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Last Updated: May 14th, 2012 - 22:24:01 |
Basically, there are 2 types of rental investment property making large profits on the market today. To make the generous gains, we can either rent fixer-uppers after remodeling homes or rent luxury condominiums.
Difficulty in finding profitable deals arises on normal rental real estate investments because the high demand for attractive rental properties is negated by the high home loan prices and the high property taxes. The competition is fierce to find a qualified equity home loan that generates positive cash flow.
“After remodeling a home or buying a luxury condo, how can I have cash flow, equity built up, appreciation saved or a tax shelter?” You may ask.
Cash flow is income money available for you to spend after the costs of the investment is paid. The single-family house is the universal entree in investment real estate, encompassing one-fourth of homes bought in 2004. Thus, earning from a remodeling home, perhaps simply by adding inexpensive home improvement tile; may cause your income, after taxes, to exceed your expenses by as much as $100 or $200 a month. This is positive cash flow.
Another reason to use your home loan on remodeling homes is how the value of equity works. Equity is the difference between your property’s debt and the market value of your property. Your equity is the difference between the market value and any mortgage balance. As your renters are actually paying off your debt, your equity increases. Better still, owns the property debt free. Then, your equity equals its market value.
So get your hands dirty. Even investment homes in suspect neighborhoods may draw first choice from renters after a little home interior decorating. Suppose, you rent a 150,000 purchase for $1,800 a month or more.
What about this luxury condominiums’ purchase, how can renting one bring appreciation? Aren’t they costly? And, the renters will bring the value of the property down, will they not?
No, once again, home remodeling can bring appreciation and turn blighted neighborhoods into revitalized areas. Careful consideration into what areas are becoming revitalized will help you choose many old apartment buildings to turn into condominiums. If you remember that bathroom, home improvement and kitchen interior home decorating add the most appreciation to the market value. Many in revitalized or resort areas are willing to pay $2,000 to $5,000 or more per month to live in furnished condos that carry many comforts, like massage mattresses, kitchen appliances, computers and advanced entertainment sets, ... These furnishings can be fairly cost-effective when they are bought in volume from a wholesale distributor. The fact that more possible renters are about can be deduced by the increase in people paying renter’s insurance.
Finally, by converting these 2 types of rental investment properties, you allow Uncle Sam to assist us by building tax shelters as deductions that lower some of the tax you pay to the IRS. Known as depreciation deductions, the IRS lets you deduct a percentage of the original cost of the property from your gross income each year, on the assumption that buildings have a finite life span and are "wearing out." Real Estate provides one of the major tax shelters recognized by the IRS.
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