Category: Terms

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Depreciation and Why it Matters

Contrary to popular belief, depreciation does not fully eliminate the need to pay taxes… But it can delay them substantially.

The tax code favors real estate investment because the government, as one of its duties to its citizens, is to provide affordable housing. To do so, the government provides incentives to spur on this type of investment. One of the coolest things about investing in real estate is a little thing called depreciation. This accounting expense can seem almost magical, but it is rooted in the truth that since assets tend to wear out over time, we account for that reduction in value, deducting the cost of an asset over its useful life.

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The Syndication Offering – What to Expect During an Investor Presentation

A syndication offering – that is, a passive investment opportunity – can be a lot of information at once, but it is usually quite structured. Some passive investors see dozens of investor presentations per year, but if you are just starting out, you are probably not that familiar with what a syndication offering entails. As you get more experience with these, you will note that most have some things in common. This carries through from the printed materials to PDFs to webinars. There are key topics that should be discussed by the syndicator, and presentations usually have everything addressed below but likely not in the same order.

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There are Different Classes of Multi-Family Real Estate – What are the ABCs?

When we talk about the ABCs of multi-family real estate, we are really defining the property classes of the assets, or describing the characteristics of a potential real estate investment. The Classes are A, B, and C, and help classify a property based on geographic area, physical condition, and tenant and surrounding demographic characteristics. Each class implies different levels of risk, reward, challenge and value. When reviewing syndication offerings, these are often referred to as class A, class B, class C and even class D.

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7 Smart Hacks For Analyzing Real Estate Investments – Using Data to Verify Profit Potential

They say that analyzing real estate investments is all about location, location, location. But what makes a location a location. With this article, I hope to impress upon you the absolute importance of vetting the neighborhood wherever you might have an opportunity to invest in a multifamily project as a passive investor. The syndicators can do a lot with a property, but not much can be done to the surrounding area. If that area is a relatively bad one, say like what I call a war zone, even the best syndicators will have trouble turning a property around and making it make money for you. Identifying demographic patterns is all about trends that increase the likelihood of success – or doom a project from the start. After all, a multifamily venture is all about maximizing the quantity of units rented yet at the highest rent per unit.

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Start Here

So… You want to invest in real estate but your time is limited and you do not want to have to manage tenants, toilets and trash.

Many of us know that investing in multi-family real estate can be much safer than investing in the volatile stock market. We want to preserve and even grow our wealth, retirement fund or our nest egg.

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The Top 17 Commercial Real Estate Terms That You Need to Know NOW

Learn about these commercial real estate terms: Average Annual Return (AAR), Capitalization (Cap) Rate, Cash-on-Cash Return (CoC), Cost Segregation Study, Depreciation, Due Diligence, Forced Appreciation, Hurdle, Income Statement (T-12), Internal Rate of Return (IRR), Net Operating Income (NOI), Offering Memorandum, Preferred Return, Rent Roll, Schedule K-1, Value-Add Property

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5 Multifamily Investment Opportunity Characteristics

Each multifamily investment in a real estate project deal is unique, so it is sometimes difficult to compare them against each other. One way that you can do this is to compare the different characteristics of risk in order to make an informed decision on which one to invest in. You ultimately want to make sure that the riskier a project might be, that you are getting paid for that risk.

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How Real Estate Crowdfunding is Making it Easier to Passively Invest in Syndications

In a thought… Real estate crowdfunding has democratized investing in areas, such as large real estate projects, that were only available to the wealthy or well connected. You have heard me discuss crowdfunding in other parts of Actively Passive, but I would like to go into depth on the topic, as one of the biggest benefits of using a crowdfunding platform is that you get to leverage the platform’s due diligence resources. There will usually be a small tradeoff or fee for this privilege, but this allows you to be even more passive than before. In other words, the platforms are doing the work, not you.

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Forced Appreciation – How It Works and Why We Like It

Before discussing the topic of forced appreciation, I feel that I need to give you some context. Real property appreciates or depreciates in value due to different market forces on the different types of property. In other words, each type of property has its own set of rules. Where single-family homes rely on comps (external forces) to determine value, commercial real estate is valued by the underlying business (internal forces) or income stream of the property. Withing the broad category of commercial real estate is multifamily property, which is defined as a property having 5 or more rental units (doors).

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