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How we make our money and investors profite
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Appreciation of Property Values
Real estate tends to appreciate over time, driven by factors such as economic growth, inflation, and improvements to the property. As the value of the underlying properties increases, so does the value of the shares held by investors. This capital appreciation can be realized when investors sell their shares or when the company itself sells properties at a profit.
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Return of Capital Distributions
Beyond regular dividends, real estate companies might make special distributions to return capital to investors. These payments are usually derived from the sale of properties or refinancing of existing assets. Unlike dividends, which are typically taxed as income, return of capital distributions reduce the investor's cost basis in the investment, potentially offering tax advantages.
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Tax Advantages
Real estate investments come with several tax benefits that indirectly enhance investor returns. Depreciation deductions on properties can shelter a portion of the rental income from taxes, effectively increasing the after-tax return. Additionally, long-term capital gains from property sales are usually taxed at a lower rate than ordinary income, benefiting investors further.
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Strategic Property Management
Effective property management ensures properties remain fully leased, well-maintained, and appealing to tenants. By maximizing occupancy rates and controlling costs, real estate companies can improve their net operating income, which supports higher dividends and potential property value appreciation. Strategic upgrades and repositioning of properties can also lead to higher rental rates and increased property values.