What Happens When You Consistently Invest $50,000 In Real Estate Syndications?
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When you’re building long-term wealth for your family, investing on a regular basis makes all the difference. So whether you have $50,000 to invest or 5 million, the important takeaway is to understand the math and upside with investing in real estate syndications.
Below is an example of what a typical investment might look like investing $50,000 each year. It’s important to note that not every investment will go according to plan (there are risks). But below is a guide for what one might expect when planning their investment strategy.
Year 1
There’s a reason why we see so many repeat investors. It’s because after you’ve invested in your first syndication, you’ve accomplished something incredible. You’ve selected your first property and you’ve taken action. Once you’ve overcome fear and taken that first step, you really start to see the possibilities (and quarterly cash flow).
Assuming a modest start (8% cash-on-cash return), you’ll start to see quarterly distributions of $1,000 from DEAL A.
Year 2
Early in the year, you’ll receive your first Schedule K-1, the tax document that shows your income and losses from your first investment. Through the magic of our tax system, accelerated depreciation, and cost segregation, your K-1 for DEAL A shows hefty paper losses, even though you enjoyed a nice $1,000 quarterly distribution since the deal closed.
Those paper losses allow you to offset both your investment income and your regular income as well.
This same year you invest another $50,000 into DEAL B, which bumps your monthly cash flow from real estate syndication investments to $2,000 each quarter.
Year 3
This year, in the early spring, you receive two K-1 tax forms. This marks a turning point in your finances because from here forward, you’ll begin to look forward to tax season!
Soon you invest another 50K into your third deal, real estate syndication DEAL C. Afterward you begin to receive 3 distribution checks each quarter, totaling about $3000. You’ve boosted your yearly income at this point by $12,000 annually. In addition to cash flow, the equity you have invested is now increasing in value. You are also taking advantage of debt paydown. This all means a large upside when it comes time to sell or refinance.
Year 4
The market is heating up and your sponsor decides it’s a great time to sell DEAL A. You are repaid your original $50,000 investment plus an additional $25,000 in profits. Woohoo!
Around the same time, you decide to invest your $75,000 plus the $50,000 you save in year 4 into DEAL D.
You now have $225,000 invested with a cash-on-cash return of $18,000 annually (or $4,500 quarterly).
Year 5
By this time, DEAL B has completed its renovations and is sold. You receive your original $50,000, plus an additional $25,000 in profits.
Last year’s deals worked beautifully, so you decide again to roll that $75,000 with this year’s $50,000 all into real estate syndication DEAL E, bringing your total invested capital to $300,000.
Now your quarterly cash flow checks start really looking good, totaling about $6,000.
Years 6 - 10
As you remain consistent in your investments, you’ll notice things start to snowball.
Over these 10 years, you’ve saved up $500,000 in cash, which is no small feat. You’re smart and money-savvy, which is why you put that into syndications. So let’s do the final round of math…
By the end of year 10, you have $881,250 invested in multiple real estate syndications across multiple markets and asset classes, producing $70,500 in diversified passive income per year.
And you’re seeing MASSIVE tax benefits every year.
You have the ability to donate often to charities that you love, travel more, spend more time with family, and volunteer in your community.
Most of all, you rest easy with the confidence that you’ve created a lasting legacy for your heirs. Someday, they’ll continue to invest and build their own passive income. You won’t have to worry about the future of your family.
If you were to invest $50,000 a year into real estate syndications, THAT’s what happens.