In the USA nine in ten rich people used real estate as the main mean of investing. Why?
Because renting apartments and apartments is a big service to society. The government can not do it efficiently. So, it is giving us, the entrepreneurs, all the initiatives and advantages to do it, one tenant at a time and we do it as small or big business to get all advantages.
This is the action plan:
- Buy real estate using leverage, to control the big mortgage with a small down payment, using other peoples' money (OPM);
- Buy residential or commercial real estate at a low price to get instant equity;
- Make improvements to add more value / equity to your property;
- Appreciation in time adds to equity in top of improvements;
- Lease, collect rents and manage the cash flow wisely;
- Use depreciation, create legally a paper loss on business, and offset earned income from job to lower your overall federal tax;
- Refinance for cash out up to 70% of equity, these are not taxable money;
- Reinvest the cash from refinancing to buy a larger property using leverage (OPM) and keep going, making money.
Do improvements to optimize appreciation, refinance for cash and buy again a bigger investment!
This way you realize the snow ball rolling effect.
With four or five transactions in nine years or sooner you may control over one million dollars in assets. This is the magic of investing in real estate.
I would have likened to have a plan issued like this one, before I started in real estate investing and managing properties for profit nine years ago.
Residential real estate investments – well done – pay the mortgages, taxes, and utilities expenses with money coming from tenants' rents.
You will learn how to use financial and legal tax advantages to keep that money, from resources shared with you at my website. Taxes and accounting for real estate have a special flavor because the legal advantages available. You can take advantage of them too. The big action plan is here.