Once you realize that real estate investing is not risky, you ‘ll see all the ways that you can make money from owning properties and letting someone else pay for them. Many novice investors just think about rental income but true investors learn early that their rental properties go far and beyond monthly rent checks.

1. Cash Flow – Again, most people only think about this because it is easy to see that owning rental properties will produce monthly income. Not every rental will produce income and some investors will go after properties that have a negative cash flow and bet on future appreciation. Real estate investing is considered low risk when you follow tried and true investing principles. Owning rental properties with a negative cash flow is not a good way to invest and is super risky. Do not invest based on speculation. Before you search for rental properties make sure you set your real estate investing criteria
2. Equity Build Up – Every time you make a payment to the bank for your property, you own a little bit more of that property. Of course the first few years, the amount of the mortgage payment that actually goes towards paying down the principle is very, very small. The majority of the payment goes towards interest. Remember, your rental property should be paid for by your tenants. They are making the mortgage payments if you have positive cash flow. You are building equity while they are paying for your house.
3. Appreciation – Over the long term home prices go up. In the short term, they go up and down. Over a long period of time neighborhoods also change, but you should not buy rentals in areas that you THINK will improve. Remember that is speculation and speculation is risky. Find nice rentals in a good area that has a good proven track record for rents and home prices. The home will probably appreciate at 4-6% over the next 30 years (life of the mortgage).
4. Tax Shelter – Very rarely do you find a novice investor talking about tax shelters on investment properties. the professional investors think about taxes all the time. As the saying goes, it’s not what you make it’s what you keep! When talking about tax shelters, you’re really talking about the depreciation of the property. The government let’s you depreciate many big ticket items that wear out over time and are used in your business. Real estate investors know how to use depreciation to eliminate taxes on monthly rental income. My advice… get a good accountant! They will pay for themselves with the tax benefits they can find on your rental homes.