By [http://ezinearticles.com/?expert=Bob_Foust]Bob Foust
How can real estate make me money? Very good question. There are several ways, both long and short term, and in varying degrees of risk. Yes, risk. All investments involve risk, but we need to avoid undue risk and manage the unavoidable risks. We can help.
Real estate investments - we will outline and discuss investments, not "flipping" and not "making a quick buck"-that is speculation- rather, we want to consider solid investments. Think of real estate as long-term, not a fast buck. Real Estate Investing is like a marathon, not the 100 yard dash.
Why invest? - to increase wealth and/or increase income over time.
When is the right time? - Time is your ally in the real estate market. What I mean is that time will produce shocking results if you invest wisely. My favorite answer for those asking "When" - is a tongue in cheek "yesterday." The sooner you start a mortgage, the sooner it will be paid off (by your renters of course).
How to invest? - income producing property, usually rentals, either residential or business (not your home, that is not liquid). We are talking about investing in addition to owning your home.
Become a Landlord
Benefits of investing;
A - Renters will pay the mortgage on your property for you. After the mortgage is paid off, all the rent will then be pure income.
B - The value of your property will increase over the years. For example, California residential values have grown at an average compound rate of 5% per year for the last 27 years (this is prior to the last two year downturn). This is classic wealth building, and your personal net worth will soar, all the while using other people's money (OPM) to pay the expenses. And by the way, you are applying leverage to increase your wealth.
C. - Immediate income tax deductions -- all operating losses of an income producing investment (rental) are deductible against your current year's income (some restrictions apply). This is a substantial tax advantage for the owner.
D - Another income tax deduction -- depreciation of the income property is also a deduction for the owner in the current year. For example a $400,000 rental home is depreciated over 27.5 years to give the owner a $14,545 deduction applied to each year's ordinary taxable income. Nice!
E - Positive cash flow -- as the owner raises the rents regularly, cash flow increases for the owner, who then has a nice source of monthly income. In the long term, especially after the property is paid off, the rent can be viewed as a nice retirement income.
We've touched on some of the very positive benefits of investment property, but the subject is so important that much more detail must be presented and studied.
Please contact us for any question and our in depth reports on Risk, Operating Guidelines, and our Hints and Tips for Landlords.
About the Author: Bob Foust is the chief executive for the FOUST Team at C21 Discovery; one of the top-selling real estate teams in Southern California. He specializes in Orange and Los Angeles Counties and operates one of the area's most informative real estate websites. To contact him or learn more about real estate in Orange County, please visit [http://www.FOUSTonline.com]http://www.FOUSTonline.com. For additional pertinent real estate information see our blog at [http://www.foustonline.blogspot.com]http://www.foustonline.blogspot.com.
Article Source: [http://EzineArticles.com/?Wealth-Building---Creating-Wealth-and-Income-in-Real-Estate&id=1869151] Wealth Building - Creating Wealth and Income in Real Estate