INTERVIEW WITH BEN LEYBOVICH NOLAND ARARACAP
My
But there is more to this deal, because through some
contribution was 5%, but after proration of rents
strategic management, I intend to increase the NOI
and transfer of security deposits, all I needed to
over the course of 12-24 moths by about $500/month,
bring to closing was about $5,300.
which will accomplish several goals for me. First of all,
mortgage for 25% of the purchase price.
this will obviously increase my cash flow from the
I know what you are thinking – what’s the cash
building. But also, the increased NOI will constitute an
flow? Well, in this deal, I plan on a 15% expense
improvement of value by about $60,000 at 10 CAP.
for vacancy and repairs as part of the operating
costs, which is about $900/mo. But even with that,
the
building
is
still
showing
cash
flow
A couple other things to note here:
of
So, what I’ve
1. Even if a lot of things go wrong in the first year,
managed to do is to buy a great cash-flowing asset
chances are better than the average that I will receive
for what a lot of people spend on fast food and
everything I’ve put-in back ($5,300), which would
coffee in the course of a year.
constitute 100% cash on cash.
$1,000/month after debt service.
I could not have
touched this employing traditional financing.
Do you see what I meant when I said earlier that
while the $36,500 discount on the purchase price
2. Financing close to 100% of the purchase enabled
was nice, there was much more value in the
me to do a deal which I otherwise would not have been
terms? One looks good on paper, while the other
able to do. I am 37 years old; I have three year-old
puts real money in my pocket!
twins; even if I had this much spendable cash, I would
never choose to allocate it this way at this stage in the
game.
Yes, I am highly leveraged into this building. But, my
capacity to hold on to the building is a function of cash
flow, which is strong. Besides, between the discounted
price at the front door and the forced appreciation
resulting from the increased NOI, I will easily own 75k
– 95k of equity within one to two years.
3. My ability to finance close to 100% of th ????????)????????????????????????????????????????$??????)??????????????????????????????????????????(??????????L???????????!????L???????e????????)???????????????????????????????????????)????????????????????????????????????????((