1. INCOME
Rent pays for the property and in essence, the tenant is buying the property for you. Aim for a positive cash flow, but we willing to endure a little negative cash flow to ensure the potential for future appreciation for the property.
2. DEPRECISATION & OTHER TAX BENEFITE
Depreciation is a non-cash expenditure, and can be used to offset income from other sources. That's a tax shelter. The profit from a home sale is taxed at long term capital gains rates which are lower than regular income tax rates. The profit isn't subject to Social Security tax for over 5% like ordinary income.
3. EQUITY BUILD_UP
Sooner or later, the loans on all the property you own will be paid off, and after that, it's just taxes.
4. APPRECIATION
Each day houses are worth a little more than they did the day before. The stock market is volatile, while real estate tends to be stable. When home sales are show, prices tend to be flat, and when the market's hot, prices tend to jump up, but it's unusual for prices to decline.
5. LEVERAGE
Leverage is the ability to use other people's money to control a large asset. It allows you to acquire and control huge dollar amount of real estate without having to have a lot off cash. By using the 1031 tax deferred exchange technique, you can move from property to property always leveraging you way up in the world of property ownerships and never have to pay a dime in income tax. Note: Real state is one of the most attractive opportunities for achieving financial freedom available in America today. I have been fortunate to acquire 96 rental units in the last five years and sold over 100 single family home a year since 1996. The start of my real-estate career was a disaster; it took fourteen months to complete three total renovations and sell. I had on other source of income, and ended up $100,000 in debt and within 30 days of bankruptcy. This humbling experience was due to the fraudulent representation of the wholesalers I purchased these deals from. Repairs were double as stated and the appraisal was less than the ARV advertised. God works in mysterious ways; he took it all away and then gave back 10 fold. My business is my ministry, and my deals are truly as good as get.