5 ways to win in Real Estate Investing (REI)

  • Appreciation

    • Annual Property Value Increase (approximately 6%)

  • Depreciation

    • Annual allowable tax decrease - 1/27 per year

  • Instant Equity

    • Appraised higher than purchase price

  • Tax write-offs

    • Meals, entertainment, repairs, business expenses

  • Cash flow

    • Monthly income in excess of costs

Anatomy of a $100,000 purchase

Appreciation at 6% = $6,000.00

Depreciation = value of building (minus) land (x) your tax bracket = approx. $1,000

Instant Equity = price varies per property

Tax write-offs - (Vacations, business dinners, improvements, repairs) = $5,000 - $10,000

Cash flow of $150.00 per month = $1,800.00

Annual income of $13,800.00

Cost of purchase = $10,000=> one time

Location, Location, Location

Location is the largest deciding factor when it comes to REI. This plays a big factor towards the five way to win at real estate, but also many more. Location will many time also determine the type and demographic of tenant that you will be getting. For example, near Marquette you can expect to get college students with annual turn over as compared to Bay View where you are creating a long term tenant with low turn overs.