5 Steps To Leverage Your Fixed Income In Five Years With Real Estate

This means that you can put a 25% down payment on a one-million dollar net lease commercial real estate property, and enjoy all of its monthly fixed income.  Discover more of net lease commercial real estate, NNN-CRE, please visit our net lease commercial real estate

Our recommended 5-year blueprint for you to build durable wealth. Below is how you can turn your $100,000 into $300,000 in five years, and create passive monthly income along the way.  Please note if you do not have $100,000, you need to find a partner or investor who would joint venture with you.  Other hand, if you already have $300,000, you can skip to the paragraphs after step #5.

If you decide and desire, you can even turn your $100,000 into a cash-flowing million-dollar net lease commercial real estate in just five years:

1. Invest $100,000 by making five 20% down payments on five $100,000 turnkey cash-flowing single family properties. If you don’t know where or how, sign-up for our free 30-minute confidential consultant (link: https://www.dajkgroup.com/consultant--concierge-services.html). Do your due diligence.

2. Real estate has a historic appreciation rate of 6%. Compounded, each of your $100,000 properties is worth $134,000 within five years. That is $34,000 of appreciation in each of your five properties.

Important Notes:

Equity is the difference between what a property is worth and how much is owed on that property’s loan. Equity can also be thought of as your “skin in the game.”

Cash flow is your monthly rent income minus mortgage, property taxes, property insurance, maintenance, professional management, and a factor for vacancy. It is your passive income.

3. So now for each property, you have $20,000 of original equity as the down payment, plus the $34,000 in equity from appreciation. That is approximate $54,000 in equity each property.

4. In fact, your tenant is also paying down your loan for you every month for five years. At today’s interest rates, that another $6,000 to add to your $54,000. That’s a grand total of $60,000 of equity for each property over five years!

5. That $300,000 of total equity over your five rental properties, it is just five years after you began with $100,000.
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It’s the magic of financial leverage coupling with a compound interest at work. You achieved the rate of appreciation on both your down payment and the money that you borrowed from the bank.
 
Compound interest is slow, lame; and it doesn’t create wealth on its own. Wealth is created when compound interest is leveraged this way.

After five years’ time, you can keep holding your five properties, exchange via 1031 (tax deferred strategy) or sell them and cash in.

For example, you decide to sell your five properties. You won’t get $300,000 in equity cashed out. When you pay agent commissions and property make-ready costs, it might get whittled to $250,000.
With your $250,000, you typically do not have to pay any tax (yes, zero tax) on your capital gain if you use it as a down payment for another property (follow the generous tax-deferred exchange rules).
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This means that you can put a 25% down payment on a one-million dollar net lease commercial real estate property, and enjoy all of its monthly fixed income.  Discover more of net lease commercial real estate, NNN-CRE, please visit our net lease commercial real estate (https://www.dajkgroup.com/net-lease-investment.html )

Yes, now you’ve created financial leverage on an even larger property and continue to amplify your wealth in the same way!

Intrigued? This experience also means you understand some risks and limits. The above example is surely simplified.

What’s are some risks and limits?

• Well, we didn’t include any mortgage loan closing costs when you bought the five $100,000 properties. Often, you can ask the seller to pay some of these for you in exchange for your full-price offer.
• The 6% appreciation rate could be lower (or higher). Let’s say it is lower. Let’s say that the properties even lost value. In this case, you’re not sunk as long as your property stays rented and cash-flowing. That’s why we strategically and carefully pick markets and cities that hedge against downturns (stable-price, job growth markets).
• Some things surely will go wrong. You’ll have bumps over the five years. The month you have to replace a garage door or section of fence won’t feel so great. Think long-term.  Alternative, you need to learn how to structure a lease option so that the tenant/future owner will take of the property.
• This whole thing still might not work out. There are simply no guarantees in investing.

​Please note real estate pays you five ways at the same time. In growing $100,000 to $300,000 in five years, we’ve only discussed two of just five ways you’re paid with residential, cash-flowing real estate!

​Those two are appreciation and mortgage pay-down made by tenants. There’s also cash flow, tax benefits, and inflation-hedging.

Please note a structuring with a lease option investment property, tenant/future owner manages the property for you. Your time is worth too much to replace flooring, fix faucets, or collect rents yourself. Be an investor!

This is about smartly investing your money over time to leverage other people’s money to build durable, lasting wealth for you and your future.

I encourage you taking action.  Please sign-up for our free 30-minute confidential consultant.

​Strategically and Smartly leverage your way to financial freedom.

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