Total Return for Multifamily Syndication Investment?

[Shafi Noss]

Hi everyone,

I was talking with an investor friend the other day and he asked me a question I didn't have an answer for. He asked "So if I were to invest 100k in a multifamily deal, how much would I make total over a 5 year investment?"

Of course this varies greatly deal to deal. But he was trying to get at the fact that there are a lot of pieces to a syndication: cashflow, tax advantages, value add, loan pay-down, and appreciation over time. What I couldn't quite answer is what do these look like, ballpark, bundled together?

For example:

If he invested 100k for 5 years receiving an 8% preferred return on a value add property at an income of 200k, what would that look like for him? Here's a calculation to give an idea of what I mean:

-40k cash from cashflow
-5.5k tax benefits from depreciation (100k / 27years x 5years x %30 tax bracket)
-100k cash on sale
-10k cash on sale for the 2%(?) appreciation per year
-20k (?) on sale for value add
Total: $185k over 5 years == $37k per year

I know this isn't perfect, maybe its not even a good approximation. Does anyone have a sense of what would be a good estimate from an investors perspective?


Thanks very much,
Shafi