You’ve stopped at this video because you want to figure out the four areas that you can create returns in real estate. Guess what I’m going to do. I’m going to give you the answer to that question coming up. I’m here to share some of the tips and strategies that are going to help you to go out and make more money. They’re going to help you to have more control over your free time, which ultimately, is going to help you to live with less stress.

I probably need to get to answering your question, which is the four different areas that you can go out and create returns in rental real estate? Which is one of the main reasons that when you are sitting down and you’re figuring out why real estate is the area for you, you also are thinking to yourself, which of the different areas would you like to be involved in real estate and you’ve come up with an area and you’ve figured out exactly, maybe for instance, why you want to be involved in multifamily real estate and doing that long distance. Well, then you dump into the different four areas that are actually going to help you to create returns. This is something that I’ve been talking about for a really long time.

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The first thing that most people talk about real estate is, what do they always say? “Real estate always goes up over time.” You know what, there is some validity to that. I guess the thing to think about is, there are a number of different ways that you can have it go up over time, but we’re just going to stay at the really high level today. Maybe in another time, we’ll talk about these five specific ways that you can create appreciation. Appreciation, basically, is the value of the property going up over time as it’s looked at in a certain currency.  Basically, the price is going up. It’s appreciating in value. That’s the first area where you can create. 

There’s also another area, and this is really, really positive, especially and one of the main reasons I love investing in US-based real assets. US-based real estate, specifically, is depreciation. Now, depreciation is really an area that is helping for a tax benefits perspective, but it’s one of those areas that helps you to go out and create new areas of returns for yourself, for your investors. If you’re someone who is out syndicating capital, it’s another really important area for you to take into consideration. 

The third area that I like to talk about today that will help you is the area of amortization. Now, when you think about amortization, this is really the capital buildup or the equity buildup over time. What do I mean by that? If you buy a property and when you buy the property, and let’s say that you go out and you borrow money from a bank, technically, when you buy and close on the property, you own about 25 to 30%, depending on what type of loan you have. It could be as low as three and a half percent, but the other part is actually owned by the bank. Over time, when you’re making your mortgage payment, you’re actually paying down the principal and you’re also paying interest. Over time, you or should I say your tenants or your residents are actually paying your mortgage every month. They’re helping you to build up more equity. You’re amortizing or gaining an equity in the specific property. That’s the area of amortization. Really, building up your ownership of the property over time and your tenants are paying that down. 

The last area that I want to talk to you about is, usually, what everybody talks about, and this is cashflow. Now, one of my favorite games in the world, as you know, is Cashflow 101. This is one of the areas that everybody likes to talk about in real estate. Once you go through the formula and you talk about the things that we’ve looked at before, how you get to your net income, this is really your cashflow.

When you’re looking at a particular type of property, you want to make sure that it’s creating revenue, that you have the operating expenses under control and that you can really control the NOI, because that’s going to help you on the valuation of your properties. If you owe debt service or a mortgage, then you’re going to subtract that and it’s going to get you to your cashflow, which is one of the fantastic areas in real estate that allows you to put money back into your company, help to pay your investors, et cetera. 

These are the four different areas. Once again, it’s appreciation, it’s depreciation, it’s amortization and there’s cashflow. These four areas really helped me when I was getting started really focusing on the different areas to create returns while I was working a really, really busy corporate job. I was also building and figuring out how to make sure that my portfolio was as robust as possible.

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I share a lot of these stories in an eBook that has been getting lots and lots of traction. If you want that eBook, absolutely for free, just go to keeponcashflow.com/roadmap. Leave your name and your email address, and we’ll send it out to you absolutely free. If you want a little extra help, also, too, continue to focus on what you do best and maybe looking at some opportunities that you can invest in long distance, and you really want a foundational educational foundation, there’s a wonderful podcast, at least, because of the feedback that I’m receiving. That is the Going Long podcasts with Billy Keels. I would love for you to start downloading the episodes, be a member of our tribe, of our audience at the Going Long podcast with Billy Keels. 

Once again, everybody, I’m Billy Keels. That’s my 2 cents for today. As always, hasta la proxima.

 

You can also check out my latest podcasts and collaborations here keeponcashflow.com/podcasts/