The real estate investor can look forward to a return on his investment composed of spendable income, tax shelter, equity buildup, and appreciation in value. Spendable income consists of quarterly cash distributions to the investor after providing for adequate reserves. Tax shelter enables the investor to report a taxable income or loss for income tax purposes that is different than the cash flow primarily due to the ability to deduct allowances for depreciation. As a result, the investor may not pay much income tax on the cash distributions received during the initial years of ownership of the property. The other two components of return on investment are equity buildup and appreciation. Equity buildup is that portion of the payments on the loan obligation that reduces the principal balance. The appreciation in value of the property over the ownership period results in an additional increase to the investor’s original investment. Both of these types of return are not realized until either the loan is refinanced or the property is sold or exchanged.

Greenwood & McKenzie structures group investment projects to maximize the tax benefit to the investors in both the initial and succeeding years. However, primary emphasis is placed on economic feasibility when weighing the various factors involved with a prospective acquisition. An in-depth analysis of all factors contributing to the potential success of a property is conducted, including such items as design and layout, location, existing and future demand, proximity to shopping, accessibility and employment base. The firm has limited its area of ownership to Southern California and the Phoenix, Arizona area and recently has re-entered the Texas area. Projects usually are acquired new, which enables the partnership to properly maintain the project from the beginning.

Investor Communication

Greenwood & McKenzie feel that it is most important to keep the investor well informed. The investor is furnished an operating statement on a quarterly basis, and year-end income tax information by March 1st, for the use in preparation of both Federal and State income tax returns. An annual progress report and investment summary is provided in the Spring, detailing results for the past year and plans for the current year. Additional progress reports are furnished during the year on an as-needed basis. An estimate of the year’s tax consequences and an estimate of the investor’s net equity in his or her properties is provided annually.