How it works

 

Real estate is the one hard asset with tax advantages that offers a high cash return, equity build up, and financial leverage.

·  Real estate ownership is the oldest form of wealth creation

·  Generates very attractive returns

·  Value increase has historically equaled or exceeded the rate of inflation

It is not paper money! It is something that you can physically touch and you can generate money in 3 different ways.

One Property lets you make money in the following manners:

1 the cap rate
2 the difference between the cap rate and the interest rate (so you make money on the money being borrowed)
3 Property Appreciation

 

A Hypothetical Example:

Strike Price of 10M

CAP rate of 8% (note: with this CAP banks will loan up to 75% with quality national tenants)

Quality National Tenants = Dollar Tree, Dollar General,  Planet Fitness, O' Reilly's, AppleBee's,  Subway, Jersey Mikes, TOGOS, GNC, Vitamin Shoppe, etc...

Out of Pocket Cash 2.5M

With interest rates so low, at 3.75 you make money on the money that you borrow. 8% CAP minus 3.75% interest equals 4.25% 

so now you have 8%, 800K NOI plus 4.25% on your loan money, 319K

Your ROI  is out of this world.

And many of these properties have "lease ups."

 

 

A real example:

 4 tenant building 40,000 square feet (Dollar Tree, Planet Fitness, Beauty School, Dental Office)

This is a real property in Elgin, IL. 

 

Purchase Price	5,250K
Loan	3,900K
Down	1,350K
Interest Rate	4.5%
NOI	457.3K
CAP	8.7%
Interest	175.5K
Principal	120.5K
TOTAL Debt Service	296K
Cash Flow	161.3K
ROI	20.9%
Cash on Cash	11.9%

 

Also this property has a huge Upside. It came along with a one acre out parcel. We are actively looking for a ground lease deal.