The phrase ‘passive income’ is associated with investment in rental property. Banks gives loans to buy a piece of rental real estate , as opposed to lending you money to buy stock, because rental property has hedge against inflation, as raising rents is possible during depreciation where phantom losses emanating from the appreciation of property, then capital gains rolled over into what is termed as a ‘like kind’ investment over time.
Investment generally is characterized by inbuilt risks, and so investing in a real estate is not exempted and careful consideration must be given before any property is purchased. The reason is not far fetched from the fact that it is not liquid with many militating factors which include loss of income from tenant turnover and a low occupant rates, cost of property taxes, payment of taxes on capital gains if profit is not rolled over within six months, and sometimes heavy losses inflicted by natural disasters beyond human control.
It will be wise to hire a professional property managers to help minimize the day-to-day involvement with the investment to help cub un-necessary losses. It is said by professionals that it is best to start small and carefully review possible real estate purchases, first, work with a realtor in the community while you look out at many properties and analyze each for its potential cash flow through which you can gain informed information and timely insight from the community where the property resides before considering investing heavily on real estate. Taking action by would be land-lord is necessary
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