Tax Benefits of Real Estate

Tax Benefits of Real Estate

Owning real estate is far more than just having a property that spits out monthly profits, it is rather the tax advantages to owning property that make it unique to almost any other investment option out there. 

Owning real estate is far more than just having a property that spits out monthly profits, it is rather the tax advantages to owning property that make it unique to almost any other investment option out there. 

The way cash can be generated through property should not solely focus on the monthly rental income, because profit can be calculated in so many other ways. An investor can make money each month through rent, but on paper be operating at a loss – canceling out any tax obligation of owning said property.

Mortgage Interest Write Off

One of the more favored tax benefits from real estate investors. Imagine having a $500,000 mortgage and a property and you pay 4% interest per year, which amounts to paying $20,000 in annual interest. 

You can take that interest and write it against either your own taxable income on a primary residence or against any rental income you receive. If you apply this to a principal residence capped at the first $750,00 of a mortgage or if you have a rental property it makes no difference if you have a $200,000 mortgage or $5,000,000 mortgage – because that’s an expense against your rental income.

How to Save

By using the $500,000 example, let’s say you are grossing $50,000 per year in rent. Then subtract $20,000 interest paid and the revised gross amount on that property would now be $30,000 per year.

This effectively lowers the mortgage interest amount that you would usually be taxed at.

So let’s say on a primary residence you’re paying $20,000 per year in mortgage interest and you’re in a 25% tax bracket. That means you can deduct that $20k off of your income and essentially save around $5,000 in taxes if you’re in a 25% tax bracket.

This means effectively what you’re paying instead of 4% is around 3% per year because it’s classed as a write-off. This is a huge advantage of owning real estate and then leveraging your money on top.

Smart Investing

Leveraging your money in real estate is one of the unique reasons why real estate is such a solid investment long term. This way of leveraging is much different to margin and stock trading with high risks and exposure. It almost always makes sense to leverage money in real estate if you can get a long-term loan at a low-interest rate.

Start planning a better future by saving on taxes and building a real estate portfolio.

Please reach out to us at Startup Tandem with any questions you may have. We look forward to hearing from you.

Cashing in on crisis and utilizing space

Cashing in on crisis and utilizing space

Cashing In On Crisis And Utilizing Space

Whether it be commercial, residential or industrial, there’s always money to be made in real estate investing.

If we take a snapshot look at Seattle, the average house price in the year 2000 was $176,300. Millennium speculators will now be sitting pretty on any investment worth more than 5 times that much, with the average price setting back prospective buyers $915,340 – or a cool million when considering agent fees, taxes, Uhauls etcetera.

Getting A Solid ROI On An Investment

So how does a Seattleite seek a solid ROI on a million bucks? Attracting travelers to rent out your property is a sure-fire way of generating a passive income and there is no more popular platform than vacation rental giant, Airbnb. The site provides a simple, clean and concise way of linking your property with anyone globally and at a time and date of your choosing. 

real estate outlook 2022

Airbnb Listings Have Been Super Profitable In Recent Years

Last year, Airbnb listings generated a massive $48.9 billion in gross revenue for the company and its hosts, an increase of 76.6% from 2020 when gross revenue sat at 27.7% billion. During the global pandemic coupled with travel restrictions, consumer needs changed, catapulting the company to dizzying new heights.

With travel costs now further increasing due to inflation and rising fuel costs, many Americans are opting for cheaper staycation trips and if you are lucky enough to live in a location with beautiful surroundings such as Seattle, you can expect to make a pretty penny in peak seasons and weekends. Renters can also enjoy the flexibility of being a host or renting out the full property. So if you are a single homeowner, clear out the clutter in that spare bed and create a cozy space for weary travelers to rest. There is no obligation to feed your guests, but the smell of freshly baked cookies wafting through your home will be sure to add an extra point to your feedback score.

PRO TIP: Read this blog post on the Startup Tandem blog about finding an accountant in Santa Monica CA! It will help you decide on whether or not your startup needs a bookkeeper!

What Are You Waiting For?

So what are you waiting for? Get your design hat on and make profitable use of spare space and start your side gig today, all from home.

With interest rates being so volatile, it will be interesting to see what happens in the real estate market for the second half of 2022.

Business tip: On a rental using Airbnb, short term rentals can give you two or three times that amount your monthly mortgage is. Variable factors that can affect are depending on the location and the season. As a tax benefit, if you rent your home for 14 days out of the month you don’t have to pay state or federal taxes.

PRO TIP: Contact Startup Tandem if you want help with anything financial! We offer a range of service packages and can help with everything from bookkeeping to Fractional CFOs.

How To Build A Startup Financial Model

How To Build A Startup Financial Model

How to Build A Startup Financial Model 

If you are wondering how to build a startup financial model, then you are in the right place. We are going to discuss the top considerations when you are wanting to build a model. If you are interested in building a startup financial model, stay tuned!

What Is A Financial Model?

