You get free money, you pay something with this money, payroll in this case, and THAT is not deductible.

Put yourself on payroll to pay into FICA, then push that salary into a Solo 401k or IRA to defer the income tax component. 

Shocker: You will not be dealing with the most sophisticated sellers at times and there are reasons for why they are distressed.

Payroll should be run, and a W-2 issued the following year.

The payments to loan are from payroll.

@Christopher ChristianFunny, I can relate in some way to your status as I want to go deeper into real estate but I am not sure what is the way there, I currently have a few payed properties but i got them not from too Sophisticated methods but from Appreciation (I STARTED YOUNG).THE BIG MONEY AS You MENTIONED COMES FROM COMMERCIAL AND WHY DONT YOU START WORK WItH A DEVELOPER TO LEARN FROM OTHERS experience, instead of getting more debt.

I think it can be very profitable at scale if you are fairly sophisticated and willing to hustle. 

Others, I'm sure, will have more sophisticated ways which I encourage you to look into.

There are more sophisticated ways to do it, but I focus on building a trust-based team and leveraging Steven Covey's Speed of Trust equation for all our benefits.Good luck with the deal!

@Ami ShahWork with @Brian Eastman this is very sophisticated investment and you need someone who is good and experienced.