Investment Property Income: Building A Residual Income

One of the quickest and surest ways to build income from property is through the purchase of investment property.

Investment property is any real estate not meant to be used as your personal residence that generates income on a monthly or yearly basis. This can include a second home or an apartment building you lease out to tenants, an office building that you lease, or a retail store front, among others.

Income derived from these investments is called investment property income otherwise known as residual income or passive income. If the income from your investment property is higher than its expenses you will experience positive cash flow and therefore your residual income will grow.  

There are several ways to increase your residual income:

  1. Continually buy properties that have positive monthly cash flow
  2. Raise rental rates on the property you currently own
  3. Decrease expenses on the property you currently own

Those planning to add investment property to their portfolios it is always recommended you seek the help of tax and real estate professionals. They can help you determine the best type of investment property to buy and how the residual income should be reported on your tax returns.

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