The Investment

If you could invest $100,000, then get your $100,000 back still keeping the investment as it grows in value and even receiving reoccurring income from it- would you do it? Of course you would because your cash on cash return would be infinite since your cash is paid back and reverts to zero. To find out how investors today are doing this listen to the end.

This is the concept of Infinite Returns which means when you no longer have money in the deal but you’re still receiving the benefits of cash flow and other returns. Everybody should want infinite returns and guess what? While real estate isn’t the only way to do it, it’s the easiest way.

How It Works

Here’s how it works in real estate and you, yes you, can do this too! The most UNCOMMON way is by paying no money down on properties that’s – no cash out of pocket. So for example if you’re buying a $500,000 property and a bank gives you $500,000 that’s 100% financing, 0% your money in the deal.

Let’s talk about The most common way this is achieved and what you can count on in following this formula

1. You’ll get your initial cash investment back
2. You often can get even more money out of the property which is technically profit when you have no money in the deal and that profit comes tax free because its in the form of a loan
3. You’ll continue to collect rental income but you now have zero cash invested
4. You’ll continue to own the appreciating asset and either pull more profit or sell it eventually

Sounds too good to be true? Well, its not and here’s how you do it!  

You buy a property you put cash downpayment. You increase the value of the property by doing upgrades or expansion and increasing the rents. Once the value increases, you do a cash refinance to pull your original cash downpayment out, making your cash investment back to ZERO. 

One of my favorite aspects of a cash-out refinance is that it allows you to get your original investment out, but doesn’t require you to sell the property to enjoy the extra value you’ve created and All money from a cash-out refinance is “tax free,” Yes you will have a higher mortgage payment but it’s paid for by higher rents and you still keep your asset but you got your money back. Let’s do a real-life example.

Real World Example

Let’s say you buy a 4plex with $100,000 down based on the value of that building at that moment in time. That value will be primarily based on the rental income it generates which is $8,000. And now you renovate maybe change the floors, upgrade the appliances or renovated the bathroom. The renovations have allowed you to increase rents to $12,000 and its time to show your bank the increased rental income and they will appraise the building for a higher value allowing you to do a cash refinance of your original $100,000 and then some. The extra over the $100,000 is coming to you tax free and hopefully you’ll put that money to more work!

This is the concept of infinite returns and you can see why people grow their wealth exponentially through real estate. To learn more and how you can do it too call me.

If you are looking at the option of selling a home in the San Francisco or Peninsula in the near future, please reach out to us.