There is only one thing really worth trashing

A lot of real estate investors talk about the dangers of other investments and tend to trash them every which way.  They'll talk about the volatility of the stock market, the risks of investing in crypto, below average returns in life insurance, etc. 

I think a lot of people make a lot of money in every different type of investing. You just really have to know what you’re doing. There are definitely reasons that I prefer real estate to other investments, and I will cover many of those reasons over the course of these articles. But the reality is, if you were able to become an expert in an area of investing, you could probably make a lot of money in that area. 

So I won’t speak negatively about other types of investments, but I will very openly speak negatively about one specific thing. That’s your W-2 income.  W-2 income is really the only thing worth talking trash about, in my opinion.  

If you have a W-2 as your primary source of income, then you would typically receive that income on a regular basis in the form of a paycheck. As you have noticed, if you receive a paycheck, there are a lot of taxes that come off the top of these.  And there’s no way around that!  If you are an employee of a company, this is how you get paid.  Period.  

This means you are getting taxed in your tax bracket by the IRS and your state, and also getting hit with payroll taxes.  

Generally, payroll taxes can not be reduced or written off.  And though you may get some deductions that lessen your IRS and state tax, you are still paying a lot of taxes as an employee.  

Real Estate investment income is completely different.  First of all, depending on your situation, most likely you would not pay payroll taxes on any of your rental income from real estate investments.  

Secondly, rental income is taxed at lower rates than your W-2 income gets taxed by the IRS and state.  

Additionally, there are ways of receiving rental income - putting the actual cash in your pocket - but getting a tax write off against that income that doesn’t cost you anything.  (Yes, that sounds like cheating.  But I assure you it is 100% exactly what the IRS and your local state government expect you to do.)  It's that magic word called "depreciation" which is a fancy way of saying you are getting a write off on your taxes that you did not have to pay for, because you own real estate.  I will of course go into a much more in depth explanation of this in later reading.

In addition to all that, and possibly the most important point for many of you - there are ways to invest in real estate where the investments actually reduce your tax liability on your W-2 income.  (This one requires a bit of work and certain qualifications, but many of you would have a way to qualify and it is pretty spectacular if you can make it work.)

The point of this article is not to get into an explanation of how this all works. That will be for later articles. The point here is to simply inform you that if you are a W-2 employee, you need to look into the ways that real estate can help you burn down your taxable income - and  eventually replace your W-2 income - with rental income that is taxed differently.