You also get an annual deduction for depreciation, which is typically a percentage of the value of the property that you can write off as an expense against revenues.

Manufacturing plants must determine the optimal num-ber of mechanics to have on duty each shift to repair machines that break down. Gasoline stations must decide how many pumps should be opened and how many attendants should be on duty. Tax credits are deducted directly from the tax you owe. Supermarkets must decide how many cash register checkout posi-tions should be opened. Tax credits are available for low-income housing, the rehabilitation of historical buildings, and certain other real estate investments. Even though this particular program is geared towards long term investment goals, if the value of your property has gone up and you decide to sell, the appreciation is your profit. We call this “The property Multiplier Effect.”Īppreciation and Tax advantages. Now just imagine if you used a cash-out refinance on your first property to purchase a second property? You could continue this trend and continue to purchase properties, with cash from your original investments to purchase more income producing properties. It’s an ongoing stream of residual income if your property is purchased and managed properly.

This is the monthly profit you make after all expenses associated with the property.

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