How You Can Make Money from Investment Property

Rental income. The cash flow or rental income derived from investment real estate is a dependable source of income, with the potential for future growth and has an effective safeguard against the profit eroding natures of inflation. When comparing investment real estate to other investment options remember this—an investment that fails to deliver sufficient income (whether it be stock dividends or rental income) will in time suffer in value—conversely, investments that yield higher cash flows will show higher rates of appreciation. Don’t buy an asset, buy the current and future cash flow.

Accelerated mortgage payoff. Anytime you pay off the mortgage on an investment property early, you create an equal amount of appreciation/equity. Success in this regard is particularly sweet, when you are afforded this luxury as a result of your tenants.

Property improvements/enhancements. Property Improvement can be loosely defined as anything that increases the current market value of the property—activities like expansion/build outs, rehabilitation and reconfigurations are examples of property improvement that can affect cash flow and profits.

Purchase profits (buying at a discount). Making a profit on the front end of the transaction serves to lessen your overall risks and increases your chances for greater profits/ROI (return on your investment) during the holding and selling phases of the investment real estate ownership life cycle.