Make note: never make a decision on a whim, especially in real estate. Real estate is simply about a return on investment. I want you to consider these basic elements of returns on investments to see benefits of purchasing, holding, or selling an investment property.
Tax shelters signify a legal way to use real estate investment property to reduce annual or ultimate income taxes. Unfortunately, it is not one-size-fits-all, meaning you need to check with your accountant to find out the current laws for your area.
The money that comes in from rents and other income minus what goes out for operating expenses and loan payment determines a property’s cash flow. Remember folks, you’re purchasing a rental property’s income stream, so be sure that the numbers you rely on later to calculate cash flow are solid.
Loan amortization, means a reduction of the loan over time leading to increased equity. Properties with income and expenses represented accurately to the lender increase the chances the investor will be able to acquire better financing. Lenders evaluate rental property based on income stream. When buying multifamily property, make sure you present lenders with clear and concise cash flow reports.
It is my hope that there is something in my post that will be helpful to you in your real estate business and be beneficial as you build your real estate investment portfolio.