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Our Game
Consider this brief example:Generally, we negotiate deals 20 – 30% below current realistic market pricing. While we might not be able to immediately “flip” these properties and accrue this % gain, the profit is nevertheless built in. If you consider a five year holding period, with an annual inflation (growth) factor of only 3%, it is reasonable to expect to achieve a 50% or more annual return on investment. A simple example can illustrate this. Consider the following example: if one acquires property for $150,000 in an area with serious potential, such as the areas we are currently investing in. This property may have sold for $300,000 but is now marketed at $200,000. If the property increases in value (from its current market value) by 3% per year for five years, the property would only be worth about $230,000. While this is a very conservative example since the property will probably be worth $300,000 again, it illustrates the point that with only an $80,000 profit on a $30,000 investment (20% down), the annual return to the investor is about 53%. And, this is ignoring the positive monthly cash flow from rentals and tax benefits from depreciation.
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