Focus on Opportunity
If you read our daily blog, you probably understand that we at Kingdom Calling work to teach people how to incorporate every financial decision into the calling God has for their lives. We teach clients, and to a lesser degree, our readers, to understand how an investment will contribute to their overall cash flow. We teach them how to analyze all the benefits and risks associated with an investment in addition to understanding what type of contribution the investment makes to society.
In our blog to this point, we’ve essentially stuck to the principles, but we thought it would be helpful to share a specific example of an investment that fit with our philosophy. So I’m sharing an interview with a representative of a company that offers just that sort of product. Of course, everybody’s walk is different, and the investment we’re discussing today would certainly not be right for everyone, so in this case, we’ve kept the particular investment opportunity anonymous.
Because, as is key at Kingdom Calling, you must know your calling before you implement the tools to steward your finances to best promote it.
Q:Can you give an overview of the investment opportunity?
A; Because of market conditions, oversupply of inventory, and lack of financing options, our group has developed a model that allows investors of all types to take advantage of lucrative real estate opportunities by leveraging our buying power and mitigating risk through our Total Leasing Program.
In addition, we’ve obtained investment opportunities within the Go Zone, the largest tax incentive ever offered on Real Estate in the history of our country.
Q: Why invest with your company?
A: In addition to buying Real Estate at significantly discounted prices from top of the market of pricing,
All of our Real Estate Investment Properties come with the option of our “Total Leasing Program” – giving you a full rental income for up to 30 months and leaving you CASHFLOW POSITIVE on a monthly basis:
} 100% of your mortgage payment
} 100% of your property taxes,
} 100% of your homeowner association fees and dues
} 100% of your management fees,
} 100% of your maintenance costs
} 100% of your utilities
Q: Can you give an overview of the real estate market as you see it?
A: For at least a portion of every decade, Real Estate markets act irrationally, providing the patient investor with great rewards and little risk.
This last decade has seen some of the most irrational Real Estate purchases in decades.
As a consequence, the most experienced investors have stayed on the sidelines and watched, as emotionally charged investments were given little practical thought.
Properties were purchased in an “auction madness” that prices higher and higher, without regard to operating income and payment of debt.
Now these original developers and investing speculators have cash flow problems that can only be solved by cash. This has created some of the greatest buying opportunities of our lifetime.
It’s our philosophy that a prudent investor makes his money on the day he buys the property and collects his money on the day he sells.
Q: Can you give an overview of this particular market?
A: Earlier this decade, Biloxi’s market experienced significant price drops as most markets around the country. Due to the momentum created by the Go Zone, the expansion and attraction of new business, and rapidly increasing population growth – Biloxi has turned the corner and become an “emerging market”. In fact according to the National Association of Realtors, it is the fastest appreciating market in the United States and forecasted to see steady, dependable growth for several years.
Q: What sort of guarantees does an investor have?
A: As with any investment, there is always risk. If someone tells you there is zero risk you should run away. The beauty of our program is the way we have made buying in this down market possible but through our Total Leasing Program; we have designed a strategy to mitigate the investors risk through this down economy.
You can certainly find good deals on Real Estate just about anywhere today. The risk is finding a suitable tenant in the shortest possible time to avoid vacancy, hoping your tenant pays their rent on time – and due to the reality of the economy as a whole – hoping your tenant doesn’t lose their job and stop paying rent all together. With our program, you get a corporate tenant from day one on a long term, 2.5 year lease. You are assured of 100% occupancy until practically 2012 and in the meantime, you are cash flowing at a very strong cash flow rate.
Q: Can you give an overview of the GOZone benefit?
- The Gulf Opportunity Zone Act passed by Congress in 05, signed into law early 06
- Establishes tax incentives and bond provisions to rebuild the local and regional economies devastated by hurricanes Katrina, Rita, and Wilma.
- Tax Benefits available to investors across the regions of Mississippi, Alabama, and Louisiana
- 50% BONUS DEPRECIATION IN YEAR 1
One of the most advantageous clauses of the Go Zone Act is that it provides buyers with a bonus depreciation equal to fifty (50%) percent of the depreciable portion in year 1, and on an accelerated basis to offset active, passive, and capital gains taxes. Depending on how you file your taxes, you may have the option of taking the write off back 5 years and use it against active income taxes you have already paid, resulting in an IRS refund check equal to the amount of the tax cash credit.
Q: What sort of exit strategies should an investor have in mind for this investment?
A: The buyer can hire any management company they want at the end of the 2.5 years, including our property management company of which we will already have a tenant or tenants in place and continue to manage forward.
Some buyers choose to sell after realizing the depreciation benefit. This can be done through a 1031 exchange to avoid recapture. We work very closely with our investors to advise them on the best exit strategy and their options at the appropriate time. This process usually begins about 2 years into the corporate lease.
Q: What value is being created by my investment in this deal? (in other words, how am I providing value to the market which is naturally compensating me because of this new delivered value?)
A: The Biloxi market lost 65,000 homes in one day. The population is experiencing a boom. Supply cannot keep up with demand and you are contributing to the rebuilding and re-vitalization of an area that a few years ago was desperate need of assistance.
Q: What sort of cash flow should I expect?
A: Our investors can expect anywhere from a 13-25% cash on cash return annually
Q: To what degree is the investment secured by collateral?
A: Financing is always dependent on the circumstances of the individual buyer and typically 80% LTV (Loan to Value), however, due the relationships we have formed with various lenders, we can sometimes provide buyers with as good as 90% LTV.
Q: What other specific information can you share?
A: In my lifetime, there has never been a better time to buy Real Estate then today. Combine that with the largest tax incentive ever offered on Real Estate and you will understand why Forbes magazine ranks this one of the top 3 Investment Opportunities anywhere and the # 1 Real Estate Investment Opportunity in the United States.
As we said up front, we’ve held back certain details because any investor needs to be educated in order to determine if a particular investment is right for them, but this is an example of an investment that some of our clients see as an opportunity to add to their own cash flow which directly aids in them living out the calling to which God calls them to. It’s an investment that has several layers of security in case the initial analysis does not prove accurate, and has the potential for additional appreciation, with a tremendous tax benefit that you can not find anywhere else.
We counsel our clients individually and extensively to help them choose the investments that are in line with where God is calling them. Each person is different and needs to understand every possible risk and reward with any investment before investing.
Other articles in this newsletter:
A column putting today’s bruised economy in spiritual perspective
An article discussing knowing through thinking vs. knowing through doing
A detialed review of what it means to steward your money to better facilitate your walk