Therefore, if your rental income and the value of your investment property increase at this rate, your cash flow and equity will increase significantly over time. The average rate of inflation in the US for the past 50 years has been 4.1% annually. Generating positive cash-flow, as with any other income plan, is the name of the game, and those considering investing in real estate would do well to crunch the numbers and be aware of the possible pitfalls before moving forward. It is often said that landlords grow rich in their sleep because cash flow and equity increase over time. The catch with any real estate investment, of course, is the issue of cash-flow. When you hold a property you cash-in on cash-flow, and long term appreciation. There are 4 important steps to follow to create positive cash flow: i) Buy at a discount Always buy rental property at a price that provides a positive cash flow. When you flip a house, you only take advantage of only one profit center: use change. 1) Buy positive cash flow rentals This seems obvious, but you’d be surprised how many people buy negative cash flow properties (or even ‘break even’, which quickly becomes negative). However, most wealth building in investing Real Estate incorporates the other two profit centers: cash flow and appreciation. This, as you all know is the classic ∿lip. Now it can be sold to an owner-occupant that can acquire long-term conventional financing. When you buy a deferred maintenance house that can’t be financed conventionally and make the necessary repairs to bring the house up to FHA insurable condition, you have used-changed the property. You can build your portfolio by purchasing different types of properties: apartments, single family homes, apartment complexes, commercial buildings, office spaces, raw land, tourist locations, even foreign properties, to name a few.Īs a strategy for investment, you have 3 primary ways to make money in Real Estate Investing: There are many ways to invest in real estate. “My favorite holding period is forever.” -Warren Buffett
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