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## Ep094 - Infinite Returns

Jan 18, 2019

We recently received the suggestion asking us to talk about the concept of infinite returns and how to achieve them. Today we explore the topic and give examples of how this could be done.

Calculating Cash On Cash Return:

• Base numbers
• \$1000 rent and \$400 expenses
• We take the \$1000/mth rent and subtract the expenses of \$400 equals \$600/mth net multiplying this by 12 months we get \$7,200 per year
• \$1000 (gross rent)-\$400 (expenses) = \$600/mo
• If we divide the annual net income by our cash in the property we get: \$7,200/\$100,000 = 7.2% return (not bad)

Better return:

• \$1000/mo (gross rent) - \$400 (expenses) - \$400 (debt service) = \$200/mo net x 12 = \$2400/yr
• \$2400/\$20,000 (down payment) = 12% return

Power of leverage, the lower the money you have in the deal, the higher the return!

Infinite return:

• \$1000 rent/\$400expenses/\$400 debt service/\$200 cash flow
• \$200 x 12 = \$2400
• You have no money in the deal
• \$2400/0 = Infinite

How do you leave no money in the deal?

Infinite return examples:

• Example 1 - cash-out refi
• Example 2 - bank 80%, private lender 20%
• Example 3 - bank 80% - seller 20%
• Example 4 - seller 80%, private lender 20%