Cash Flow and Paying Yourself

[Jake Chenoweth]

I’m not currently invested in real estate but I plan to dive in (I’ve been saying this for a few years now but I’m not really in a good place for investments especially what I want to invest in).

But I guess I might be a little confused on how “cash flow” works and how you use that money.

I guess I’ve always thought that you collect rent and basically just put it in your pocket (and obviously report that income you’ve made on your taxes at the end of the year). However, I know you need to set some aside for your expenses i.e taxes, mortgage, repairs etc.

But I've been thinking that if you create an LLC and put your properties in that business name you are now able to write off business expenses and are basically "living" of the business. You don't technically pay yourself, you just make "business purchases."

If anyone could please advise on this I would greatly appreciate it! I don’t wanna throw myself into something that I don’t have a good general idea on.

Thanks in advance!