How To Use Rental Properties to Start Building Wealth

The wealthy like Real Estate for a number of reasons. Below are some of the reasons that I and many others, love Rental Real Estate.

The benefits of rentals / wealth generation:

1. Cash flow: The true meaning behind passive income. Doing no work and being paid by others. Offers the highest ROI without the use of my money initially.
2. Tax purposes: Avoid paying taxes on income earned through real estate depreciation and tax laws. All done legally and efficiently. You can also defer taxes when you sell with a 1031 Exchange.
3. Mortgage pay down: My biggest expense in life is rent; I will find others to pay my rent and mortgage for me while having others lend the money to me. Creative financing and use positive cash saved to invest in other assets.
4. Appreciation: The icing on the cake, property values "should" go up, but I can't predict the market. If I buy the proper investment and FORCE appreciation, there is no potential for loss. Adding a bedroom is an example.

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Not everything in Real Estate is easy, there are pitfalls for those who don't prepare or study accordingly. Below are some of the difficult parts of owning rental real estate.

Top difficulties of rental property investing:

1. Building wealth takes time: Some will over leverage themselves by going into massive debt trying to expand too quickly. This isn't the proper course for the vast majority. Taking consistent action over a long period of time is.
2. It can be all consuming: All the moving parts; problems happen. Your business will run how you set it up. If you don't have proper process in place, you will be overwhelmed. Learn to outsource the task or do it yourself.
3. Deal with difficult people: Contractors, property manager, tenants, bankers. Do upfront work on these people and weed out the ones who cause damage. Otherwise headaches will occur and end up causing more damage.
4. Involves paperwork and bookkeeping: Receipts logged, taxes, rents paid and expenses going out. You need to be organized if you want to stay afloat.
5. You can lose your investment: Real Estate is not a guaranteed thing. There are ways for you to fail, don't assume that everything always works out. But there are ways to decrease risk by educating yourself.

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Where Do You Start?

For aspiring or novice investors, it's crucial to gain a clear understanding of whether an investment opportunity is viable or not. Often, this assessment boils down to the overall return on investment (ROI).

If you're seeking guidance on how to efficiently and swiftly evaluate investment opportunities, look no further. My Real Estate Deal Analyzer has been crafted to assist you in calculating specific metrics, including:

1. Overall Cash Flow
2. Downpayment Impact
3. Net Operating Income
4. Cap Rate and Cash on Cash Return
5. Rent Collected and Expense Tracking

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Hope you find it useful!