Alright, let’s talk about the exciting part of investing in apartment syndications—watching your money grow.
I know you’re a numbers guy, so let’s get right into the returns, profit breakdowns, and real-world examples of what you can expect when investing in a syndication.
Spoiler alert: It’s pretty sweet.
How Your Investment Grows in an Apartment Syndication
When you invest in a syndication, your money isn’t just sitting in a bank account collecting pathetic 0.5% interest. It’s working in three major ways:
1. Cash Flow – Getting Paid While You Wait
Think of cash flow as your quarterly “thank you” checks from the rental income.
Tenants pay rent. The syndication covers expenses (mortgage, maintenance, etc.). The rest is split among investors.
Typical cash flow: 6%-8% annual return paid out quarterly.
Example:
Research: Historical apartment cash flow returns range from 6%-10% (CBRE Research).
2. Appreciation – The Big Payday at the End
While you’re collecting cash flow, the syndicator is improving the property—renovating units, upgrading amenities, and increasing rent.
Once the property sells in 5-7 years, you cash out in a big way.
Property value goes up. You get your original investment back. You collect big profits on top.
Research: U.S. multifamily properties appreciate at 4%-6% per year on average (Federal Reserve Data).
Example:
3. Loan Paydown – Building Equity Without Lifting a Finger
Syndications use leverage (bank loans) to buy apartment buildings. The beauty? The tenants pay down that loan for you.
Every month, rental income covers the mortgage. Every month, the loan gets smaller. Your equity in the property grows automatically.
Example:
Research: The average loan paydown adds 2%-4% to annual returns (Freddie Mac).
What Returns Can You Expect?
Most apartment syndications target 15%-20% annual returns, when you add up:
Cash Flow: 6%-8% per year Appreciation + Loan Paydown: 7%-12% per year Total Returns: 15%-20% average annualized return
Research: Historical multifamily returns have averaged 17% per year, outpacing the S&P 500 (NCREIF Index).
Example Syndication Deal – $100K Investment
You double your money in 5-7 years.
Research: Multifamily IRRs (Internal Rate of Return) typically range from 14%-18% (Marcus & Millichap).
How Does This Compare to Other Investments?
Research: The S&P 500 has averaged 10% per year but with 50%+ crashes every decade (Morningstar).
The Best Part? These Returns Are Tax-Advantaged
Unlike stocks (where you pay capital gains and dividend taxes), syndications offer HUGE tax benefits:
Depreciation → Paper losses that offset taxable income 1031 Exchange → Roll gains into another deal, tax-free Refinancing → Get cash-out tax-free
Research: Real estate investors legally pay little to no taxes due to depreciation (IRS.gov).
Final Thoughts – Why Syndications Are One of the Best Investments
If you’re looking for an investment that grows steadily, pays passive income, and builds generational wealth, syndications are hard to beat.
You earn solid cash flow while your investment grows. You benefit from appreciation and debt paydown. You get huge tax advantages along the way. You DON’T have to deal with tenants, toilets, or termites!
So now, let me ask you—would you rather:
A) Keep grinding in the stock market, hoping it doesn’t crash?
B) Put your money into an asset that pays you while it grows?
If option B sounds good… you’re thinking like the wealthiest investors out there.
Sources & References:
CBRE Research – Multifamily Performance Data – https://www.cbre.com/
Federal Reserve – U.S. Housing Price Index Data – https://www.federalreserve.gov/
Freddie Mac – Multifamily Market Trends – https://www.freddiemac.com/
NCREIF – Multifamily Real Estate Returns – https://www.ncreif.org/
Morningstar – S&P 500 Historical Returns – https://www.morningstar.com/
IRS – Depreciation Tax Benefits – https://www.irs.gov/newsroom/tax-reform-brings-changes-to-depreciation
Helping: non-woke senior managers who are busy dads and car enthusiasts, and are frustrated with the stock market or their retirement account performance, to fix their investment headaches through commercial real estate.
Helping: non-woke senior managers
who are busy dads and car enthusiasts,
and are frustrated with the stock market
or their retirement account performance,
to fix their investment headaches
through commercial real estate.
Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. Investors should conduct their own due diligence, not rely on the financial assumptions or estimates displayed on this infographic, and are encouraged to consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any investment opportunity. Investments in private placements involve a high degree of risk and may result in a partial or total loss of your investment. Private placements are generally illiquid investments. Investors should consult with their investment, legal, and tax advisors regarding any private placement investment.
Strafford & Company is a real estate investment and development company, seeking investment opportunities in the commercial sector. | Copyright Strafford & Co, 2024
