How Investing in Missoula Real Estate is IDEAL
There is a concept called IDEAL when it comes to investing in real estate. IDEAL is an acronym and we’re going to give you a detailed explanation of what each letter stands for and why it is important.
So, What Does IDEAL Stand For?
- “I” is for income, or monthly revenue earned
- “D” stands for depreciation, which results in tax breaks
- “E” represents equity, as in your tenants’ income paying off your mortgage
- “A” is for appreciation, such as your property value increases significantly
- “L” means leverage. For example, you can acquire a property worth $200,000 for the much lesser amount of the down payment
These definitions are all very nice, but how do they get put into action to help you with investing in real estate? We’ll explain what is meant by each of these descriptions below.
Income
Many investors choose to earn an income stream from real estate as opposed to occupying it. It can be in the form of monthly or other periodic rental money.
The “other periodic rental stream” we are talking about is vacation property which can be daily or weekly rentals. Some people buy run-down properties and fix them up. Then they re-sell it and earn a profit. There are several viable ways to make this profitable.
Equity
You have more equity in the property when the income from your tenants pays down the mortgage on that particular property.
How Does Appreciation Increase the Value of Your Property?
Appreciation is defined as an increase in the value of a property. Factors that go into this can be inflation, improvements you make to it, or increased demand for property in that community. It is not always possible to accurately predict things like inflation or property demand. However, you can improve your appreciation value by making significant improvements to it.
Leverage
Leverage is when you purchase a piece of property at a much smaller down payment amount than what the selling price is. Then you use the income from that property to pay off the mortgage on it.
Another bonus is the property will keep earning you income well beyond when the mortgage is paid off.
Remember This Acronym
The keys to success in this type of investing include remembering the acronym IDEAL. It is a simple yet thorough explanation of the entire concept of real estate investing.
Where Should You Begin Investing in Real Estate?
You can start by contacting Missoula Property Management. We know what properties are good investments or great investments since we manage thousands for real estate investors just like you. Give us a call today.
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