Real estate is not bought on emotion, held, or sold. Investing in real estate is not a love affair; it’s about investment returns. As such, these four fundamental elements of return are always considered by prudent real estate investors to determine the potential benefits of buying, holding on to, or selling an investment in real estate revenue. If you are looking for more tips, read here.

1. Cash Flow – The cash flow of a property is determined by the amount of cash that comes in from rents and other income less what goes out for operating expenses and debt service (loan payment). Moreover, real estate investment is all about the cash flow of the investment property. You are buying the income stream of a rental property, so be sure that the numbers that you rely on later to calculate cash flow are true and correct.

2. Appreciation – This is the increase in a property’s value over time, or the future selling price minus the initial purchase price. However, the fundamental truth to understand about appreciation is that investors in real estate purchase the investment property revenue stream. Therefore, it is reasonable that the more revenue you can sell, the more you can expect your property to be worth. In other words, make a determination and throw it into your decision-making about the probability of an increase in income.

3. Loan Amortization – This means that the loan is periodically reduced over time, leading to an increase in equity. Because lenders assess rental property on the basis of the income stream, lenders present clear and concise cash flow reports when buying multifamily property. Properties with income and expenses accurately represented to the creditor increase the chances of obtaining favourable financing from the investor.

4. Tax Shelter – This means a legal way to reduce annual or ultimate income taxes using real estate investment property. However, no one-size-fits-all, and the prudent real estate investor should check in any particular year with a tax expert to make sure what the current tax laws are for the investor.