If you haven't yet completed your 2011 tax returns, the time to start thinking about doing so is now. Even if you know your market and are confident in your success, if you are a cash flow real estate investor, then your tax return is likely to be much more complicated than the basic 1040 EZ form, but it isn't too difficult to do things right. Here are a few tips to get you started:

Cash Flow Real Estate Investor Tax Tips:

1. Keep all receipts.

The U.S. Government Accountability Office (GAO) explains the most common problem with the tax returns of those who buy investment property: lack of documentation. According to one article, "individuals (or couples filing joint returns) tend to misreport their net income from rental real estate activities more frequently than other types of income." The most common issue is cash flow real estate investors who don't keep excellent track of their rental income and their property expenses. If you want to be certain to avoid these problems, keep all of your receipts together in a safe place.

In today's economy, many people feel uncertain about how to invest their money. If they have a little extra money, they hate to leave it sitting around in a low-yield savings account, but they feel wary of the volatility of the stock market and many other investment options. If you are one of these investors, you may wish to consider real estate investment and rental properties for sale as a portion of your portfolio. According to a recent Christian Science Monitor article, "after five years of weak property markets, real estate is starting to look a bit more enticing for investors."

If you live in Memphis of follow the headlines of real estate news, then you may be as surprised as I am to find every news story written about the real estate market coming from the view point of doom and gloom.  Sales are down, prices are down, values are down, buyers are down, my dog is down, my girlfriend left me, my car broke down, my wallet is empty...sorry, I seemed to have gotten caught up in my 'Country Music' moment!

Three research or news organizations have ranked Memphis real estate at or near the top of major real estate news stories over the past few months with a brand new research paper being released this past week showing Memphis as the #2 market in the country for affordability.  The Council for Community and Economic Research (C2ER) gathers data from 309 urban areas to rank them in their Cost of Living Index (COLI) and Memphis has always ranked as one of the most affordable cities to live in as well as raise a family and invest.

Planning for Success Takes Preparation and Time

Real Estate investors should treat their investment properties just like a business and with every business there needs to be time set aside for planning.  The entire staff of MemphisInvest.com came together last week to present our plans for 2012 and the owners presented our plan to the staff of new programs, new cities, new hires, new promotions and the exact steps we were going to implement to grow over 60% for the second year in a row!  Spending five days together was fantastic for the entire team even though it really shook up our normal routines.  Planning for success and sharing as well as involving the entire team was by far the best thing we could have done to start 2012 with a bang!

Heading into a new year is always a great time to take stock of where you are and start preparing for any changes or adjustments you need to make.  It's also a great time to educate yourself and real estate investors are not immune to continuing education!