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Sample Investment Strategies

Yearly Acquisition Model

Objectives: Wealth Growth

Diversification: Property Class (mix of A & B properties; Location; Investment Type (real estate + stocks)

In this model, the investor acquires one property each year, and holds the portfolio for a total of ten years. As a bonus, the investor moves the cash flow into a retirement savings account. This investor is taking advantage of both real estate and stock market investing.

This investor invests in a mix of A & B properties to diversify returns:

Class A - New properties, luxury finishes, excellent location, most expensive rent, less tenant turnover, less hassle. These properties tend to yield the lower cash flows with very little repairs expense expected, but they appreciate better due to the demand in their location and quality.

Class B - A little older and/or a step down in finishes, a bit more tenant turnover, but landlords can expect higher repair expenses and a bit more headache. Higher cash flow, but less appreciation.

No one can predict exactly how properties will appreciate, future interest rates will be, or how rent prices will increase. But I've used some fairly conservative assumptions to make these calculations. Also, these growth rates are never constant, but here we assume they will be the same every year.

Assumptions - Year Acquistion Model.png
Yearly Acquisition Graph.png

At the end of the ten years, after selling costs and loan payoff, this portfolio would have a net annualized return of 13.1%, and be worth


Additionally, the cash flows reinvested by contributing to the retirement account has increased the investors Net Worth by an additional $87,117.

This is where things start to get really fun.


Suppose this investor is ready to retire. The next step could be to sell the portfolio using a 1031 Exchange (seek the advice of a tax attorney for this) to defer capital gains tax, and purchase an apartment building with 30% down, worth $5.6M. If the apartment building yields 3% cash flow annually, the investor now has a nice $168,000 a year for retirement living expenses!

Real Estate is a great way to fund your retirement because, even as you are spending the cash flow to enjoy your retirement, the value of your asset is increasing as rents increase, property appreciates, and the loan principal is being paid down. 401(k) accounts, IRA's, etc, continue to deplete through your retirement, and you must hope that your assumptions about cost of living, age at death, desired lifestyle were correct so you don't run out of money!

It gets even better! If you hold onto that apartment building until you die, your heirs will inherit a property with a stepped-up tax basis - meaning that they will not have to pay tax on the gains from the time you first acquired it. Your heirs would inherit a cash-flowing, well-kept property - what a great legacy!

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