Consider the Tax Impact of Your Investment Decisions: This includes such issues as:

Classifications of passive, active and portfolio income and losses
Capital gains taxes
Income taxes
Tax Credits
Tax deductions
Tax Deferments

CMPS professionals help you determine your before and after-tax rate of return on real estate investments. CMPS professionals also work with your CPA in determining the best tax strategies for your situation.

Evaluate and Reduce Investment Risk - risk is the possibility of losing either the principal invested and/or the potential income from the investment. CMPS professionals help you reduce investment risk in several ways.

Risk Analysis - This is the process of evaluating alternative investments based on their level of risk. Risk analysis can be done using industry-accepted rates of return and allowances for risk, or it can be done on an individual basis. Each investor has a different tolerance for risk, depending on their tax status, their capacity for leverage, their financial situation, etc. For example, if you can earn 15% per year on an investment with a tenant who signs a five year lease, versus 20% per year on an investment with a tenant who signs a two year lease, is it worth the extra risk of not having a tenant after two years for you to accept the 20% rate of return versus the 15% rate of return.

Shifting risk - CMPS professionals help you structure your leases and rent agreements to shift the exposure of increasing costs to the tenants. This can include shifting the risk of rising interest rates, operating expenses or tax increases.

Due diligence prior to purchasing an investment property - Due diligence is the process of examining a property and related documents such as appraisals, inspections, environ mental surveys and title work in order to reduce risk. By helping you apply

a consistent standard of inspection and investigation, CMPS professionals help you determine whether to purchase a property, or move on to the next deal. You should always be prepared to walk away from an investment if it does not meet your predetermined standards and criteria.

Investing with the right entity - CMPS professionals work with your real estate attorney to help you structure different 'entities' such as LLCs, Partnerships and Corporations to limit losses to your initial capital contribution into the investment.

Diversification - Investing in multiple investment properties with varying risk levels reduces the chance that all the investments will be affected by the same turn of events. By keeping all your real estate equity in your primary residence, you are not diversifying your real estate portfolio. On the other hand, if you spread your real estate equity and investment dollars over multiple properties, you would be hedging your real estate risk and diversifying your portfolio. On the same token, you need to be careful not to spread yourself too thin and not to invest without a business plan. If you end up with 10 mortgage payments on 10 vacant properties with no tenants, you would end up in a very precarious financial situation. CMPS professionals help you diversify your investment portfolio to include real estate while also diversifying your real estate investment portfolio itself.