| Opting to invest in residential real estate has become a | | | | to be one of the fastest ways to earn really good |
| popular trend amongst many investors. It is in human | | | | money. However seeing that the market is quite |
| nature for investors to invest when the market is rising | | | | volatile, you never know what to expect. For this |
| in terms of stock, gold, and housing and automatically | | | | reason it is highly recommended that you keep your |
| stop investing when the market falls. In true essence | | | | residential property for at least a five year period |
| this leads to many investors leaving a lot of money | | | | before you decide to sell it off once again. |
| that could easily be earned. | | | | 3. Debt pay down - Now when you own a residential |
| If you take the time to understand the fundamental | | | | property you would be expected to make monthly |
| principals that come with real estate investment, you | | | | mortgage payments. These simply are accumulated |
| will be able to capitalize on various aspects that many | | | | over time to reduce the amount of loan that you own |
| other investors are known to miss out on. | | | | to the lending company. Now seeing that we are |
| The thing you have to understand is that real estate | | | | aiming to look at long term investments there are a |
| investing is no quick get rich scheme. Yes it does offer | | | | few things that you need to keep in mind. Now the |
| you the opportunity to make some quick cash through | | | | common loan system that everyone opts for will |
| flipping houses however the word investment should | | | | simply include a monthly repayment with interest. If you |
| always be related to long term. This will ensure you | | | | are planning to hold your property for a couple of |
| are more successful. | | | | years, you will see that you are actually paying more |
| While most of the investors will be packing their bags | | | | than you initially took out because of the interest rate. |
| to go home when the market falls, this is where you | | | | Seeing that you are going to be looking to sell of your |
| can utilise on the fundamental principals that you have | | | | property in the future it is ideal to go for an interest |
| learnt and capitalize in terms of large profits. You will | | | | based loan only. This will result to me more profitable |
| be able to make money regardless of the market | | | | for you in the long run. |
| status. | | | | 4. Tax write offs - It is quite common for one to have |
| The fundamentals | | | | to pay Alternative Minimum Tax on various real estate |
| When the market for real estate is rising in terms of | | | | properties depending on weather or not you match the |
| equity, it makes it very easy for any "layman" off the | | | | criteria. The tax is usually based on the earned income |
| street to even make money in the real estate | | | | and you may even see your self having to pay short |
| business. What you have to make sure is that you put | | | | term capital gains tax as well. However there is a |
| your money at the right place at the right time. | | | | possibility that you can have your tax written off which |
| No matter how much research you do, being able to | | | | can prove to be quite beneficial for many. The problem |
| predict the market will be impossible. For this reason it | | | | with those investors that deal with houses on a flipping |
| is better if you simply opt to understand four various | | | | houses basis, there income is treated as earned |
| profit centres. | | | | income. This means you would have to pay the full |
| 1.Cash Flow - This simply entails of the amount of | | | | amount of tax that you would do for a 9 to 5 job as |
| money your residential income property brings in. Even | | | | well. |
| though it may seen quite simple to calculate, many | | | | If you stick to the strategies and fundamentals that |
| tend to over look various factors. You need to include | | | | have been highlighted above, you are known to be |
| all the expenses that are needed to be paid. These | | | | able to earn a good amount of money regardless of |
| would include mortgage payments, repairs, advertising, | | | | the market change. Any market trend that moves in |
| debts, maintenance etc. It is important you keep a tally | | | | your favour will obviously boost your profit prospects |
| of all expenses to give you a fair value of cash flow. | | | | but even if the market moves in a negative favour, |
| 2. Appreciation - It is possible for the market value of | | | | you are still going to be able to "fight" your way |
| your house to increase while you own it. This is seen | | | | through. |