Cash flow: Cash flow nothing but the difference between your income and your expenses on a real estate property. You could have a positive cash flow or even negative one. Any body would love to have positive cash flow. On cash flow you receive, never use all of it for rapid debt reduction. You would be walking on a thin line. Keep a strong positive cash flow, and then you would have more options and space to plan.



Appreciation: Appreciation simply means increase in the value of real estate property. There are two types of appreciation. The first is "Inflation" that is economic conditions beyond your control. You may not gain much form this type of appreciation as the gain is balanced by higher cost of living. The second type is market appreciation, which you could control. When you develop your property, you increase the value higher. You could buy a piece of real estate property in need of repairs and bring it back up to neighborhood standards property or slightly higher; this would in turn give you a property that is much higher in value.

Leverage: Leverage is a capacity of borrowing a certain percentage of the value of a piece of property. Real estate, in comparison other field investments, offers you an extremely high degree of leverage. In some real estate investing, a couple buying a single-family home could obtain 95% financing. This further allows people to purchase real estate property with little.

Amortization: With leverage and the use of other people's money, comes with a repayment schedule. Your outstanding balance is decreased with every payment made by you. Part of each payment goes to interest and rest of the payment goes to pay the principal. The principal reduction is called amortization, dropping debt. Hence, amortization could make you opulent, slowly and steadily.

Tax advantages: Owning real estate with the objective of making a profit allows you to withhold interest payments and other expenses come tax time. But don't be fooled into buying real estate for the tax advantages; rather, buy it as it makes economic sense to do so.