Comments on: Everything’s Free & Clear — Rentals Included — Yet Still Taking Home 25-35% of What’s Easily Attainable

By: BawldGuy

BawldGuy — Mon, 24 Sep 2007 07:13:59 +0000

Enjoy!

By: Cher

Cher — Mon, 24 Sep 2007 05:32:11 +0000

There must be some fractional ownerships of NNN out there because, yes, you need allot of bucks to have exclusive ownership.
Great to talk to you Thursday…thanks for the time and great ideas. Brian has been in touch for info and I e-mailed info to him.
We are flying out to Boston tomorrow night…red eye…trip is a write off thanks to out of state property.

By: Jeff Brown

Jeff Brown — Sat, 22 Sep 2007 17:45:25 +0000

Good to see you here David – The NNN approach is very cool for a retired lady. Her potential challenge would be having enough capital to acquire a property offering a national sized tenant the qualify of Walgreens. In any case, they sure make life easy, don’t they?

By: David Stejkowski

David Stejkowski — Sat, 22 Sep 2007 15:18:01 +0000

Very nicely done, Jeff. Throw that cash into a Walgreens or some kind of very safe NNN deals and you are looking at a very nice ROI.

By: Jeff Brown

Jeff Brown — Sat, 22 Sep 2007 02:13:26 +0000

Damn! I knew I’d heard it somewhere.

By: Doug Quance

Doug Quance — Sat, 22 Sep 2007 02:05:44 +0000

That’s some pretty smart prospecting, Mr. Brown!

What can Brown do for you?

(I think that might have been taken, already…)

By: BawldGuy

BawldGuy — Fri, 21 Sep 2007 20:18:07 +0000

And Robert – thanks so much for the complement.

By: BawldGuy

BawldGuy — Fri, 21 Sep 2007 20:08:45 +0000

Hey Robert, good to see you back.

The 25% equity position worked out because of the following assumptions used, which I”m confident you’ll agree are real life.

7% interest only loans. Got that from my lender before writing the piece. He said he can do that all day every day with 25% down.

35% operating expenses – speaks for itself. As you’re well aware, small properties, i.e., 1-4 units, generate a lower expense factor overall than do large complexes.

Rents used were taken from, as mentioned, either available properties with existing leases, or recent closed transactions of my own clientele.

Borrowing against her existing props would certainly get the results you put forth. My argument would be time.

What does she care, for instance, if she ends up with after tax monthly income of $11,000 or $12,500 – given her current status?

By: Robert Coté

Robert Coté — Fri, 21 Sep 2007 19:56:19 +0000

Brilliant and short analysis. Yes, free and clear is not a good policy when there are favorable taxes and better opportunities. I do question the amount of leverageyou are recommending. $5m of income generating properties for her $1.4m investment is 28% or 4:1 leverage. Tax benefits against income help but she is also going from $13,000 in property taxes to $45,000 (after deductions) right? Then there are the inevitable management costs.

Don’t get me wrong. This woman needs to get the equity working harder as you suggest. I just don’t want the top line numbers to be the reason. Bottom line she’ll do herself and others a great service by freeing up these assets for better uses.

Not to step on your territory but “encumbering” the existing properties for the purposes of mantaining/improving with the idea of higher sales prices or rental value might also be part of your plan.