I am a newbie to this board so I must 1st say that I have found the form very helpful. I am a top producing corporate salesman who is looking to diversify and create multiple streams of income, I also just became a real estate agent. I am currently involved with a RE firm that specializes on purchasing foreclosures. I’m about to do my 1st deal which will net me $20,000-$40,000 within 1 year with no $$ down. My question has more to do with taxes than investment advice. Those of you who are successful in creating real-estate income…how do you keep the tax man out of your pocket? I already pay uncle sam too much of my income and I’m not looking forward to paying him any more.
I suggest you consult a professional tax advisor and a certified financial planner. These individuals can look at all your income sources, consider your investment goals, and suggest tax deferral or tax shelter opportunities. The proper entity structure for your business will also be an important consideration.
While I don’t mind paying the IRS the minimum amount I am legally required to pay, I do hope that one day my tax bill will be $1 million. Because if my tax liability is $1 million, my income has got to be $5 million or more. You see, the more you have to pay just means you made a lot more to begin with.
There are a lot of sources out there, including some material by yours truly. Some authors I recommend (other than moi!):
Vern Hoven (available on amazon.com)
Albert Aiello (available here? - expensive but excellent)
Sandy Botkin (available on amazon.com)
Dianne Kennedy (available on amazon.com)
John T Reed (good books, not such a pleasant guy, very skewed opinions)
John Hyre
I hope your endevor is successful. But when you say no money down it brings to mind that you may have to put up your credit. There is an inherent risk to that!
To reduce your tax consequences you either reduce income(401K type programs) or increase deductions. Increasing deductions by highly leveraged properties has the risk of vacancy.
Another aspect is to learn how to create that income into an IRA. With the traditional IRA you defer taxes for as long as you want, With the Roth IRA the gain becomes non-taxable for your future investments and retirement. Why work so hard to create 5 mil in income when you can create much less if you have no taxes to pay on it.