apartment buildings, such as storage units, office or retail buildings, and rental houses.
3. Real Estate-Related Income
This income is common for specialists in the real estate industry, such as brokers. They may make money from commissions on properties they have helped a client buy or sell. Real estate management companies sometimes get to keep a portion of rents in exchange for running the day-to-day operations.
4. Ancillary Real Estate Investment Income
For some, this can be a huge source of profit. Ancillary real estate investment income includes things such as vending machines in office buildings or laundry rooms in rental apartments. In effect, this involves mini-businesses within a bigger real estate investment. They let you make money from a semi-captive collection of customers.
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