Cash on cash return is a metric used in real estate investing to evaluate the profitability of an investment property. It measures the annual return on investment (ROI) based on the amount of cash invested in the property.

The formula for calculating cash on cash return is:

Cash on Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested

Real estate investment can offer a level of safety and stability, but like any investment, it carries inherent risks. Here are some factors to consider:

• Market Risks: Real estate markets can be influenced by economic conditions, interest rates, local market dynamics, and demographic trends. Economic downturns or changes in market conditions can impact property values and rental demand.
• Liquidity Risk: Real estate investments are relatively illiquid compared to other asset classes. Selling a property can take time and may involve transaction costs, making it challenging to access funds quickly if needed.
• Operational Risks: Real estate ownership comes with ongoing responsibilities such as property maintenance, tenant management, and compliance with regulations. Vacancies, unexpected expenses, and liabilities can affect investment returns.
• Financing Risks: Many real estate investments involve borrowing funds, which adds leverage to the investment. While leverage can amplify returns, it also increases the potential for losses, especially if property values decline or interest rates rise.

Overall, real estate investment can be a relatively safe and rewarding venture when approached prudently, with careful consideration of factors such as location, market conditions, and risk tolerance. Diversification, due diligence, and a long-term investment horizon are essential elements of a successful real estate investment strategy.

IRR stands for Internal Rate of Return, and it's a commonly used metric in real estate investing to evaluate the profitability of an investment property over time.

useful for assessing the potential returns of an investment property taking into account factors such as purchase price, operating income, financing costs, and eventual sale proceeds. It's essentially a measure of the property's overall investment performance.

Calculating IRR involves estimating the future cash flows generated by the property, including rental income, operating expenses, financing costs, and the proceeds from the eventual sale of the property. These cash flows are then discounted back to their present value using the IRR rate. The IRR rate is the rate at which the net present value (NPV) of all cash flows equals zero.

Investors typically use IRR to compare different investment opportunities and determine which ones offer the highest potential returns relative to their risk. A higher IRR indicates a more lucrative investment, while a lower IRR may suggest lower profitability or higher risk.

• Traditional cash investment: Investing after-tax money allows you to take full advantage of the depreciation benefits of owning real estate – without the hassle of becoming a landlord yourself.
• Self-directed IRA: Consider a self-directed IRA to diversify retirement savings into real estate. By partnering with a custodian, you can roll over a portion of your retirement funds, expanding investment options. We can provide recommendations for reputable self-directed IRA custodians.
• 1031: We offer the option to facilitate 1031 exchanges into our projects, allowing active owners to transition into passive ownership seamlessly. Our minimum equity investment for 1031 exchanges is $1 million, ensuring access to exclusive opportunities for diversification and growth.
• Capital gains/opportunity zones: For clients who have realized capital gains from the sale of assets such as stocks, businesses, or real estate, we provide investment opportunities in qualified opportunity zones. Our projects enable investors to defer tax payments and potentially eliminate taxes on project sales, offering a strategic tax-saving solution aligned with your financial objectives.