A good sized room with small pocket office is much more desirable than two cramped rooms.

Tenants are stable long term residents, and property is located in a desirable school district.

Most people who want to start in wholesaling think that it's a great way to earn income to become an investor.

Here’s a quick breakdown of our financials:Operational expenses (excluding mortgage): $33k (Jan-Dec 2024)Annual mortgage payments: $58kTotal needed to break even: $91k+Income earned this year: $80kClearly, we need to bridge a gap of about $11k just to cover our expenses, and I’m exploring options to increase profitability.

Part of those cuts included the short-term rental tax loophole, a strategy real estate investors can use to help mitigate their rental income tax by offsetting earned income with real estate losses, and could be renewed or extended.  

I am interested in utilizing space again for group meetings, workshops, and for clients who may still desire private space.  

. $130k your earnings are the long run are far different. 

This creates two loan payments ($100,000 of equity and $300,000 on the new mortgage).Key NumbersHome Equity Loan Interest Rate: 6%Mortgage Interest Rate: 7%Rental Income: $3,000 per monthExpenses (management, taxes, insurance, maintenance): $800 per monthIncome and ExpensesMonthly Rental Income: $3,000Monthly Expenses: $800Monthly Mortgage Payment: $2,000ExplanationThe investor earns $3,000 in rent each month.They pay $2,000 on the investment property mortgage and $800 on other expenses.This leaves $200 profit each month or $2,400 per year.However, you have to pay $6,000 interest on the equity borrowed.This leaves you with an annual loss of $3,600.While the rental property generates positive monthly income, the interest cost of borrowing the initial $100,000 results in an overall loss.

To go a bit further into what Dmitriy mentioned, since your IRA earns the income the tax treatment is specific to your IRA.

I started investing a little over a year ago and have earned almost $160k gross so far with 3 Padsplits.Next year if I do nothing, the 3 current properties should earn about $200k gross.