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John Jung, Coldwell
Banker King Thompson, Dublin, Ohio
Direct Line: (614) 526-5692 Home Officel: (614 793-2967
Fax:(614) 889-1901
Email: FreeReport@JohnJungJr.com
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Free
Real Estate Investing Reports
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How
to Make Money in Real Estate Investing
How
is it possible to make money investing in real estate. There are four
areas that provide a real estate investor profit. Those four areas
are
- Positive
Cash Flow
- Debt
Retirement
- Tax
Savings
- Property
Appreciation
I
review these areas with my clients before I even consider writing
a contract on a piece of property. But this is just the beginning.
There are items written into the contract that will enhance
your cash flow. Items not many other Realtors® consider, let alone
understand. Read the following 'outline' on how to make money investing
in real estate, then give me a call. I'll explain these four elements
and then we can determine if real estate investing is right for you.
1. Lower Your Taxes
Tax
incentives for real estate investors can often make the difference
in your tax rates. Deductions for rental property 'losses' can often
be used to offset wage income. Tax breaks can often enable investors
to turn a loss into a profit.
For which items can investors get tax breaks? You could claim deductions
for actual costs you incur for financing, managing and operating the
rental property. This includes mortgage interest payments, real estate
taxes, insurance, maintenance, repairs, property management fees,
travel, advertising, and utilities (assuming the tenant doesn't pay
them). These expenses can be subtracted from your adjusted gross income
when determining your personal income taxes. Of course, these deductions
cannot exceed the amount of real estate income you receive. In addition
to deductions for operating costs, you can also receive breaks for
depreciation. Buildings naturally deteriorate over time, and these
"losses" can be deducted regardless of the actual market value of
the property. Because depreciation is a non-cash expense -- you are
not actually spending any money -- the tax code can get a bit tricky.
For more information about depreciation and various tax alternatives,
ask your tax advisor about Section
1031 of the U.S. Tax Code.
2. Have a Positive Cash Flow
There
are two kinds of positive cash flows: pre-tax and after-tax. A pre-tax
positive cash flow occurs when income received is greater than expenses
incurred. This sort of situation is difficult, but not impossible
to find, but they are usually a strong and safe investment. An after-tax
positive cash flow may have expenses that outweigh collected income,
but various tax breaks allow for a positive cash flow. This is more
common, but it is generally not as strong or safe as a pre-tax positive
cash flow.
Regardless of what kind of real estate you choose to invest in, timely
collections from your tenants is absolutely necessary. A positive
cash flow -- whether it be pre-tax or after-tax -- requires rental
income. Be sure to find quality tenants; a thorough credit and employment
check is probably a good idea.
3. Use Leverage
One
of the most important factors in determining a solid investment is
the amount of equity you are purchasing. Equity is the difference
between the actual worth of the property and the balance owed on the
mortgage.
4. Benefit from Growing Equity
While
investing in real estate is relatively complex, it is often worth
the extra work. When compared to other financial investments, like
bonds or CD's, the return on investment for real estate purchases
can often be greater.
The key to real estate investing is equity. Determine an amount of
equity that you want to achieve. When you reach your goal, it's time
to sell or refinance. Determining the proper amount of equity may
require the assistance of a real estate professional.
Investing
in Central Ohio? Let Me Help You Today!
John Jung, Coldwell Banker King
Thompson, Dublin, Ohio
Direct Line: (614) 526-5692 Home Office: (614) 793-2967
Fax:(614) 889-1901
Email:
investinfo@JohnJungJr.com
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