How to Create a Six-Figure Passive Income Stream Using Multifamily Real Estate Syndications

As many new investors are expanding their knowledge around the real estate asset class, I thought it would be beneficial to unpack the concept of passive income a little further.

Contrary to conventional wisdom, informed investors have changed their mindset and created a Wealth Strategy around financial freedom vs. retirement. Simply put, achieving financial freedom is the process of first identifying your vision for the future, then calculating your expense load to achieve this. You can also start with your current lifestyle burn rate to get started. Then, you will build a portfolio of assets that generate enough passive income to exceed your expenses. Passive income meaning, predictable income that comes in while you sleep. Simple, right?

The typical financial planner retirement scenario prescribes you to save in your prime earning years for 30-40 years, defer taxes, build as large of a nest egg as possible, and then retire and withdraw at the age of 65 at a 4% distribution rate. The model for this nest egg is compounding at about 7% per year. Fees, inflation, and taxes should also be factored into this equation.


So how do these strategies differ?

  • Building a Wealth Strategy is comprehensive, lower risk, and significantly outperforms the traditional retirement model.
  • Since taxes are your #1 expense in life, a Wealth Strategy promotes paying taxes as early as possible vs. in your later years. Wouldn’t you rather pay the tax on the $100,000 at today’s tax rates than on the $1 million? At a 33% tax bracket that is $33,000 vs. $333,000, the only thing that is certain is that 33% tax bracket will be higher in the future. Assets such as multifamily real estate syndications and infinite banking are highly tax-efficient.
  • A Wealth Strategy can significantly accelerate your progress to achieving financial freedom in 50% or less the time of the retirement plan model.
  • Retirement means to stop doing what you’re doing, while financial freedom means you have the freedom to do what you want to do in life while providing financial security to weather a job change or major illness.
  • Passive income proponents want to pass on a legacy to heirs and not outlive their money. The retirement model consumes your nest egg over time and makes estimates on how long you live. Having a wealth strategy incorporates multiple passive income streams that are highly tax-efficient, predictable, and accelerate over time vs. depletion.

Make sense so far? Ok, now for the fun part. Let’s take a look at an example of how you can build a six-figure passive income stream in 5 years.

In this approach, we start with the concept that you have $500,000 to invest. This can refer to money you have in 401ks, trapped equity in your house or single-family rental, or cash value life insurance policies vs. earned income on the sidelines. We assume an average cashflow distribution rate of 8%, a 2x equity multiple, and a 5 year hold period. Tax calculations are not made in this simple model as they will be unique to everyone, however, with proper tax planning, one can achieve a tax rate close to zero from real estate assets.


Each year you invest $100,000 in one or two multifamily real estate syndication opportunities.

By year 5 you have invested all of your original capital across 5-10 multifamily properties. While the $40,000 in passive income year 5 isn’t enough to quit your day job, we also receive our original equity back from the deal ($100,000) in addition to the profits of $60,000. We then redeploy the original capital of $100,000 into another deal, but take the $100,000 ($40,000 + $60,000) off the table in passive income. The process just rinses and repeats from here.

This is just one model to consider. Hopefully, it provides you with further education on how having a strategy to achieve financial freedom can help you to live life on your own terms.