5 Ways You’re Paid Investing in Real Estate Multifamily Syndications

Investing in multifamily real estate syndications, investors are paid in 5 ways. Since real estate in general, is multi-dimensional, that means you get paid in multiple ways simultaneously.

1. Appreciation – Real estate’s historic appreciation rate is 6%.
2. Cash Flow – Rent income minus all the monthly expenses (mortgage, insurance, property taxes, repairs, vacancy, property management, etc.) leaves you with residual income.
3. Loan Pay-Down – Tenants pay the monthly principal portion of the mortgage.
4. Tax Benefit – Mortgage interest deduction plus depreciation typically can be used as a tax write-off against the income generated from the asset.
5. Inflation-Hedge – As inflation eats the value of your pile of savings, it eats into your mortgage debt balance just the same. Considering a 2% inflation bump every year your interest only loan today is worth less tomorrow.

By investing in real estate multifamily syndications, investors help secure wealth preservation to a degree through the hedge against inflation and appreciation. With value add opportunities in multifamily, the appreciation is forced. Think of the it as flipping a house but with a structured and detailed business plan of acquiring an asset that have rents below market value and renovating the units over the course of time. This allows the capture of market rate rent based off the comp comparisons of the market.

How are your investments outside of real estate preserving and growing your investment? Are they paying you in multiple ways like passively investing in multifamily syndications do?

For more information about passive investing in multifamily syndications visit our blog archive. We created the Passive Investors Journal just for working professionals to provide ideas, context and helpful strategies for their hands off investments in real estate.