The Five-Step Guide to Prime Investors

[Jorge Abreu]

I've played the real estate game long enough to know that understanding investors' goals is like getting a treasure map to lucrative deals. Every investor has unique motivations, whether it's wealth multiplication or cash flow. To guide potential investors effectively, I've created a five-step guide that outlines the main purposes of investment in real estate.

Step 1: Identifying Goals

The first step is to help investors identify their goals clearly. By asking the right questions and listening attentively, I assist them in determining whether they seek wealth multiplication or consistent cash flow. Understanding their objectives is crucial because it shapes the entire investment strategy. How much funds do they currently have set aside for investments? How soon are they looking to place those funds? It all weighs in.

Step 2: Highlighting Tax Benefits

One significant motivator for many investors is the allure of tax benefits. I've noticed that some individuals invest with us specifically to reduce their tax liabilities. By explaining the process of depreciating assets, we can unlock significant tax advantages for our investors. They'd rather put that money into one of our deals and get the depreciation than not have to pay that to the government.

Step 3: Depreciation and Tax Reduction

The next step involves educating investors about the process of depreciating assets and how it reduces their tax burdens. In real estate, especially multifamily properties, there are various depreciation strategies available. We ensure our investors understand the potential benefits and how to maximize them.

You invest 100k, you get a K1 for negative 100k. Now, whether you can claim that full depreciation depends on your status, but for the most part, you can claim a good portion of it.

Step 4: Creating an Investment Guide

To streamline the investment process, I provide potential investors with a comprehensive guide. This document outlines the main purposes of investment, covers the tax benefits, and explains the potential returns and risks involved. It serves as a valuable resource for investors, enabling them to make informed decisions.

Step 5: Building Trust and Credibility

Building credibility and trust is vital when attracting investors. While some investors may be quick to jump on board, others take time to observe and assess the investment opportunity. It's essential to nurture relationships and demonstrate consistent success.

It took a couple of years for my friends and family to believe in me. But once they saw the success, they started trusting and investing.

By following this five-step guide, I've been able to attract prime investors who align with our investment goals. Understanding their objectives, highlighting tax benefits, and explaining the depreciation process have been instrumental in building successful partnerships. Remember, each investor is unique, and catering to their specific goals is the key to real estate investment success.

[Julius Vincent]

Quote from @Daniel Sehy:

Quote from @Julius Vincent:

Hey @Daniel Sehy - When it comes to taxes and depreciation, I like to explain it like this:

Imagine buying a $500K rental property. The IRS knows buildings wear down over time, so they let you deduct a portion of the cost each year...this is called depreciation. Whether it's a long-term rental or a STR, the building itself is depreciated over 27.5 years. But items within the building (e.g., appliances, flooring, and landscaping) have shorter lifespans and can be eligible for accelerated depreciation, and even 100% bonus depreciation under Trump's new "Big Beautiful Bill," if the property is acquired after Jan 19, 2025. That applies to both LTRs and STRs.

Here’s where STRs stand out: if you qualify under the IRS rules (mainly that your average guest stay is 7 days or less and you materially participate) your rental losses can be considered non-passive. That means you can potentially use those paper losses to offset W-2 or active income, without needing to qualify as a real estate professional.

That's how some STR investors can buy a property and knock $50K–$100K+ off their tax bill without actually losing any cash, which isn't possible with long-term rentals unless you meet the stricter real estate professional status (REPS) requirements.

@Julius Vincent Really appreciate you breaking that down so clearly. The way you explain depreciation and the STR differences makes it a lot easier to understand.

I’m mainly focused on longer-term multifamily at this stage, but it’s super helpful to see how the tax treatment varies by strategy. Even if I’m not planning on STRs right now, knowing how other investors use those rules is valuable context.

Thanks for sharing your expertise, it’s the kind of real-world nuance that’s tough to get from just reading tax code summaries.

@Daniel Sehy - Glad it was helpful! Multifamily long-term holds can still be super powerful from a tax standpoint too, especially with cost segregation and depreciation stacked with other strategies like 1031s, passive loss planning, or RE professional status if it ever fits into your situation.

Even if STRs aren’t on the roadmap now, it’s great that you’re learning how other investors are playing the game.

Always happy to trade notes or answer questions.