Recession Proof Real Estate…Is There Such a Thing?

20 Feb

YES!  Owning Positive Cash Flow Properties

Cash Flow PropertiesI get asked all the time “Is there a real estate investment that is recession proof?” The answer is YES! During an economic downturn the best real estate investment is the one that will sustain itself for a length of time.  Buying positive cash flow properties is not only a great avenue to build net worth but also can provide a monthly income to offset any revenue lost from other sources.

I have looked all over the internet for programs similar to our Fortress Investor model and I have only found a handful that offer investors turn-key properties, most of which require a 25% down payment. 

Here’s an example transaction of how our program works:

Property Value: $200,000
Purchase Price: $157,500 ($7,500 Down Payment and $150,000 Seller Financing)
Terms of Seller Carry: No Interest 45 day Balloon
Property Type: Fourplex
Property Condition: Fully Renovated
Property Status: Leased Up with 3 Month Rental Guarantee
Monthly Mortgage Payment: $1,225/mo ( $6.5% 30 yr Term Includes Taxes and Insurance)
Expenses:  $530/mo
Income: $2700/mo ( Includes 10% Vacancy)
Total Before Tax  Monthly Cash Flow: $945/mo
Total Before Tax Annual Cash Flow: $11,340
Total Guaranteed Equity: $50,000
Security Deposit & Rents Assign at Closing: $6,000
Total Out of Pocket Cost of Purchase: $1,500

If you are wondering how this would compare to a traditional purchase, Mike put together a spreadsheet you can see HERE. It’s a very simple transaction which entails a 2 step closing.

Step 1: Fortress will sell the example property to the investor for $157,500 of which $7,500 is the down payment and $150,000 is short term seller financing. The investor becomes the owner of record after the closing is complete.

Step 2: The investor does a “No Season Rate & Term Refinance” at 75% of the banks appraisal.

With this model the investor acquires a turn-key property for a fraction of the out of pocket cost of a traditional transaction.

So is this investment recession proof?  Yes, it doesn’t matter if the real estate market is in a downturn because you’re able to collect positive cash flow every month, and when the market does turn around you will be able to sell into a strong market if that’s the long term goal.

If you have a burning question, please don’t hesitate to ask by leaving a comment below and Mike or I would be happy to help.

Happy Investing

Tags: Positive+Cash+Flow+Properties+For+$7,500+Down
Please Spread The Word:
  • Digg
  • StumbleUpon
  • Reddit
  • Yahoo! Buzz
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • LinkedIn
  • Technorati
  • Twitter
If you enjoyed this post, make sure you subscribe to my RSS feed!

No related posts.

One Response to “Recession Proof Real Estate…Is There Such a Thing?”

  1. Nike Free 12. Aug, 2011 at 7:28 pm #

    Indian vendors satisfies the entire entire world of comment local community and web site comment candidate must the content. We provide proper function of link making and link marketing that like write-up submissions, directory submissions, social bookmaking and social media advertising