Whats the 4th way to make money?

General Real Estate Investing
1

Ok, I read here somwhere on here that when you buy and hold you can potentially make money 4 ways:

  1. Positive Cash Flow
  2. Appreciation
  3. Depreciation
    4??? What’s number 4? I was explaining it to a newbie and forgot.

Any ideas??? Is there a number 5???

Thanks!

JeffInCT

2

With a Sub To - L/O that has little or no equity.

  1. For me to take their house they will have to move out and pay me the next 3 to 6 payments. Depending on the time of year. If they went to a Realtor it might cost them up to 10% to sell it and still make the payments while it is on the market.

  2. NROC When doing a L/O you get a “non refundable option consideration”

  3. You get positive cash flow.

  4. You get the depreciation.

  5. Then you get the appreciation at the back end.

Bruce

3

I’m liking that Bruce. Not sure if it’s what I remember… but I like it.
Thanks.
Jeff

4

Maybe equity buildup from the rents paying down the mortgages.

5

Jeff,

There are actually at least 5 ways to make money with buy and hold:

  1. Positive cash flow
  2. Equity picked up at closing (assuming you buy at a discount)
  3. Tenant paying down the mortgage (more equity)
  4. Appreciation (still more equity)
  5. Tax benefits (depreciation, interest deduction, etc)

In addition, you could even stretch this to list to six and consider any cash back at closing as tax free income. It’s income because the tenant is paying it back via their rent payment and tax free because you borrowed it and therefore aren’t taxed on it. In fact, you actually get to deduct the interest on the money since it’s a loan.

Mike