In my experience, there are six specific steps you should take to set up the groundwork of your real estate business. When you operate as a business, you reap the tax benefits and overall income benefits of owning rental real estate!
- Know what your goals are! If you don’t have a clear goal, you have no direction. If you haven’t yet set a goal, download our Freedom Cheat Sheet. It’s the perfect roadmap to financial freedom.
- Choose a legal entity. We use LLCs per the counsel of our accountants. Be sure to seek the advice of your own team. Operating as a business allows you to receive incredible tax benefits! Not to mention, you can offset your rental income by writing off business expenses.
- Implement the Profit First System. This system has overhauled my entire business. Profit First is a simple and effective formula designed to help businesses stake claim on their income by prioritizing profit above sales and expenses. You can hear my interview with Profit First author Mike Michalowicz here, and how Natali and I use Profit First in our personal business here.
- Organize yourself early in the game. This is something I wish I had done. I had a few properties under my belt before I decided to take organization seriously. The sooner you start organizing, the easier it will be. Check out episode 100 of Investing in Real Estate to hear about our real estate organization system.
- Never stop purchasing real estate investments! Why? You pay more at tax time on your rental income if you aren’t offsetting it by purchasing more real estate! Here’s more about the “buy until you die” strategy.
- Set a vision goal. Think about your future in real estate, and what you want it to look like. Setting goals can help you hire the right team and outsource your business. Doing so makes your experience passive!