Law Office of Rick Todd Blog

Wednesday, January 10, 2018

Basics of Residential Real Estate

If you are like most people, you are looking to invest your money so that it can increase and you will have more money in the future. There are many ways of investing money and one of them is in residential real estate. Investing in real estate can be simple if you understand the basics. This article seeks to shed some light on different ways that real estate investors make money.


The real estate market is always changing. An investor will purchase property and wait until its price goes up before selling the property and making a profit. The reason that the property value goes up is partly because the land around the property has become busier and become scares or the investor has made upgrades to the property to make it more attractive to potential buyers.

Cash flow income

If you invest in residential real estate seeking cash flow, you will probably purchase property such as an apartment building and operating it so you collect a stream of cash. This stream of cash is from the rent collected from the tenants. The tenant will pay a specified amount of money at a specified time. If the property is well run it could be a source of income for the investor.

Real estate related income

This income for those "specialists" in the real estate industry. An example of a specialist is a real estate broker who make commissions for purchases and sales of property. There are also real estate management companies that run properties for the investors and they earn a percentage of the rent paid by the tenant as payment for handling the day to day operations of the property.

Real estate business operations

This is income made from certain special services of business activities related to the real estate investment. An example of this is charging parking fees in the property garage. Also if you run a hotel you can charge your clients for a movie. You can also charge for vending machines in office buildings or laundry services if you invest in low cost housing.

If you learn to take an opportunity and make the most of it, you stand to make money investing in real estate. However, before investing you need to consider which investment type is appropriate for you.

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