Making money from a rental property is one of the best ways to become financially independent. An estimated 90% of the most wealthy people in the world make money through investing in and owning Real Estate. Like other forms of investing, owning rental property takes awareness and due diligence.
One method to start investing in rental property is to purchase and live in a property for a time, then rent it out and buy another property and repeat the process. Starting while still young is a great advantage while implementing this method of owning rental properties, but not a requirement.
When to Start
However, being young is not a limiting factor in becoming a property investor. On average most Americans purchasing rental properties or investing in Real Estate are between the ages of 35 and 55.
There are multiple methods of making money in Real Estate. There are several categories to consider when making an investment decision. Options other than single-family or residential properties include:
- REIT (Real Estate Investment Trust)
- Mortgage Lending
Click here for explanations of each and how they create income.
Passive Money Makers
Real Estate has income creating advantages beyond collecting rent that is often overlooked. Passive income that comes from rental properties are methods that create additional wealth other than cash flow from collecting rent. Increasing market value for the property amortization and tax advantages are all additional methods that increase profits.
For a business like a hotel, additional fees to play in-room movies and conference room usage along with parking fees, are all ways to add extra cash flow to a property operating as a business.
Increasing the value of a property is as simple as using other peoples money. As rent is collected, the profit is used to pay down the mortgage or in other words, amortization.
Along with amortization, appreciation is another method of passive value that the Real Estate owners enjoy. The simple fact that there is less land to build on and a steady increase in population growth will ultimately drive price up over the long run.
The advantages of owning Real Estate are numerous, and the ability to make money with a property are many.