What Happens When You Invest $50,000 Each Year in a Real Estate Syndication?

Fifty thousand dollars is a whole LOT of money, not to mention investing fifty thousand dollars each year into passive real estate investments. I get it. But let me show you how passive investing in commercial real estate investment opportunities can have a profound impact on your annual income, your financial goals, and ultimately your net worth. I’m hoping that once you see the astounding returns, you will want to put forth the effort to include this investment strategy into your investment portfolio.

We’ve witnessed everyday people with less than extraordinary salaries use this investment vehicle – a real estate syndicate – as a great way to change the trajectory of their lives and the lives of their families forever.

Let’s see what it might look like for a passive investor to invest in these commercial properties so that you can get an idea of what these real estate deals can possibly produce in terms of yearly cash flow. Every deal is different and these examples are by no means a guarantee as to what your returns will be on any particular investment.

But let’s take a look at some examples:

Year 1

The first year of real estate investing in one of these real estate assets may not knock your socks off, it will be very satisfying that you have expanded your real estate portfolio while your earning passive income without having to do any of the day to day operations. In fact, you won’t have to do any work at all except for some due diligence, in the beginning, to make sure that this is the best investment for your financial goals.

Let’s pretend you have invested in a 400 unit real estate syndication deal in Atlanta, Georgia.

Soon after you have made your initial investment of $50,000 in your first real estate syndication, you begin receiving $333 a month in cash flow distribution checks, which is about an 8% return.

Not a bad start.

Year 2

You then receive your first Schedule K-1 for this particular real estate property. Each of the real estate investors will receive a Schedule K-1, which is the tax document that shows your income and losses from your first investment. We’ll call that Atlanta apartment community from year 1 – Property A.

Through the magic of our federal tax code, accelerated depreciation, and cost segregation, and the enormous tax benefits that these real estate properties afford, your K-1 for property A may show a sizable paper loss, even though you received monthly cash flow distributions of $333 a month since the apartment building was acquired. Paper losses through depreciation can possibly allow you to offset your taxable income for both your wage income and your investment income.

Let’s say that in this same year – Year 2 – that you invest another $50,000 into another commercial real estate syndication, we’ll call – Property B. This now increases your monthly cash flow distributions from these real estate investment properties to $666 a month ($333 from each property – both A and B).

Year 3

Now in this particular year you will receive two K-1 tax documents. You actually might be excited about tax season going forward with the tax savings these investments can possibly create for you.

Thereafter, let’s say you invest an additional $50,000 into another real estate syndication opportunity we’ll call – Property C. Then you can start receiving 3 cash flow distribution checks that total about $1,000.00 each month. Just by investing in these three real estate syndications, you have increased your annual income by $12,000.

Who couldn’t use an extra $12,000 a year without having to work for it?

Year 4

Halfway through the year, you receive one of your monthly updates and learn that all of the renovations have been completed on the apartment complex according to the business plan and the sponsor team is looking to sell the asset. The property is located in a prime submarket and a growing metro area, so the property is purchased quickly.

Now, this gets even more interesting because now you receive your initial investment of $50,000 back plus you receive a portion of the profits at the sale, say an additional $25,000 in returns as your portion of the profits. So now you have $75,000.

If you were to invest the $75K from Property A – your first real estate syndication deal plus the $50,000 from year 4 that you were going to invest into a real estate syndication, now you have a total of $125K to invest and you already have $100K invested (from Year 2 & Year 3) so now you have a total of $225K invested and using the same 8% return could yield about $18,000 a year in cash flow distributions to you – $1,500 a month in passive income!

Year 5

Let’s say the same scenario happens in year 5 with Property B. The apartment building is sold and you receive your initial investment back of $50K plus you receive $25K in your share of the profits for a total of $75K.

You roll that $ 75,000 with this year’s $50,000 that you have earmarked as investment capital and invest that into what we will call – Property E, which brings your total capital invested to $300,000.

Now you should be receiving about $2,000 a month in cash flow distributions.

Years 6 – 7

You get the idea so we’re going to fast forward a bit.

In years 6 and 7 Properties C and D are sold, respectively. Let’s say that you invest your yearly “earmarked” $50,000 investment capital plus your returns of those syndication deals that were sold. Then you invest $125,000 into Properties F & G respectively.

Now, you have a total of $487,500 invested. Every month, you get SIX cash flow distribution checks (for Syndications B-G), totaling $3,250 per month, or about $39,000 yearly income.

Fast Forward to Year 10

Let’s say you have been investing your $50,000 each year for the past 10 years, you have received returns from the six deals that were sold giving you a good amount to reinvest.

Okay, so say you saved $500,000 ($50,000 per year over 10 years). Well, first of all congratulations on being savvy with your money.

At the end of 10 years, you will have over $880,000 invested in multiple commercial real estate syndications and in multiple real estate markets, and in various asset classes, producing $70,500 in tax-advantaged, passive income per year that is diversified. That would be more than the median household income in the US!

So, if you kept investing $50,000 a year for 10 years and parlayed the returns and your initial investment capital into various other real estate syndication investments, that’s what can happen. Pretty sweet right?

Disclaimers

Please know that when we give examples of returns that in no way is it a guarantee. The examples we went over are for educational purposes only.

I should also point out that these examples did not include reinvesting the cash flow distributions, which you could certainly do to accelerate your financial goals even more.

At the end of the day, you likely would not see this scenario exactly as is described because these are just examples and there are many other factors to take into consideration. It’s quite possible that your returns could grow more slowly, and it’s entirely possible that they could grow much quicker than the examples above. That’s the beauty of investing, you can’t predict, but you can project.

Conclusion

These examples were just a demonstration of how patience and diligence together with compounding returns can have a profound impact on your life and can create the opportunity for generational wealth.

And, like you, we look forward to investing in multifamily real estate syndications for the next ten years using this stable investment vehicle to grow our wealth and improve the lives of others.

Note: we are not financial advisors and are not offering financial advice of any kind. Please consult with your advisors before making any investment or financial decisions. 

Ready to Learn More? 

The best way for you to learn more about commercial real estate syndications is to join the PCRP Passive Investor Club.

Through the PCRP Passive Investor Club, you’ll get a priority review of all the deals we offer. We’ll work with you to determine your investing goals and then present you with the best deals to meet those goals. We’ll then guide you every step of the way as you invest in those deals.

So if you’re ready to start investing passively in institutional-grade, commercial real estate in fast-growing, climate-resilient markets in the U.S., join the PCRP Passive Investor Club  – IT’S FREE! – and get started on your path to EARN PASSIVELY and LIVE ABUNDANTLY!

If you would like to know more about what we do and how it may be of value to you, please reach out to us anytime.  We’re always happy to help!