You’re wondering how to build a startup financial model. But what is a financial model, anyways? Financial modeling is the process of mathematically creating a model of a real life situation.  This is done in order to determine a valuation for a business or to compare businesses to competitors. It’s an important process that has many benefits.

Simple Startup 

This is going to be a model that is created and generally provided for free. This is essentially a template that will allow those who know how to use excel, to do it on their own. Keep in mind that there are a lot of companies that offer this, and some are not the best. 

Also keep in mind that not all small businesses or businesses can hire someone like a company to build a model for them. It does not make sense because they do not have the money, or they are just starting out. 

The model that is available for many people is going to be one that is simplified. It will be one that will be simpler than ones that a company would use for their clients. 

There will be three tabs to this document that are going to be especially important for your business or company. The first tab is going to be a summary tab. This is where you will find your output. You will find that you have your income statements as well. Many people, such as CEO’s, will use this for knowing how much they have spent on a business startup

The next tab is a model tab. This is where you will have all the magic occur. This is where you can put expenses, head counts, projections, or other marketing items. This will allow you to balance your cash as well. 

There is a tab that is an instruction model. This tab will allow you to be able to navigate through the model to ensure that all the numbers you are getting are accurate so that you do not have to worry.

PRO TIP: Read this article and learn if you should quit your job and start a business.  We know you’re going to love it!what type of business should I start?

what type of business to start


One of the most important things to do is build a budget. Keep in mind that you need to determine how much you can spend. The headcount or your employees is going to be where the most expenses go to. You should always make sure to hire the hardest-working employees.

Determine how much cash that you think you will be spending in the years to come. Do not ask people how you should spend the money, instead, make sure that you know what you want to do and budget accordingly. Be strict with your budget and stick to it. 

Always be aware of things that could go wrong. Have money put aside for this reason. Make sure that you are investing in your company and determining how much money you will need. Building a company does not have to cost a million dollars. Let us look at how to start your model and where to start it.

Starting Your Model 

You have come up with an idea and you have hired a few people to help you. At this point you may even have a few clients. Now it is time to make a model for your financial figures. You want to determine if you can make more money or how long you can keep your business going as it stands right now. We are going to take a look at the few things that you should keep into consideration. 

  1. You are going to want to determine if the market is big or small. You will determine at this time if you are making enough money to have a good business or not. Essentially you are determining if your business is worth taking off. You will determine here if you continue or not. 
  2. If your business is booming, you need to determine how many people you will need to keep up with business. This is where you determine pay, headcount, and what you need. You need to work with your budget carefully. 
  3. Lastly, you need to determine and be fully knowledgeable about the economics of your unit. You need to know how much you are making off a sale after all the expenses put into it. 

Pro Tip: A lot of businesses and companies will lose out on business on their first few sales. This is common and you should not worry.  Instead, be sure to partner with a great company like Startup Tandem to ensure your optimizing sales and cash flow.  Startup Tandem offers different service packages for you to choose from and are very well known in the startup community.

Optimizing Your Startup

There are a few things that you can do to ensure that your start-up is successful. Many people decide to spend more money at first and end up finding challenges in the beginning. The key it to envision everything long-term. This will help you decide what you need and how you can achieve what you want to achieve. 

You need to be making money and have money coming in. This means that you need to be selling items and keeping track of your expenses. There are a few things that people will spend a lot on during the first stages of their business and that includes 

  • Rent 
  • Utilities
  • Payroll
  • Contractors 

These are all expenses that need to be taken into consideration. If you do not keep all these items into consideration, your business will likely fail. Taking the time to determine what you want to pay, how much help you need, and getting all bills figured out will help you keep your business up and running.

CONCLUSION: How To Build A Startup Financial Model

Taking the time to determine how you can build a financial setup for your business is important. We have gone over a few tips and how you can access a spreadsheet in Excel to help you understand your financials. Keep in mind that everything you have read in the article is informational. This information will help you determine what you need to cut costs on and what you can keep. Taking the time to know what to cut and what to keep is important.

Partnering with the right company to manage financials is key to having a thriving business.  Startup Tandem is a great company that can help you navigate the tricky financial waters of being an early stage startup. Startup Tandem has two locations and services businesses all over the continental United States. Contact them today and start building upon your startup with the right financial foundation.

We hope that it has helped you better understand how to build a startup financial model.

Financial Management Tips For Early-Stage Startups

Financial Management Tips For Early-Stage Startups

10 Financial Management Tips For Early-Stage Startups

You’ve come here to see our top 10 Financial Management tips for early-stage startups.  Congrats- this marks the beginning of a rewarding journey that you’ve taken the initiative to step out on.  Building a business from the ground up can be daunting at first, as I’m sure you’re painfully aware.  These tips are guaranteed to make this process a bit easier to digest, and hopefully set you up to springboard gracefully into the next phase of your business adventure.

Important Financial Management Tips Every Startup Needs

Open A Business Bank Account

The first step to making sure your finances are in order is to separate personal and business expenses.  This helps you to keep track of expenditures that will become important once tax season rolls in.  If not done, finances become tricky quicker than you might think.  

