Real estate is an IDEAL investment and is comprised of five components. Income, Depreciation, Equity, Appreciation and Leverage.
I – Income
D – Depreciation
E – Equity
A – Appreciation
L – Leverage
Real Estate investments provide income in the form of cash flow or remaining periodic income after all expenses.
You are allowed to depreciate your investment property as an asset, which allows you to reduce your taxable income on your active income.
As your tenant makes rental payments, you make payments towards the mortgage. Some of that payment goes towards your equity, which can be used later.
Over time properties gain value.
You use money from equity and appreciation to purchase other properties.
Real estate investment is the only type of investment that has all of the above five components.