This is the tried and true approach, practiced by an infinite number of small, single-property managers to organizations with a large number of real estate holdings. But why think of this investment in such a simplistic way when there are a handful of other revenue streams that are just as successful, if not even more lucrative without all the back-end work?

Self -Deprecation, or Depreciation?

For starters, here is one example that is virtually invisible, and performed by your property without you so much as talking to your accountant: depreciation. This phantom deduction is a totally legitimate write-off with no legal ramifications.

Property depreciation contrasts sharply from other forms of concerns that generate a profit. In a retail setting, pre-tax net profit is taxed at its corresponding rate, depending on such factors as location, zoning, etc. But with property depreciation, the taxable amount of your profit from revenue is offset by this depreciation write-off, without ever having spent a dime!

Since depreciation is calculated on the value of the property, not the dollar amount you have invested, you are receiving the benefit of its full value, in much the same way equity loans are granted. In some cases, the property owner could be reaping the benefits of depreciation without ever having intended to pay off the property or see its terminus.

To further this point, compare it to the depreciation of an automobile. Under certain arrangements, this depreciation may be written off, but the owner will still end up paying that car off, and lose a large portion of the original purchase price in the resale market!

Before you continue reading this article, there is one point that needs to be made about the profit earned by your property investment. Returning back to the tried and true approach, the last step usually taken is the use of profit. Do you fix up the building and property? Stash the money for a rainy day? Some of you may have thought of using your hard-earned dividend by purchasing more properties. On the surface, a very good use-that is, unless you are unfortunate enough to acquire a property that has expenses beyond its earnings potential, resulting in negative revenue. While that may sound oxymoronic, there is still a penny to be made in this situation. You see, writing off the depreciated value renders a value that our good friends at the IRS consider a net loss, at which point they enact a subsidy to keep you in business. So when you feel like a poor, helpless capitalist, Uncle Sam to the rescue!

Splitsville, The Heavens, and Subcontractors

One facet of property ownership that may slip through the cracks - no pun intended - is the separation of building assets and the land on which it is situated. To create a leasehold property, as this is known, you legally recognize and market each as separate entities. Part of your revenue would be generated by the use of the land, and another by occupation of the building.

Why stop there? Not only can you lease the grounds and the building on the grounds, but you can also lease the air-rights above the property. This arrangement gives legal right to the lessee to build up or use the airspace above the building. In this case, the sky really is the limit!

As you grow your real estate empire, you might consider the benefits - and costs - of property management companies. These are businesses that essentially run the day-to-day of your property: administrative, tenants, accounting, etc. for management fees. In exchange, you get the freedom to do as you wish. There are drawbacks that can arise from this, especially when you look to divest your interest in the property, but it is something to consider if you value the most common goal of entrepreneurs: quality of life.

An Empty Canvas and Black Gold

Aside from the conventional uses of buildings, land, and airspace, there is much value in selling the rights to use the empty exterior walls of your property, for example. A gigantic sign that can seen by thousands of people daily, such as near a busy intersection, is valuable to marketing companies with clients that need to build brand awareness. Provided that you have space, you can also lease the grounds to a billboard company to erect their structures.

A friend of mine went another route involving construction of structures: oil drills and derricks. But he's no oil tycoon, per se. Simply, he bought land in an oil-rich area of Texas, sold the land to an oil company, and made an arrangement in the selling contract to receive a 3% premium on revenues generated by the oil drilled on that land. While that figure may not seem like very much, when you consider some of these plots are extracting $6,000 a day in oil, it makes him happier than a pig in slop!

When taking the steps to invest in real estate, there are creative ways of generating cash flow other than by traditional means. Everything from air-rights to underground natural resources can be sold to interested parties. Tax write-offs, advertising space, and property management firms can all make you money without breaking your back, or the bank.

All that is left to ask is, "What else can I rent out?"