CONTENT SERIES: Confessions of a Deal Junkie
How The Boken 401(k) - An American Crisis

American investors are in the middle of a national crisis.

If you’re like most, you follow conventional advice, you work really hard during your peak earning years, putting as much money as possible into a 401k account or another retirement account vehicle to secure your financial future.

You’re initially show illustrations of rates of return that sound promising enough. But are the projections real?  Mine for one didn’t materialize…

According to my financial advisor, as of 2017 the annualized return on the S&P index in the prvious 10 years was 5.54% before fees and expenses.  But that’s still not all. If we assume an annual inflation rate (what I believe is a hidden tax) is 2.5%, the net is a truly dismal rate of return!

Isn’t it time to look into alternative investments?  When properly placed in a portfolio, alternative assets like real estate help lower the overall volatility in a portfolio, and in many cases are suited for those investors with lower risk tolerances.

What Are the Options You Ask?

Dan Genzel is a serial real estate entrepreneur who both serves as a strategic partner for private clients and owns millions of dollars of commercial real estate
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One solution is to find an alternative asset class for a portion of your assets that offers both yield, inflation protection and appreciation. What tangible asset fits these requirements?  Commercial Real Estate.  I personally prefer an asset I can go our and touch and feel and have a personal impact on.

My Real Estate Investment Strategy

Over the years, I have perfected my own little algorithm of buying investment and commercial real estate under the radar at a very good basis and investing human and financial capital to create exceptional returns. I’ve proven, by ensuring that due diligence tenets are followed, the probability of success, can be greatly enhanced, providing strong support for investments in real estate ventures.  Let me elaborate how investing a portion of your assets in investment real estate that you can self-direct within a 401(k) account can help you boost your retirement accounts.

First, buy the real estate with a fixable problem under market value.

For example, if the real estate has a vacancy the owner has just not had the motivation to lease, I can (or I hire a broker to) literally go door to door and find tenants (which I do on a regular basis). If a property I’m interested in buying needs better curb appeal the current owner isn’t interested in improving, I can hire the contractors to improve it.

Re-finance the property and "unlock" and return the equity

My equity investors love getting capital back as soon as possible.  Once I have increased the net operating income (because I have generated more revenue by leasing space) the property is worth quite a bit more.  Because the property is going to appraise for much more that what’s owed on it, I’m able to get a loan for more than what is owed. With the new loan in place, I pay back the investors their initial investment (who doesn't like that), and then split any cash proceeds left over.

Getting out at the right time.

Commercial real estate investments do best as short duration investments, which generally last 3-5 years.  So, when I have maximized the value and I see nothing but risk on the horizon I look to sell and recycle the capital if desired by all.  There is an opportunity costs on capital so the decision to hold on to an assets has to be calculated.  Is the capital invested better off in this asset or deployed into another asset?  This is key—keeping my investors’ capital working and “invested” at a high rate of return at all times, for as long as possible.

There is no other business where I can compel a group of strangers (tenants in my commercial investment property) and compel them (via the written Lease) to in effect pay the property monthly expenses , including amortizing mortgage (via Rent) and then hand over to me what's left over to do with as I please...PLUS these same strangers will have paid off the debt on my property in about 20 years
LANDON RAY
Founder and CEO
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