The obvious starting point is the financial return of rents, but the long-term appreciation of a building. Both aspects of a building can provide great return and should be factored in when weighing the risk versus reward of a property.

Property values have doubled or even tripled in the last 20 years within the Chicago area, and historically speaking, real estate tends to appreciate over the long term.

Every year the income property is owned, 1/27.5 of the property’s value can be written off against the income generated. So, for a multi-unit bought at $500,000, the purchase price would be divided by 27.5 to get $18,182 in depreciation. This is the amount you could write off the cash flow you earned for the year from that property. Consult a CPA for the details of this tax benefit, as this is meant to be a basic understanding that there is a substantial benefit of using depreciation as a tax deduction.

Several deductions can be made on your property, including:

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• Interest accumulating on the loan

• Repairs and maintenance

• Property taxes

• Utilities (paid by you for tenants’ use)

• Homeowner’s and mortgage insurance premiums

• Travel expenses

• Professional services, including a property management company, accountants, and attorneys.

• You may also be able to deduct part of your rental income from your taxes      (if collecting rent through an LLC)