The Five Real Estate Profit Centres
I just read an excellent article written by Malcolm Silver of Malcolm Silver & Co. Ltd. You can find the full article in his newsletter on his website in his Winter 2011 newsletter you canfind by clicking here.
In it, he talks about the five profit centres in real estate:
1. Market appreciation
2. Earned appreciation
3. Positive cash flow
4. Mortgage reduction and leverage
5. Tax deductions
I work with many real estate investors, am one myself and speak with many more people almost daily who are beginning to look at their first foray into real estate investing. When people get started, they are generally focused on one thing and that is cash flow. Some take it a step farther and look at potential for market appreciation. It’s the other factors that are often forgotten: earned appreciation, leverage and taxation.
It’s wonderful to find a property that can offer all five profit centres and it certainly is possible especially if someone is willing to look at earned appreciation – the need to fix up or rehab a property first.
Almost all of the world’s wealth has been created through real estate investment and it is an opportunity that is widely available to most people at some stage in their lives, beginning with home ownership.