I totally get why you should reinvest profits from rental units. But what do you do with those profits? Say I am cash flowing $30K/year. What should I do with that? Save up for a down payment on another unit(s)? Pay off principal? Something fancier?

buy more units to increase cash flow, do needed repairs and save for a rainy day

Dude, 30K a year will be an AWESOME cash flow. I will continue leveraging myself to a point where I feel most comfortable. If I continue to cash flow from those new acquisitions then I will start placing them into tax shelters like Roth IRAs, 529 plans (If you have children) and municipal bonds. Or be doing 1031 exchanges and go from 4-5 unit properties to 10-15 units, then 15-20 units, then 20-30 units, then 30-40  and so on until I reach 100 or more units. There is a variety of ways to invest your money, real estate by far to me is the safest bet and Oh the tax write offs should be more than a good motivation by itself.  

What strategy did you go with?

I am looking at ways to reinvest at the moment and would like to minimize tax hit before years end 

@Erin Hauser

Whatever you do make sure you put aside the tax liability and not reinvest it all.

@Chris M.

The only way to reduce your "tax hit" is to either make less money or somehow generate deductions.  Since this is a real estate investment forum, buying property isn't a deductible event by itself.  So you need to actually spend it or find some non-cash deductions.  Good luck.