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5 Fiscal Reasons to Invest in Real Estate

Real Estate Investment

Investopedia offers three simple steps on how to acquire wealth.  The many real estates investing professionals I visit apply all three.  First, they make more money than they spend.  Number two they avoid debt.  And, number three, they invest their savings wisely.  Many of my guests have told me, “It isn’t how much you make that matters.  All that matters is how much you keep.”

The three steps on how to acquire wealth seem simple enough in theory but in practice, all three can be challenging because they take discipline, focus, and knowledge.

Successful professionals most certainly do not lack discipline.  They are successful professionals because they are disciplined in their fields.  An important aspect of discipline is the ability to delay gratification for the reward of long-term gains and successful professionals have this strength in abundance.  Many have spent years acquiring education and expertise before financial rewards of any kind begin to materialize.

The years of study not only require discipline and time, but it also requires financial investment.  Because of the financial burdens associated with the educational process, many professionals begin their careers buried deep in six-figure debt. Not only are well-educated professionals behind the 8-ball economically compared with some in other professions with less educational requirements, but they are also behind others due to the later start in their careers.

Being buried deep in debt, even with immense amounts of discipline, makes it challenging to save to invest.  Plus, if you are like many successful professionals, your interest and focus are dedicated to your field, not on the question of how to acquire wealth. 

In the life of many successful professionals, there has been little time and perhaps even less interest in learning about the field of investing.  Lacking investment knowledge, how can one invest wisely?

Money Investment

Investopedia’s three simple steps to acquire wealth, when layered with the complexities of real life, can make the attainment of financial freedom seem like the impossible dream.  Some even begin to despair that they may never attain financial security, much less wealth, even after 30 to 40 years of work in their fields.

Yet, as I have learned from my own life experience as well as from numerous interviews with professionals who passed through these trials, it is possible to engage in a fulfilling professional career that contributes to the betterment of humanity and the world at large while discovering how to acquire wealth. 

The many financially successful professionals I have interviewed discovered the secrets of wisely investing in real estate.  By applying their well-developed discipline and acquiring just a basic understanding of the 5 ways real estate investing can help acquire wealth, they have attained financial freedom.

These inspirational stories show us that we can be kind, caring, compassionate human beings committed to using our fields of expertise to solve some of the biggest challenges facing our world and, at the same time, develop our own financial wealth through real estate investing.  As they learned the power of the 5 ways real estate investing can help acquire wealth, these professionals discovered even more avenues to take their field of expertise into the world to provide even more service to a world in great need of their skills and knowledge. 

What they learned is that with financial wealth, they can pursue their field of interest on their terms, apply it where they see the greatest need, and they can do it in their own time frame.  In other words, financial freedom brings them time freedom, and with financial and time freedom, they have more resources to do even more than perhaps they had ever thought possible while flourishing not just financially but in all areas of life.

A Passive Real Estate Investing Periodontist

Investment in future

Jeff Anzalone, a periodontist, is one example (Creek Side Chats Episode 45).  He could see that because of the 5 ways real estate investing can help acquire wealth, it held advantages over other mainstream investments such as stocks, bonds, and mutual funds. 

He could see that real estate investing

5 Fiscal Reasons to Invest in Real Estate
Jeff Anzalone

provides many advantages to acquiring wealth, but from his perspective, there was one huge obstacle.  He was under the impression that to avail oneself of these advantages; one would have to actively engage in the acquisition and hands-on management of real estate assets. 

To Jeff, that meant caring for tenants, toilets, and trash.  Since he had a full-time periodontist practice, he was definitely not looking for more work to take up his time.

Fortunately for Jeff, he soon discovered that he could passively take advantage of the 5 ways real estate investing can help acquire wealth.  He learned that by doing it right, he could just as easily passively invest in real estate as he could in the stock market.  This meant that he could have all the advantages of real estate investing without any of the management and other ownership responsibilities. 

The big difference between stock market investing and real estate investing is that real estate investing historically outperforms the stock market, therefore, leading him to a faster road to clear his six-figure student loan debt and ultimately making him a millionaire before the age of 40.


Jeff is a smart guy, but as he describes himself, he is just a Louisiana red-neck kind of guy that was fortunate enough to find a reliable and predictable way to acquire wealth that has provided financial independence and given him a way to stop exchanging his time for money.   Jeff is well aware that this is not the case for many, if not most, of the highly educated healthcare professionals who are working 60 to 70 or more hours every week just to keep their heads above water.  They are discouraged, depressed, and facing burnout. 

Some are reaching such points of despair and hopelessness that they are becoming suicidal.  This predicament that other professionals find themselves in is of such great concern to Jeff that he decided to do something about it.  He established an educational program to teach other professionals the secrets of real estate investing that he learned and employed to attain his own financial freedom.

Besides teaching others to invest in real estate, Jeff continues to run his periodontist practice.  He no longer runs his practice to provide an income.  Instead of exchanging his time and effort for money, he puts his money to work for him to provide for his livelihood. 

