Quote from @Jack Martin:
Hi Sylvia, I may have over emphasised the importance of interest deductions, of course, my purchase was based on cap rate, not write off's; write off's are a nice bonus as there aren't many write offs left. Depreciation and every cost and expense also lowers my taxable income., what criterion do you use to evaluate investments?
Well, Jack, I shouldn't have jumped on you. People talking about spending money primarily to get a deduction is one of my pet peeves.
My primary criterion is, will it make me money. I also evaluate how much work is involved in ownership, and is it an asset I want to own.
Hubby and I are in our early 60s, so we aren't building an empire. Our real estate investments are all in the small town that we call home. We buy distressed properties and make them into nice rental houses. Upfront that is a lot of work, but once it's done and a very well-screened tenant is in place, there is very little to do.
Do I want to own it? In regards to real estate, there are a few questions we ask ourselves. Location, of course, is first. Is it where we want to own? Will it make a good rental? Is it too big/small? Is there too much/little land with it? Is it too old? Will we be happy or ashamed to say we own this?
And will it make us money? How much will we have in it once rehab is done? How much rent can we charge? What is the outlook for appreciation?
All that is, of course, evaluation of potential new investments. There is a very different way we evaluate investments that we already own. But this post is already over-long.