My biggest epiphany I realized early in my investing career and the reason why I like real estate is that it makes money three-pronged. Many people compare real investing to buying stocks. I think it can’t be any farther from the truth. A stock might go up 10% and real estate only went up 5%, but the appreciation is only one way real estate makes money. You make it three ways. Real Estate investors make money three ways
- 1.Monthly Cashflow
- 2.Mortgage Pay down (paid by tenants)
You usually will have all three money streams going on a property if you’re doing it right. Real estate is leveraged; your return on investment is usually a lot higher than your appreciation of let’s say 5%. You’re looking usually closer to 20-30% ROI and that is conservative
Rental income is relatively recession proof. Even if the value of the property fluctuates, as long as you have tenants there will always be a cash flow, when you buy the correct properties.