Opening a business bank account might seem like an obvious thing to do to some, but it’s not necessarily the first thing that comes to mind to others. This is a sure-fire way to begin intelligently tracking your finances.

Start A Simple Accounting System

You’re also going to want to make it easy to track everything that your business spends money on.  You can hire a bookkeeping and accounting service or do it on your own. Companies such as Startup Tandem offer bookkeeping and accounting management, in addition to a variety of other packages.  If you do it on your own, setting up an accounting system like quickbooks is the easiest way to do so.  Doing this at the beginning will make things much simpler as time goes on.  

Having to roll over an existing system into a newer, more efficient one can be a hassle.  Especially when you have 400 other things that need your attention.  And if this all seems to be too much, it may be worth your effort to hire an accountant.

Understand and Control Cash Flow

The most important thing a business can do is understand where its money is coming from, and where it’s going. Setting up an Accounts Payable system is one way to maximize control of your expenditures on basic payments like bills.  

On the flip side, establishing an Accounts Receivable process will help you to understand the money that’s coming in.  Consult with a professional to see what systems are right for you. 

Build Strong Relationships

Successful businesses are built around strong relationships.  There is no successful venture out there that relies on work alone.  Taking the time to talk and develop a rapport with clients, suppliers, your accountant, and anyone else involved in the process will only help to strengthen your business.  

You would be surprised how far being kind and open will get you in life.  Who knows what doors might open?  The accountant you befriended might lead you to another person who’s great with money. They could be your future CFO, and you would never have known it otherwise.

Create a Budget

The next step would be to set yourself a realistic amount for spending.  Creating a goal that you can work toward for the year will help you stay on track and incentivize smart decisions.  

If you check in throughout the year, your initial budget projection will tell you if you are over or under-performing in relation to what you decided.  Ironing out problems before they grow will only serve to make life easier.  

It can be tough to stick to budget, especially when just beginning.  That’s the phase where you have basically no income, and only money to burn.  That’s why budgeting is so important.  By understanding the amount you have to spend, you can set up an efficient plan that gives you a sense of security in your decisions.

Develop Financial Projections

Using your newly created budget, you can now craft a financial projection for the future.  Adding in sales projections, you will be able to see on paper how much money you might be making.  That is, if everything goes according to plan.  

Like the weather, business can change on a dime so it is important to remember that a projection is not an exact picture of what is to come.  However, it can be a valuable tool in understanding the direction you are headed in.  With a properly constructed financial projection, you could see your profits rising faster than ever.  Companies such as Startup Tandem offer a variety of financial services that can help your business grow.  Hiring a company such as Startup Tandem is a great way to get things moving in a positive way for your startup!

Don’t Overspend

We all know the phrase, “You have to spend money to make money”.  While this is most certainly true, it does not mean that you have to throw all of your money out the window while hoping that it all comes back someday.  

When choosing how much to spend, make sure you are covering the essentials and not much else.  Maybe don’t buy the giant office you think you’ll “grow into over time”.  Cross that bridge when you come to it, and save some money.  On hiring teammates, only fill the positions you know you need.  Growth in sales will be your signal to hire more.  

Take Care of your Employees

Like I stated earlier, no business goes far without people to push it forward.  Making sure that your employees are managed correctly will just take future problems out of the picture.  For instance, make sure that payroll is consistent.  

Even if you don’t have much cash to throw them in the beginning, a steady stream of something is better than the alternative.  And if you have the means, make sure things like stock options are set up so that employees too can share in the growth of wealth.  

Learn When to Outsource Work

As the leader of a booming business, you may find it hard to keep up with all of the tasks required of you as time goes on.  Time is money, so sometimes spending money to save time might be the best option.  Hiring an accountant is one example.  This professional money handler will only serve to save you time, and ensure that you can stay on track with everything else you need to take care of.  

Maybe, you don’t need to be the one giving all the orders all the time, or putting together the employee schedule.  What if you hired a manager to do that work instead?  Is that something you realistically need?  Taking the time to think this out fully will benefit you over time.

Understand your Taxes

It’s the last thing anyone wants to think about, but it can be a real pain if not managed properly.  Knowing how and what to file when it comes to your business is very important.  

If there’s ever any doubt about what’s required, heed my advice from the previous tip: Hire a professional.  Spending a bit more to save on a potential mistake will earn you more in the long run. Learn about how your financial advisor will help you and what they can do for your startup.  Companies such as Startup Tandem are great for early stage startups and work with businesses in many different areas of financial management, accounting, and budgeting.

Conclusion: 10 Financial Tips For Startups

Following these tips, it should be easier than ever to jump start your business.  With a healthy handle on the financial side of things, you can spend more time focusing on what you need to grow your business into a healthy venture.  Getting started managing your business is no small feat.  But with the right knowledge, good people, and these 10 Financial Management Tips For Early-Stage Startups, you should have no trouble at all.

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