Depreciation Isn’t Free Money—It’s a Real Cost

Depreciation Isn’t a Bonus. It’s a Bill.

Hot take:

Depreciation isn’t just a tax benefit. It’s a real cost—whether or not you account for it that way.

Everyone loves to talk about it like it’s free money.
→ Paper losses
→ Write-offs
→ Magic “non-cash” deductions

But depreciation reflects a real-world liability.

• Roofs need to be replaced.

• Pipes eventually leak.

• Buildings wear down.

If your underwriting model doesn’t include it, your future self (or buyer) definitely will.

Depreciation isn't optional. It’s just deferred.

Smart Investors Know It’s Coming

The best investors treat depreciation the way they treat taxes or interest: a fixed reality, not a hack.

That means baking it into your pro forma, reserving for capital expenditures, and thinking beyond your initial cash-on-cash return.

If it’s not part of your model, it will be part of your maintenance backlog—or worse, a capital call.

Depreciation isn’t free.
It’s just slow.

What’s a “tax hack” you’ve seen people misuse?