Jeff now runs his practice because he has a fulfilling calling to diagnose and treat diseases of the supporting and surrounding tissues of the teeth to help people maintain health and well-being. He has a meaningful calling and financial independence that gives him time-freedom to follow that calling while doing more and being more.

A Passive Real Estate Investing Retired Advertising Executive

Holly Williams (Creek Side Chats Episode 21) found her way into passive real estate investing through a very different channel.  Holly, the daughter of an oil company employee dad and a school teacher mom, did everything that we are told to do to succeed in life.  She went to school and attained her bachelor’s degree.  She acquired a job in advertising, climbed the corporate ladder, and earned a very comfortable six-figure income.  Along the way, she married and had a child.

5 Fiscal Reasons to Invest in Real Estate
Holly Williams

As Holly describes, life was good.  Then one morning, after taking the red-eye from Los Angeles to her home in New York, she was taking a morning nap when her husband awoke her, telling her a plane had just struck the World Trade Center.  From their rooftop view, just a few blocks from the Trade Center, they could see the damage and watched in terror and horror as people began jumping to their deaths from the upper stories of the building.

This was a defining moment for Holly as she realized that all the rules she’d been taught throughout her life could no longer be trusted.  Life was uncertain and unpredictable.

Throughout the following decade, Holly continued reassessing her life.  From 2009 to 2010, her parents became ill, and because of the illness, they began chiseling away at their 401Ks that they had been counting on being there for them until the end. 

The fear of running out of money before the end was a constant drag on her parents until their passing.  Holly was once again confronted with the reality that being good and following all the rules isn’t good enough.  Life can change instantly, so you’d better always have a plan B.

5 Fiscal Reasons to Invest in Real Estate

About this time, a friend came to her with an interesting proposition.  He offered her the opportunity to invest as a limited partner in an apartment complex.  As a passive investor or limited partner, all that Holly had to do was invest the money.  The acquisition and day-to-day management would be handled completely by the general partners. 

Even though Holly knew nothing about real estate investing, she trusted her friend and moved a substantial portion of her Wall Street investments into the real estate investing opportunity.

As the returns from this initial real estate investing endeavor began to come in, Holly thought sure that it was too good to be true

The best surprise, though, came when tax season rolled around.  Being a high-income earner, Holly had been used to being taxed in the highest income brackets.  Not only was Holly paying substantial taxes on W-2 earnings, but she was also accustomed to paying taxes on her investment earnings.  She earned a lot but a lot of what she earned she wasn’t keeping.

Even after seeing these initial satisfying results, there was still a part of her that said, “This is too good to be true.”   To assure herself that this was real, Holly began to educate herself about money.  As her knowledge grew, she began to realize that everything she had been taught throughout her life about money was just myths.

As her knowledge of money grew, she came to understand and appreciate the power of the 5 ways that real estate investing can help acquire wealth.  As Holly states, “This is knowledge the wealthiest 1% have always known.”

Over the next several years, Holly continued her passive investment in real estate, ultimately moving ALL of her Wall Street investments into real estate. 

It wasn’t long until her real estate investing was returning a six-figure income.  With a passive six-figure income from real estate investing, Holly retired from her corporate job to become a full-time passive real estate investor.

Like Jeff, Holly no long exchanges her time for money.  Rather, she, like Jeff, is inspired by a calling.  She doesn’t want anyone else to end their life like her parents did, in constant fear of running out of money.  Inspired by her calling, she now teaches others about money. 

Her book, Hidden Investing: What the Wealthiest 1% Know That We Don’t educate others on how they too can acquire financial wealth and flourish abundantly in all areas of life to do better and do more.

The 5 Ways to Acquire Wealth through Real Estate Investing

What are the 5 ways that real estate investing can help acquire wealth?  And, how, without being actively involved in the day-to-day operations of real estate investing, can the passive investor use these 5 ways to achieve wealth?

The answer to these questions is cash-flowing, income-producing real estate investing—the IDEAL way to acquire wealth.

Real Estate rental property produces INCOME. This is a cash-on-cash return on investment and is generally paid to investors on a monthly or quarterly bases, similar to a dividend. It is not unusual to receive after expenses an 8% to 10% cash on cash return from the rental income. 

This is only the beginning of acquiring wealth through real estate investing. The 8% to 10% cash-on-cash return is only a fraction of the return on investment that a real estate investment can return. The other advantages multiply these returns in ways no other investment vehicle can match.

DEPRECIATION of real estate property is an accounting deduction that reduces tax liability. 

Congress favors and supports real estate investing and has written favorable IRS regulations to support real estate investing. An old saying goes, “Don’t fight the IRS.” Rather than fighting the IRS, real estate investing harmonizes with the code. 

Unbeknownst to most people, our most significant expense isn’t our mortgage, medical, or food. Our most expensive financial burden is taxes. Reducing our tax burden puts money directly in our pockets. Remember that those who understand how to acquire wealth know it doesn’t matter how much you make. What really matters to wealth building is how much you keep. 

For most of us, tax reduction via real estate depreciation can reduce our income tax to nothing. 

It keeps getting better as we look into the aspect of EQUITY.  Equity is the difference between what is owed on real property and the property’s purchase price or, in other words, the investment. 

