› 1. Cash flow. › Many people invest in rental properties simply because of the cash flow - the extra money that is left after all the bills have been paid. The cash flow can provide ongoing, monthly income that is mostly passive, allowing you to spend your time building a business, traveling or reinvesting in more real estate. › Cash flow from real estate is stable and far more predictable than most other businesses. That's great for entrepreneurs enduring the ups and downs of start-up life. The cash flow can help float you though the bad times and live well during the good times. › 2. Tax benefits. › Let me ask you a quick question: if you earn $100,000 at your own business and I earn $100,000 through rental properties, who get’s to keep more? › That’s right: I do. Because the government rewards rental property owners. › Not only is the cash flow received from your rentals not subject to self-employment tax, the government offers tax benefits including depreciation and significantly lower tax-rates for long-term profits.
› 3. The loan pay down. › When you buy a rental property using a mortgage, your tenant is actually the one paying the mortgage payment, thus increasing your net worth each month. Because of the loan pay down a rental property is essentially a savings account that grows automatically, without you depositing money each month. › Today you might owe $200,000 on a rental property, but next year you might only owe $195,000 because the tenant is making the payment for you, making you $5,000 richer. Thirty years down the road, or whatever the term of your loan, it's paid down to $0. You own a significant asset that you can sell or continue renting, all thanks to your tenant paying the mortgage. › 4. Appreciation. › While the loan is being paid down the value of real estate, generally, goes up. Yes, I know, recessions do happen. Values do go up and down. People buy at the wrong time of the market. I get it. › However... › Over time, values do climb higher and higher. That's why I’m not in this real estate game just for a year or even a decade. I’m in this for life. I know my properties will continue to climb so that 30 years from now, everything will be worth far more than I’m paying for it today.
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