William, who is 68 years old, would like his investments to preserve capital and generate current income. Three years ago, he purchased a 20% share of a student housing community in a nearby college town for $200,000. The first year his income was $17,000, partially tax sheltered by depreciation. In each of the next two years income rose about $500, as modest rent increases exceeded operating cost increases. William expects these increases to continue, and he would like to add another such investment to his financial holdings.

Rachel is 52. She is interested in higher returns and is willing to accept more risk. Two years ago she invested $300,000 to join the funding for development of a 60 unit apartment building in an infill location near the city center. The building is now completed and fully leased. A permanent mortgage will soon be placed on the property. When it is, Rachel will receive full return of her investment, some additional money, and a share of the property’s ongoing cash flow.