Income Generating Investments

Finding Income Generating Investments Made Easy

If you’ve looked at commercial real estate listings in the past and felt overwhelmed at the options, you’re not alone. Thankfully, at Perfect RealEstate Investments (PRI), our goal is to show you how to invest in real estate in a way that makes sense for your specific situation.

If you’re considering investing in real estate, be thoughtful and take some time to map out your reasons and expectations for doing so. Doing your due diligence does not just mean coming up with a down payment or signing up for an online investment.

Real estate investing is a BUSINESS and needs to be treated with the same level of serious thinking that would be done if you were starting a bricks and mortar business. You’re putting YOUR money into an investment that needs to make money for you.

An income-producing property is any property that produces an income stream.
An income stream is a single payment (reversion) or flow of payments or benefits from an investment or property.
A reversion is a lump sum that an investor receives at the termination of an investment. Like when you flip a property.
property-investment

When investors purchase property for its future income. The income a property generates may come from many sources, such as:

Property rents
Amenities like a laundry facility in an apartment building or a gym in an office building ,
Roof rents from billboards
Ground rents from cell towers

Income stream can be separated into several components:

(1) A component to provide for all property related expenses, including:

Vacancy and collection losses.
Fixed Expenses (such as building insurance and taxes)
Variable Expenses (such as management, maintenance, repairs, and utilities), and
Reserves for replacements (allowances for the replacement of structure components, such as roofs, equipment, and paint – usually major items that will have to be replaced periodically during the life of the structure).

(2) A component to allow for the return of the investment (investment recapture);

Return OF the investment is the recovery of invested capital, usually through income payments and the reversion. The return OF the investment may be called recapture of the investment or capital recapture.

(3) A component to allow for a return ON the investment (investment yield), even if this return ON or yield is not realized until the property is resold.

An investor will anticipate a profit on the investment in the property – a return on the investment.

The return on the investment is the additional amount received as compensation for use of an investor's capital until it is recaptured.
The rate of return on the investment is equivalent to the interest rate that is earned or is expected to be earned.
The interest rate is the profit that is realized by the investor.

The investor may receive a return on the investment over a period of time or may not realize any profit until the property is resold. In either case, people generally will not invest in property that will not produce a return ON the investment.

Investors purchase income-producing properties for the income (future benefits) the properties will yield (produce) Investor in real property should estimate the duration of the income stream and its risk, or likelihood of receipt

It’s important to learn the key lessons BEFORE you make an investment. Too many times people make decisions like they were playing roulette – just plunking down their money and hoping for the best. We can help you have the ability to make sound business – money – decisions.

We’ll educate you on the pros and cons of each property you’re considering, letting you know the reasons a particular property may be a good or bad investment for you. If you’re a veteran investor, you can expect an in-depth discussion as we learn from each other.

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