Where Does the Money Come From With Real Estate Investment?
Real estate can be a very lucrative investment to make. It can be hard to get into, but once you break through, you can make a large amount of money. In fact, there are a number of different ways to make money on real estate property, and many of them can occur at the same time. Let’s look at a few different sources of income that might come with a real estate investment.
Appreciation in Real Estate
Appreciation is probably the form of income that is most commonly considered. Appreciation is a concept that says a piece of real estate property will gain value over time. A house that you purchase today for $100,000 might sell for $120,000 in 15 years, assuming you do nothing but take care of it. This is the easiest source of income, because all you have to do is maintain the property, however, it certainly isn’t the most lucrative source.
Rent from Home Rental Real Estate
Rent can be a very large source of income if you don’t live in the property yourself. Rent income can often solely, or at least mostly, be enough to cover mortgage payments. Once the mortgage is paid off, this can be a lot of cash in your pocket every month, and the best part is that you can collect rent while the property continues to appreciate.
Fix-up your Real Estate
Every house has a number of improvements that could be made, and many of them are surprisingly simple to do. Improving a home, of course, raises the value of the house, usually by more than the improvements cost, especially if you do the labor yourself. For example, if you spend $10,000 on improvements to a $100,000 house, it might be worth $125,000 after you’re finished. But there’s a hidden benefit to this. In addition to adding value to the house, you can also charge more for rent after making improvements, which increases that income as well.
Tax Breaks from your Real Estate Investment
This isn’t technically a source of income, but in many ways, paying out less is the same as bringing in more. You can get a tax break on expenses on a rental property. This adds even more benefit to the fix-up strategy, because this means it costs even less. You can also get a tax break for something called depreciation, which doesn’t cost you anything. That’s a pretty good way to put cash back in your pocket.
Interested in creating income with real estate but not sure where to start? Call 720.989.1996 or Contact us! Legacy Properties-PM can help you get started and be there for you, every step of the way.
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