| Real estate investing has many advantages. Tax | | | | 5. Property Management Fees. Many investors |
| savings can be one of the best advantages. It is | | | | choose to self manage their properties, they spend the |
| actually possible to make a profit on your real estate | | | | time and energy to manage the property and collect |
| holdings but take a loss on paper. Here are 7 different | | | | rents. Those investors who choose to take a more |
| ways to save money on your real estate investments. | | | | passive role can hire professional property managers |
| 1. Settlement Costs. When you purchase real estate | | | | to take care of their investments. These managers |
| there can be quite a few upfront settlement costs. | | | | generally charge 5-12% of gross rents to manage |
| These costs can include loan fees (origination fees, | | | | your property. |
| mortgage costs, title charges, appraisals, insurance | | | | 6. Depreciation. This is one of my favorite real estate |
| premiums), title and escrow costs, as well as pre-paid | | | | deductions. Despite being one of the best assets to |
| taxes and items such as home warranties. | | | | invest in, there is a tax "loophole" called depreciation. |
| 2. Interest. Another major benefit to investing in | | | | According to the IRS, when an investor purchases an |
| property is leverage. You can borrow money and | | | | investment property, the buildings on the property |
| make interest payments to the lender. Most loans are | | | | depreciate in value. They believe that within a certain |
| long term, 15, 20, or 30 years. The majority of interest | | | | time frame (27.5 years for residential real estate, 35 |
| is paid at the beginning of the term of the loan. Those | | | | years for commercial real estate) the buildings will |
| interest payments are tax deductible. | | | | become worthless. So each year a portion of that |
| 3. Taxes and Insurance. Each property will have some | | | | depreciation can be deducted from your yearly profits. |
| unavoidable expenses. Every investor will have to pay | | | | 7. Legal and Accounting. Smart investors hire |
| real estate property taxes. Most smart investors | | | | professionals to help protect their assets. Any costs |
| choose to purchase insurance for their investments. | | | | you may incur with legal or accounting can also be |
| Highly leveraged mortgages will often require private | | | | deductible. |
| mortgage insurance, this is also tax deductible. | | | | Property investing offers many advantages over other |
| 4. Maintenance and Repairs. It may be necessary for | | | | investments. Purchasing assets that produce passive |
| you to re-invest capital into your properties. These | | | | income is the best way to become financially free. |
| costs will help maintain as well as improve your | | | | Taking advantage of the tax benefits is not only smart |
| property. You can deduct these costs. | | | | but will increase your bottom line. |