Some Powerful Ways Real Estate Can Make You a Millionaire

As per the experts of Dream Homes, investing in real estate is the best mode of generating great returns in the current scenario. Although, just because you purchased a piece of property doesn't mean you're going to make riches. As Dream Homes Developers state, big wealth is generated through realty investment by capitalizing on "the four wealth generators of real estate." Single-handedly, each of these can help you make more money, but jointly they'll make you wealthy.

 1. Cash flow

Cash flow is the additional profit available after all of the fixed expenses have been paid on a property. For example, if your rental property generates INR. 50,000 in income and your expenses came to INR. 40,000, your total cash flow would be INR. 10,000 per month. Obviously, "ten thousand Rupees is not going to make you a millionaire." But remember, it is just one of the money generators. There are still three more to go!

2. Appreciation

Here, the term appreciation refers to the opportune rise in value of real estate. For instance, if you purchased a property for 20 lakh a decade ago, and today that property is worth 60 lakh, the appreciation made you 40 lakh richer! Of course, appreciation doesn't lead to increase in values every year. However, traditionally, real estate prices have remarkably increased over the long term. Hence, appreciation single-handedly is not going to make you a millionaire, so it is recommended not to indulge in bad deals in hope of appreciation.

3. The loan pay-down

When you buy a leasing property with a mortgage, you have to make a payment to the lender on monthly basis. That payment incorporates two parts: principal and interest. Interest is the revenue for the lender, but the principal is amount that you are paying down the loan with.For example, if you purchased a property five years back for $100,000 and acquired $80,000 mortgage (we’ll consider it was a 30-year mortgage with a 5 percent fixed rate), at present you would owe only $74,000. Ten years down the line, you would owe only $65,000. This indicates that each year your equity increased, as long as the value of your property didn't fall.

4. Tax benefits

Lastly, tax benefits provided by the government to investors are the fourth wealth generators in real estate investment. But you should definitely confer with a professional CA before making any financial or tax decisions.