04/21/2023
Can you Achieve 6x Greater Returns in Real Estate 🏠 vs. Stocks 📈?
Example:
Let's say you invest $500k into a commercial real estate (CRE) syndication offering that in 4 years the property sold and gave you a 2.0x Equity Multiple (EM).
You re-invested those sale proceeds into buying another property. You did this 4 more times and achieved the same 2.0x EM on each investment.
On your last sale, you would have cashed a check for $16,000,000. 🤑
The reason why CRE investments can double in value is through forced appreciation through value-add projects. A 2.0x EM is common in the CRE industry.
Compare that to the stock market.
On average, stocks go up in value about 8% per year. A same investment of $500k would only reach a value of $2,516,917 during the same time.
See chart attached.
Taking your initial investment amount of $500k and turning it into $16 million is incredible.
However, that is not even the best part...
In the example above, let's say the commercial real estate (CRE) investment gives you 7.5% Cash-on-Cash (CoC) distributions each year from rental income in addition to the 2.0x EM upon each sale.
That would mean in your first property, you would make $37.5/year, in the second property $75k/yr, then $150k/yr, $300k/yr, and up to $600k/yr in the subsequent properties!
Through the whole duration of your investing journey you would have made $4,650,000 in 100% passive income!
Compare that to stocks:
Using the same example above, let's say you made 3% dividends (in addition to the 8% stock growth). That would only be $741,344 for the same period of time, and only reaching a height of $70k/yr. (And note: having a stock grow in value of 8% per year and give 3% dividends is extremely rare).
So, in summary:
➡️ Commercial Real Estate (CRE) Investing = $20,650,000 in NET Distributions
➡️ Stock Market Investing = $3,258,261 in NET Distributions
💥 The CRE Investment was 6.3 times greater than the Stock Investment. 💥
No other investment avenue can provide investors with both: high cash flow and large upside like commercial real estate can.
..And add the fact that real estate is a tangible asset and less volatile than stocks.