Every income-property investment offers real estate investors four ways to make money on his or her investment.

1. Cash Flow
2. Appreciation
3. Loan Amortization
4. Tax Shelter

In brief, cash flow is the difference between the cash that comes in from a rental property and the cash that goes out, appreciation is the growth in value of a property over time, loan amortization is the liquidation of the mortgage over time, and tax shelter are the deductions allowable by the tax code such as mortgage interest and depreciation.

These four benefits may not be present in equal measure with every rental property, and more than likely won’t, but rental properties generally constitute some blend of the four benefits with some stronger than others.

One income property, for example, might give you an excellent annual cash flow yet offer you little in the way of a promising appreciable value and return when you the sell the property. Another property might yield little annual cash flow due to continual updating and repairs but in the end give you a fantastic payday when you sell. And some rental properties might simply offer you a good tax write off, with neither the benefit of either cash flow or appreciation.

In other words, whereas cash flow, appreciation, loan amortization, and tax shelter comprise the complete pool of potential benefits associated with owning real estate investment property, it might be overly optimistic for real estate investors to expect all four benefits in one rental property alone, and probably wiser not to.

The bottom line, of course, depends on your investment goals,and what it is you hope to accomplish by investing in real estate. So run a thorough real estate analysis on each rental property of interest and make an investment decision based on the results for those benefits you deem most important.

Here’s to your real estate investing success.