Cash flow benefits of ownership of a well-hidden from the public. Think about it. Have you ever sat down with financial planning and wondered why he never recommended to take your money and invest in real estate cash flow? I mean really ... many of the richest people in the world have used the cash flow ownership literally build an empire! Trump, Kiyosaki, Hilton, Kroc, and Donald Bren come to mind. But how often are advised to look at this?
When considering different to that question, think about it: real estate cash flow in relation to the "traditional" investment peddled by many "financial planners" may provide higher returns with less risk and more control to you, as an investor.
Since many do not know the importance of cash flow as it relates to any business. Let's start there with a quick definition:
Cash Flow: Is the amount of cash to venture capital or business creates a particular time. Since the flow of cash or cash is a key driver of business and gives businesses the freedom to create new products, services, and even the payment of dividends to shareholders, most analysts believe cash flow to the company's most esteemed of financial statistics. Organizations and companies with large cash flows are almost always the purpose of acquisition because the buyer knows that the cash may be used to offset the cost of purchase.
Is not it interesting ... (Note the underlined sentence above), but how does that relate to the property? Think of it this way, any property cash flow, which can be considered as own your own "business." That each property income flows in the form of rent, and costs in the form of taxes, maintenance or debt service. So, just how big your income and expenses, how cash flow will also be property investor.
So, first of all understand that there is a difference between investment and speculation. The investor buys cash flow, while the speculator would bet on the purchase prices low, with the hope of future sales at higher prices. In the world of investment property speculators are known as "flippers." This is a topic for another discussion, but just know that there is a difference.
Now, what are the advantages of knowing how important cash flow might be? And why will the cash flow of property speculation and "flipping" real estate?
Advantage 1: When buying real estate cash flow, I create a recurring revenue stream. So, when I invest my money in real estate that will in turn rent the tenant, I actually paid for having to put my money at risk. Lessee shall pay me to live there, which makes my income for the property. Taking into account the income from the property gives me a steady stream of cash flowing to me, which I'm free.
Contrast that scenario, flipping real estate. If I put my money in real estate in order to establish and flip-flops, and then, when the object is located in blank, or a repair, or advertised for sale are not getting any cash flow. My money is actually tied up and not available for me to use up to sell the property, and I only use if I can sell for more than put in the property. Personally I would prefer not to sell property in this market due to current conditions, it may take some time. At the time I keep the property and waiting for the sale, the property is costing me money for maintenance, taxes and advertising.
Advantage 2: Buying real estate cash flow creates an asset. What does this mean? It just means that now you can control your own or something that pays! The real difference between assets and liabilities is that the assets and liabilities of the pay claim payment from you. Your personal residence is not an asset, it is a responsibility! This requires that you pay a mortgage. Even if the house is paid for, require you to pay in taxes, insurance, and maintenance to name a few. In fact, the house is an asset for the bank, which has a mortgage, or state and federal government that collects property tax, maintenance, and a man who does your lawn ... For you, though the house is a responsibility!
Buying cash flow property creates an asset, because you can put renters who will pay. A rental property cash flow drops, which can be used or re-invest. Every time you buy real estate, and get one step closer to financial freedom and live in freedom.
Think of it this way ... If lifestyle costs 5,000 per month, you only have the assets to pay 5000 a month to maintain current living standards. Why do you want to work at work, if you have other sources of income? There will be ... That's the beauty of cash flow ownership of property. It gives you a step closer to free yourself financially.
Advantage 3: Purchase of real estate cash flow creates a tax advantage. That's right. And probably one of the most misunderstood tax benefit is that the depreciation or "phantom cash" as some call it. Basically, phantom cash (or decrease) can be taken literally, as soon as it is money that does not exist. Depreciation is the vulnerability of government tax incentives and the rich to benefit from real estate to a greater extent. This works so ... Government states that you can take the value of the building divided by 27.5 years and deduct that amount from their taxable income each year!
Let's say I buy a house worth $ 100,000, and I can rent for $ 1,000 a month ($ 12,000 per year) then I could subtract ($ 100,000 / 27.5), which is about $ 3,636 years since my taxable income. What does it mean that only pay taxes on $ $ 8,364 ($ 12,000 - $ 3,636) for this year not including other benefits can be obtained from the property.
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