If you use an accrual method, you report your income when you earn it, therefore you can take a deduction on your tax return.You do not report the debtor to the IRS on form 1099.

Time to let the tenant pay down the debt, time for appreciation to kick in, time to let the tax benefits reduce what goes out in taxes, time to season the title before refinancing.The slow route is actually pretty quick once you get rolling.John Corey

The market tends to set the rents you can expect so the way to get to the 2% figure it to reduce the purchase price.Does that help.John Corey

Check the recent major oil company's earnings.

Even if they pay as agreed you are only earning the interest.

It would lower his taxable income and reduce his taxes owed, so he gets a benefit there.In the end, if Mike wanted to leave, then Joe does not have to quit-claim or sell the property to another LLC.

Here's a few others, if you're trying to detail these out.6) Insurance7) Make ready costs when one tenant moves out before another moves in.8 ) Discounts given to lure in tenants (aka "economic vacancy")9) Advertising10) Legal fees11) Court costs12) Property management (which you can earn for yourself, if you do this yourself.)13) Major repairs (roof, furnace, plumbing)The problem with many of these is that they are sporadic.

And if you pay cash, you're earning $1100/month, or $13,200 which gives a 3.8% return.

That greatly reduces your holding costs over hard money.

If you don't want to do the management yourself, then your property manager should do it for you, and greatly reduce your effort.