"The Less I Do, the More I Make.” Perhaps you’ve heard this phrase before? Yeah, me too. I’ve always found it intriguing and inspiring. And I’d be willing to bet it’s no long shot that most people’s dream is to actually live it – to experience the reality of working less and earning more. But as attractive as it is, many don’t believe it’s really possible, and tend to view someone making such a claim as “just full of it.” And let’s be honest. At first glance it does, in fact, seem to be an apparent contradiction of logic to claim the ability to earn more by working less. But let’s dig a little deeper.

That Awesome Deduction That You Do Not Have To Pay Cash For; Yet It Generates Cash Flow In Your Pocket?

I am talking about the most powerful deduction for the real estate investor – Depreciation -- which is an annual tax write-off of the cost basis of assets held for rental or business-use, such as real estate. Why this “NO-cash-out; yet cash-IN” phenomena? The first part, “NO cash out” is because the determination of depreciation is based on the entire cost of the property, regardless of how the property is financed. So you can do what is so frequently done, put little or no money down on a property and still take depreciation on the entire cost of the depreciable property. That is, you do not have to spend any cash for valuable depreciation deductions.

The proper entity structuring (forms of ownership) is extremely important for both beginning and veteran real estate investors. The wrong entity (or entities) can cost you thousand dollars in taxes, or in lawsuits! The three principal reasons for astute entity structuring Are: 1. Asset Protection - To protect your personal assets from being attached; 2. Tax Reduction\Tax Savings - You want to legally pay as little as possible; 3. Audit Proofing From IRS your taxes - NO audits =big savings!

If you go to a bank, chances are they will want tons of paperwork, pay stubs, tax returns, etc. It's a lot of hassle. Eats up time. Whereas, when you can move fast with all cash from private lenders, sellers will sell you their homes at a discount. Let

This topic is near and dear to my heart. When I started my RE career, I heard about the necessity of finding private lenders. In fact I even found two. But then I stopped. For four years I PROCRASTINATED. I didn't get it!!! For four years I continued to go to banks and jump through their hoops. I also had used hard money lenders, but found them VERY expensive.

I started my business by using banks, savings, credit cards, lines of credit, creative techniques with sellers (like land contracts or lease/options), and partners. But, once I was self-employed, I was concerned that it was going to be harder to get loans to purchase properties. I had always been unhappy about how long the banks take to get the job done. I had it take 4-1/2 months on a house without a furnace. The bank didn't know if they wanted to make a loan on that kind of house, but that is what my rehab business is all about. Buy 'em ugly, cheap and fix 'em.

There are three major tax-saving benefits of classifying expenditures as repairs rather than capital improvements. One of them is immediate tax savings. For example, the owner of a rental property is in a 31% tax bracket and pays $20,000 as a repair is an immediate deduction which is worth $6,200 in tax savings. But if the $20,000 is capital "punishment" it must be written off over 27-1/2 years = an annual deduction of about $720 year = tax savings of only about $200 in the first year. A difference in immediate tax savings of $6,000! These tax savings could be used as an immediate source of down payment monies for other income-producing real estate.