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Investment Strategies - Tools to use to maximize Real Estate Investments



Good real estate investments create both positive cash flow and steady appreciation. However, each investor has his own balance he prefers when it comes to cash flow and appreciation. The amount of leverage on a property has a direct impact on cash flow. Smart investors manage their real estate assets by balancing the percentage of leverage in their portfolio. The optimal balance point varies based on personal preferences, goals, philosophies, and comfort levels.

Conservative Portfolio (0% to 50% leverage):
A conservative portfolio is characterized by low amounts of leverage, and high cash flow generation. The highly conservative investor would be more likely to pay off a mortgage and receive cash flow, or to put more cash down on a real estate investment. Conservative investors will typically hold a property for a much longer time period than more aggressive investors. Conservative portfolios generate lower returns on investment because they do not capitalize on leverage. Subsequently, conservative portfolios generate more cash-flow than less conservative portfolios.

Moderate Portfolio (50% to 85% leverage):
A moderate portfolio will generate good cash flow, but will finance the overall portfolio with significant leverage (debt). A moderate investor demands some positive cash flow, but also wants significant leverage to increase the return on investment.

Aggressive Portfolio (80% to 100% leverage):
An aggressive portfolio will create break-even or possible negative cash flow and high percentages of leverage (debt). The aggressive investor is not concerned about cash flow and is much more interested appreciation. An aggressive portfolio is financed initially with 90% to 100% debt. An aggressive investor will sell or refinance a property after enough equity is produced to reinvest.

Investment Strategy Leverage
- Maximum Cash Flow
- Minimum Return on Investment
Minimum Cash Flow -
Maximum Return on Investment -




Past performance is no guarantee of future results. There can be no assurance that Real Property Investment Group, LLC, or the real estate market will continue to achieve investment results similar to those set forth in the examples above. It should not be assumed that investments made in the future will be profitable or will equal the performance of examples in this document. The strategies described in the document are solely the opinion of Real Property Investment Group, LLC and should not be considered investment advice.

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