The Four Biggest Ways Real Estate Pays

I am forever grateful to the great people at BiggerPockets and their community for educating, supporting, and moving our field forward. Many times, when it comes to investing in real estate, we only get questions about how much rent they can get. That is a big part of your calculations when looking for investment properties. (And investors almost always miscalculate expenses. Which is a topic for another post!) But there is so much more. Here are the four biggest ways real estate pays:

• Appreciation: Multifamily properties have especially gone up in value over time, allowing for great upside potential. With our value-add component, we’re able to help force the appreciation and drive NOI from our efforts, not just rely on what’s happening in the market.
• Depreciation is a valuable tool for investors. Starting in July 2021, the IRS allows property depreciation over 27.5 years. With bonus/accelerated depreciation and cost segregation, we can depreciate even more in earlier years and experience the benefits even sooner! This improves your overall return and can provide you with tax-free income.
• Cash Flow: Multifamily real estate offers investors a reliable source of income from assets that you probably wouldn’t attempt to buy on your own. By pooling resources, investors can purchase different properties across multiple asset classes that generate solid returns over time, plus some cash flow now.
• Leverage involves using other people’s money or other people’s time to accomplish your goals. This reduces the amount of personal resources you use and maximizes your returns. When investing in syndications, you’re leveraging both! You’re using ODC’s team of people, systems, and processes AND leveraging your (and others) capital to purchase large multifamily assets. Please be careful with this approach and don’t over-leverage! It is only recommended for more experienced investors who know what they’re doing and want to scale.