HOW A REAL ESTATE INVESTOR MAKES MONEY

 In real estate investing, people are usually unaware of how income can be generated. An investor in real estate must be clear about the concepts that we will explain below.

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I mean that stocks historically provide an annual rate of return of about 7% and bring few drawbacks. You buy and sell through a broker and earn or lose the difference, minus their commission and taxes.

Comparatively, the securities of real estate companies that are listed in the stock markets historically give income below the average, which can be around 5% of annual appreciation, having to make a significant effort to monitor. 

So, do you think that investing in real estate companies in the stock market can be a good investment? Well definitely NO. Now I will explain why and what we think of Cat Real Estate. Once you start taking action, your wealth creation will begin. I will show you below.

Let's see ... investors who invest directly in real estate commonly earn total rates of return between 30% and 40% per year. Possibly much more. The most important thing is that this profitability is obtained passively. It means that a manager is in charge of the status of the properties, their administration, and the collection. The investor only worries about receiving the money for his properties at the end of the month. Money in the mail!

But wait a second. How is a 5% return on appreciation converted to rates of return between 30% and 40% or more? Understanding this point is the key because the rate of return is what we want. We want to do more with less.

The truth is that a real estate investor  benefits from five income centers at the same time:

  • Appreciation
  • Cash Flow
  • Loan repayments
  • Tax benefit
  • Inflation coverage

In common property, leveraged appreciation could represent a 25% return, cash flow another 8%, loan repayment 5%, and tax benefits another 2%, for a total annual rate of return of 40% on your initial payment.

Because it is an article and not a book, we go directly to the first of these income centers: the appreciation of the property.

Appreciation

It's not just the appreciation. When you take out a loan, you can benefit from leveraged appreciation, which generates a 5% rate, which in many cases is much higher.

"Appreciation" means the increase in the value of the property. What does "leveraged" mean?

Let's take a look at this example.

Let's say you put a down payment of 20,000 euros on a small two-bedroom, one-bathroom, single-family home with a total price of 100,000 euros. Property appreciates 5% after the first year. It's not very exciting to say ... is it? Your 100,000 property is now worth 105,000.

Well, wait. Your initial payment of € 20,000 has just won € 5,000. So you still have the € 20,000 invested, plus a € 5,000 return on that initial investment.

That's a 25% return on investment! Plus, it's a 25% return on just one of the five real estate investor profit centers.

Add the profitability of the other centers and you can have a total return of 40%.

So is. The 25% leverage rate of return does not even include your rental income after all monthly property expenses have been paid by the tenant's rent, your loan payment the tenant is paying, or your coverage benefits. 

The appreciation levered does not depend on that. So… wow! Now how exactly did this happen? Although you own only part of the property, you control the entire € 100,000 property - both the 20,000 down payment plus the 80,000 portions you borrowed from the bank.

A real estate investor always seeks that the cost of the mortgage and the expenses of the property are paid by the tenant's rent. You have to find the right property at the right price, and at Cat Real Estate we are a specialist in this.

A real estate investor learns that control is more important than ownership. The tenant's rent controls your monthly payments on the € 80,000 loan to the bank, so that's covered too. Is this magic? It's something new?

No, controlling a total asset with a small advance is called financial leverage. It's risky? No, it is relatively stable.

Well, if you belong to houston then you can go to real estate advisors houston Named as TrueViewBusiness & get your best Proposal from them as i found them useful.


Location: Houston, TX, USA

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