3) Average income was up 4.5% in 2024.

., Purchase Price: $475,000 ($197.9/sq. ft.).Estimated Market Value: $402,000 ($168/sq. ft.).Financing Terms: 2% interest rate, with a 9-year balloon.Unit B Income: $2,049/month (Section 8 tenant through November 2025).Unit A Income Potential: Similar rent or higher; Section 8 cap for the area is $3,234/month.Monthly Loan Payment (P+I): $1,386.Cash Flow Breakdown (if both units are rented at $2,049/month):Gross Rent: $4,098/month.Vacancy (10%): $410/month.Operating Expenses (37.3%): $1,376/month.Net Cash Flow: $943/month.Key QuestionsWould you be comfortable paying an 18% premium for financing at 2%, especially in a market where current mortgage rates are closer to 7%?

Well, three top reasons come to mind:It will allow you to deduct their earnings on your own tax return.It is required by law for any person to whom you paid at least $600 in 2023, total.

Since comps are limited, analyze similar nearby locations to estimate demand.When pitching investors, focus on a clear business case: expected income, expenses, occupancy, and ROI.

If you can’t do a 1031 to a non-income tax state, figure out a year when you will have lower income and tax rates ar as low as possible.

What's left after subtracting the expenses is your Net Income. 

For example we pay our own income taxes, broker splits and all of our other expenses directly out of what we make including required E&O insurance, MLS dues, licensing fees, Board of Realtor dues, continuing education costs, marketing, advertising, office fees/rent, transaction coordinator/ assistant fees, health insurance, car insurance and maintenance, gas, tires, software, retirement fund, etc.We are not W2 employees with payroll taxes already taken out of our paychecks, company-paid health insurance and matching retirement account plus a guarantee of at least 40 hours paid work per week, sick pay, paid vacation… none of that.So if you’re thinking you’ll be able to pay an hourly wage typical of a W2 hourly employee like $50-85/hr… that’s definitely not going to work.

So, when Trump changes to no tax on tips I feel inclined to change my rental income structure.50% reduction in rent.Previous 50% made up from a mandatory nontaxable tip. 

I'd be heavily focused on mitigating that future tax liabilty rather than directly supplementing that income.

Lastly, always keep your job and build your employment foundation because that keeps you income relevant and lendable.Hey thanks for your reply!