Put simply, when making an investment in real estate, the ultimate goal is to put the money to work right away and letting it increase so that a person has more money in the future. The profit earned, which is also called the return, made on a real estate investment has to be enough to cover the risk that is taken, the taxes that have to be paid, and the overall costs related to owning the real estate, to begin with. Those who want to achieve success like a recent award winner, recipient Kheng Ly, need to get to know some of the most basic terms they will hear.
Real Estate Appreciation
The term appreciation refers to a situation when a property that has been invested in actually increases in value due to a change in the real estate market. This occurs when the land around the property becomes busier or scarcer. This often occurs if a large shopping center is built nearby or if upgrades have been made to the investment property. These are factors that make it more appealing to potential renters and buyers. Keep in mind, real estate appreciation can be tricky, and it is much riskier than investing to receive cash flow income.
Cas Flow Income
This type of investment in real estate is focused on purchasing a real estate property, such as a large apartment building, and then operating it so a person is able to collect a stream of cash from the rent payments received. This is the money that tenants are going to pay to use the property for a certain amount of time. Cash flow income is able to be generated from properly run storage units, apartment buildings, rental houses, office buildings, car washes, and more.
When it comes to investment property, getting to know some of the most common terms is just the tip of the iceberg. It’s a good idea for a person to do plenty of research and fully understand the process before venturing further into this realm. Keep in mind, in some cases, the risk taken isn’t worth the reward received.