Property Income Investment Profits
Posted on February 28, 2009
Filed Under Property Investment |
Owning rental property can be one of the best ways to boost your personal net worth. The profits can be great from your property income investment. Unlike the ups and the downs of the stock market, real estate generally always appreciates in value over time. And, if you purchase the right property, in the right area, you can easily surpass the returns available from the stock market and other more traditional forms of investment.
Not everyone has the skills to be a good landlord, but those who do find that they can build a lot of wealth and monthly income with their investment properties in a relatively short period of time. If you are looking into purchasing investment real estate and are not yet skilled at being a landlord, you can always hire a property management company to manage your properties for you. They can manage for you until you either gain the skills yourself, or decide that a management company is your best long-term option.
Finding profitable investment property can take a bit of time, some local connections, and tons of research. However, once you learn about the industry, and start buying investment properties, it does get easier and easier to do.
Before you ever place an offer on a piece of property, you should be familiar with the following three things:
Understand Your Timeframes and Commitment Time
One of the first things you should consider is how long you are looking to own the property. You should always know the answer to this question before you purchase any investment real estate. The length of time you plan on owning the property has a lot to do with how much the property will cost you in repairs and maintenance. It also has a lot to do with how much improvement you are willing to make to a property.
The length of time you plan to own the property also determines some of your risk factors. Just about any property will increase in value over 20 years. However, if you only plan to own the property for 2 years, then you need to much more carefully consider the repair costs and initial price you pay for it. For most people, and for most properties, investing over a longer period of time makes the most financial sense.
Take Time to Build a Network of Real Estate Agents and Other Landlords
One of the best things you can do as a new property investor is to build yourself a network of real estate agents and other landlords. They will be the first to bring properties to your attention which they think you might be interested in purchasing. They will also serve as great references when you have questions about the industry or problems with one of your properties; nothing is better than talking to others who have experience!
Clean Up Your Credit
One of the most important things you need to do, before ever applying for investment property financing, is to clean up your personal credit and reduce your debt load. You will get much more favorable lending terms if you have no credit card debt and high credit scores. Also, by freeing up as much of your income as possible each month you will have the cash you need to invest and to maintain your properties well.
By considering your timeframes, building your network and having great credit you will be well on your way to becoming a successful real estate investor.
Andrew Stratton
http://www.articlesbase.com/investing-articles/property-income-investment-profits-197917.html
Comments
4 Responses to “Property Income Investment Profits”
Leave a Reply
Earned Income Tax Credit: Investment Income?
I realize that my investment income has to be less than $2,900 to file for EITC.
My investment is a rental property. If I profited about 6k but have about 5k in deductions, (interest paid on mtg. and improvements made to the house) do I still qualify?
ie: Do I claim $6k as my investment income or do I claim $1k?
Will I be claiming the full 6k? or should I claim the 6k profit minus my deductions (about 1k)?
Your investment income is your profit from your rental house. You will get EIC
References :
You use the net amount. Use the worksheet in IRS Pub 596 to figure if you have too much investment income to qualify. I believe it's on page 8.
References :
You investment income is the net amount - not the gross ($6k). That magic number is calculated on your Schedule E for the rental property. You mention "improvements" made to the rental. All improvements must be depreciated, not expensed. Meaning the amount you spent on improvements is spread out over a certain number of years. Repairs are expensed. So if you repaired the fridge for the tenant it's an expense. If you bought a new one it's depreciated. If you are not familiar with this I suggest you have a tax pro do this for you. This will effect your actual net income to determine if you'll still qualify for the EIC.
References :