Multiple Profit Centers

Real estate investing has built-in defenses against fluctuating economic cycles that many other investment vehicles do not. Because of these unique advantages, real estate can generate multiple income streams making it an attractive investment.

Long-Term appreciation

Real estate is one of the few investments that keeps pace with-or even exceeds-inflation. Over the long term (and sometimes the short term) rental properties will appreciate in value due to inflation and market demand. These gains form a solid basis for building on and preserving wealth by providing funds to reinvest in higher-value properties or by allowing you to establish a line of credit to use towards additional investments.
What did you pay for your home 20 years ago and what is it worth today?

Tenant Pays For Your Mortgage

For a small down payment, the bank effectively “purchases” your property for you by providing a mortgage that covers the majority of the purchase. Your tenant then “pays off” the mortgage for you via monthly rental payments. With the right property this relationship can extend over the term of the mortgage, eventually resulting in a mortgage-free asset that required minimal outlay on your part. Few investments can claim this unique structure.

Cash Flow For A Lifetime

The difference between rental income and property expenses represents your cash flow. Over the life of your mortgage, as rental income is continually upwardly adjusted for inflation, the spread between the revenue and expenses widens, resulting in higher and higher cash flow over time. Once the mortgage is paid off, you are left with a clear title to a property that will continue to generate income until you sell it.

Increasing Profits Through Leverage

Leverage greatly augments the income-earning potential of your available finances. For example, instead of buying one property for $100,000, you can leverage that same $100,000 by using it to finance down payments on three properties. Because appreciation is measured by the full value of the properties, and not by how much or little you’ve actually put down on them, leverage multiplies your returns substantially. Further, as the mortgage is amortized – paid down – your equity increases, creating more funds to invest in other properties, which in turn increases your leverage.