What To Expect By Investing $50,000 A Year In Real Estate Syndications

Fifty thousand dollars is a LOT of money. Nevermind fifty thousand dollars per year. I get it, but hear me out. Once you see the potential results, I strongly believe you might be more willing to put forth the effort required to get there.


I’ve seen regular people with regular salaries (even teachers!) do this and change their trajectories forever. So, as with most things in life, it’s about resourcefulness, not resources. You can do anything you put your mind to, and seeing the progression of investing in syndications year after year might help you put your mind to it.


Here’s what could happen when you invest $50,000 a year into real estate syndications:


Year 1


While the first year may not be that exciting, it’s definitely an accomplishment to invest your first $50,000. It’s also pretty cool to pick out that first property. Let’s pretend you select a 350-unit value-add multi-family unit in Dallas, Texas.


Soon afterward, you begin to receive $333 per month in distribution checks, which is about 8%, an average for our standard deals.


A nice, modest start at this point.


Year 2


In the early spring, you receive your first Schedule K-1, which is the tax document that shows your income and losses from your first investment. We’ll call that Dallas apartment complex from year 1 property A.


Through the magic of our tax system, accelerated depreciation, and cost segregation, your K-1 for property A shows hefty paper losses, even though you enjoyed a nice $300 a month 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 syndication B, which bumps your monthly cash flow from real estate syndication investments to $666 ($333 from each property, A and B).


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 month, totaling about $1000. You’ve boosted your yearly income at this point by $12,000 annually.


Year 4


Partially through the year, Real Estate Syndication A sends word that renovations are complete on the property, and the sponsors are seeking to sell. Because this property is in a hot submarket in a growing metro area, the listing gets a lot of attention and is soon purchased.


Your original $50,000 investment from Real Estate Syndication A, plus an additional $25,000 in profits is received. Wohoo!


You play it smart and invest all your returns from Real Estate Syndication A ($75,000), plus the $50,000 you’ve saved in year 4, into Real Estate Syndication D.


You now have a total of $225,000 invested, across three syndications, each with a preferred return of 8%. This should yield about $18,000 annually in cash flow distributions ($1,500 per month).


Year 5


By this time, Real Estate Syndication B (your investment from year 2) 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 E, bringing your total invested capital to $300,000.


Now your monthly cash flow checks start really looking good, totaling about $2,000 (equivalent to some people’s net monthly salary).


Years 6 - 7


Now that you’re getting the hang of it, let’s start moving a little more quickly.


In years 6 and 7, Real Estate Syndications C and D are sold, respectively. Each year, you invest additional capital of $50,000 to the returns you receive from those exited deals. In each year 6 & 7, you invest $125,000 into Real Estate Syndication 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 per year.


You’re now nearing a decent career path’s GROSS salary value. It’s like you’ve got an invisible earner in your home generating income but not adding to any of your expenses. And because of all the depreciation benefits, you’re continuing to show paper losses, so all this cash flow isn’t being taxed.


Years 8 - 10