There is an old cliché that is very true when it comes to being successful in real estate; “Knowledge is Power”.
Here is some information that may prove to be very useful to you to increase your personal knowledge base of things related to real estate.
In my book 10 Ways to Invest in Commercial Real Estate, I list the documents vital to review and one of the required documents is tax paperwork.
Tax Documents: Schedule E of the 1040 Personal Income Tax Return, the K-1 of a 1065 from a Partnership Return, and an 8825 from 1120S for a S Corporation Return
Schedule E is part of Form 1040 of an Income Tax Return. It is used to report income and losses from rental property on a personal tax return. Income from trusts, estates, partnerships and S corporations are reported on a K-1 and 8825 and subsequently on the Schedule E of the individual partners and shareholders in the case of the partnership and corporation. An honest seller should be able to provide you with a copy of the Schedule E. It will show you if the property is making or losing money.
The amount of things you can discover is significant, these documents can tell you about, repairs, utilities, local taxes, association dues, and the earning potential of the property. It is very important that you request them and thoroughly review them.
For more useful tips, see the book, 10 Ways to Invest in Commercial Real Estate.