In simplified terms, the down payment is the initial equity, but each year as the mortgage payment is made, the equity in the property increases.  This is the case if you are the homeowner and the real estate is your residence.

In a commercial real estate investment, it is even better.  In real estate investing, the investor is not paying the mortgage.  The mortgage debt is paid via the income derived from the rent.  For the investor, the mortgage paydown and the resulting equity growth come without further investment from the pockets of the investors.

This is only part of the equity growth equation.  The larger portion of equity growth in commercial real estate investing is derived from the two-sided coin of asset management.

  • One side of the coin is improvements to the property that lead to increased rents. 
  • The other side of the coin is the reduction of expenses through improved management.

Employing these two asset management techniques increases the Net Operating Income (NOI).  The NOI is the primary driver for commercial real estate valuation.  So, as the NOI increases, the equity increase.  

As equity grows, the value of the investment grows.  The passive real estate investor receives the increased value without any personal effort or time commitment. 

These techniques for increasing equity are referred to as “forced appreciation.”   We’ll address natural appreciation in the next section.

Good asset management will always work to force appreciation.  Natural appreciation occurs over time.

Even though the IRS provides depreciation tax write-offs, in actuality, over time, the property naturally appreciates in value. 

Historically, real estate property averages a 4% increase year over year. There are boom and bust cycles in real estate, but the historical ten-year appreciation has remained stable for the last hundred years. This means that real estate can reliably be expected to produce this consistent rate of appreciation over any ten-year period. 

Just from natural appreciation alone, the passive investor can expect the value of their investment to increase over a 5 to 7-year period by 20% to 28%. 

Remember, natural appreciation is only one of the four real estate investing wealth drivers.  

Leverage is the last of the 5 ways real estate investing helps to acquire wealth. 

Leverage is using other people’s money.  In most cases, this will mean using financial institutions (lenders) to purchase assets that one would not otherwise be able to obtain. 

In a typical syndicated real estate investment, investors (equity partners – both passive and active) put around 25% down to control 100% of the asset. 

Controlling 100% of the asset with only 25% investment is the secret sauce that makes real estate investing the IDEAL wealth-building investment. 

 This is because the other four avenues to develop wealth through real estate investing – Income, Depreciation, Equity, and Appreciation are calculated on 100% of the investment rather than the 25% invested.

Income – Rather than receiving quarterly returns on the 25% investment, investors receive 100% of the returns the investment asset generates.

Depreciation – Likewise, rather than only 25% of the asset’s depreciation being distributed to the investors, 100% is allocated for write-off. Understanding this makes it easier to see why real estate investors have little to no income tax liability.

Equity – Like the two above, equity growth is allocated on 100% of the asset rather than just the 25% invested.

Appreciation – 20% to 28% growth over a five to seven-year growth period on a 100% asset share, as opposed to only 25%, is a massive difference in value added.  

For many people, internal rates of return (IRR) of 18% to 35% seem totally unrealistic and lead to the belief that these real estate offerings are fraudulent Ponzi schemes. Understanding the IDEAL five fiscal reasons to invest in real estate alleviates these concerns. For centuries, wealthy people have legally employed these five IDEAL steps to preserve and grow their wealth. 

We don’t have to be wealthy to develop wealth. Anyone can take these concepts, and no matter where we are on our wealth development path, we can take these concepts to preserve and build our wealth. 

One last point to remember, which makes it 6 ways to acquire wealth, is that both Holly and Jeff have never dealt with tenants, toilets, or trash. They have never had any involvement in the day-to-day operations of the invested wealth-building real estate. 

As limited partners, they have always turned that responsibility over to the general partners while still partaking in 100% of all 5 ways real estate investing can help acquire wealth.

Acquire Wealth to Flourish Abundantly in ALL Areas of Life

Suppose this is new information. You can probably understand why Holly found these investment returns too good to be true. Her Wall Street investments never returned anywhere close to the returns she now customarily receives through real estate investing.

As Holly discovered, this is the secret to acquiring wealth that the 1% of the wealthiest of the wealthy have always known and the secret that both she and Jeff applied to their investing that now gives them financial freedom.

Like Jeff and Holly, I, too, am inspired by a calling. I want everyone to flourish more abundantly and to live fully in all areas of life. To be inspired to do more and achieve wealth to flourish abundantly in all areas of life, download the ONE-page guide: 10 Steps to Passive Real Estate Investing.


With so many investment options, confusion as to where to invest leads to inaction.  Schedule a FREE – NO OBLIGATION – NO STRINGS ATTACHED call.  Or email me with your questions and thoughts at  I’ll help you sort it all out, and you’ll soon be on your way to prosperous investing to live more abundantly in all areas of life.

About the Author - Dr. Allen Lomax

With careers in academia, podcasting, and real estate investing, Dr. Allenphoto of author dr. allen lomax Lomax inspires us to break open our minds’ secrets to discover individual and universal well-being. Through passive real estate investments, he helps enlightened investors create time freedom to live abundantly in all life’s areas.