How the Ultra-Rich Are Earning 9%, 11%, 18%… Even 27% Returns in the ONE Place Where Real Estate is Booming.
If the stock market, measured by the Dow, is still down more than a 1,000 points since it’s 2007 high…
… then where are the rich making their money?
I can tell you one place.
TEXAS.
And surprisingly enough, in Texas real estate.
Since Mike is from Texas, you might think he’s partial. But the truth is, investors from all over the world are investing in Texas real estate.
Because as you’ll see in a moment, this is one housing market that is still booming.
And Mike wasn’t about to let a lucrative investment opportunity in his own backyard go to waste.
At the same time, he wasn’t interested in being a landlord or getting his hands dirty rehabbing houses.
So through his contacts he connected with a company that gives him the best of both worlds:
1) Access to the fantastic returns from Texas’ housing boom, and
2) None of the hassles usually associated with real estate investing.
And as it turned out, this company was very special indeed.
A Company With A Crystal Ball
This company sold all it’s real estate properties in 2007. Why 2007?
Because, like many of us with contrarian minds, they knew the floor was about to fall out from under real estate prices.
It was a brilliant move. And it was just the first brilliant move of many.
Because not only did they foresee a collapse in real estate prices, they also saw that lending and credit from banks was about to vanish.
So they took all that cash they made from selling their properties at the peak of the bubble and started a new company as…. wait for it…
A Private Lender.
Brilliant!
In today’s market many banks are so fragile that they constantly deny loans that shouldn’t be denied. People with 730 credit scores are being told no!
And that leaves room for private lending companies to step in and invest in qualified buyers.
So how can we invest with this company?
Here’s How It Works…
They find the qualified borrowers.
They hire the inspectors for the property.
They take care of the legal documents and taxes.
They eliminate risk with a “Heads we win, tails we don’t lose” strategy.
And all you do is help fund the loan, starting at a minimum amount of $50k…
…and you could quickly be earning a 10% annual return.
They do all the work, you supply the money – and you both win!
And that’s just one side of the equation.
In addition to lending money, they also offer a chance at 27% returns by investing in equity!
That means that instead of “lending” money to a real estate developer and getting a 10% return…
…you can PARTNER with this Private Lending firm and become a part-owner in, say… an apartment complex.
This has incredible benefits…
* A conservative 10% return on cash flow from the business
* Tax benefits for investing in real estate – 10%
* Plus 5% profit when the apartment complex is sold
* And your profits are taxed at the capital gains rate: 15%!
When combined with another EVG strategy that can earn you 2% more in interest from your investments, this strategy produces 27% annual returns… conservatively!
With a 27% return, $50,000 turns into $20,000,000 after 25 years!
That means if Mike just put in $50,000 and continued this strategy for 25 years – he’d end up with $20,000,000.
Now you know why the rich are dumping the stock market for real estate investing in Texas.
The Elevation Group lesson on Private Lending was filmed in July of 2011. So we recently got back in touch with this special company to ask them what has changed since then.
In short, a great opportunity just keeps getting better.
In 2010, Newsweek declared the 10 cities best poised for economic recovery – and Texas held 4 spots: Austin, Dallas, Houston and San Antonio.
And this trend continues. More and more companies are moving to Texas. Right now there are 58 Fortune 500 companies in Texas – more than any other state.
And companies need employees, so the population is growing fast and furious.
These new employees and job-seekers need a place to live. So multi-family real estate, like apartment buildings, are needed more than ever.
And since the banks aren’t lending, this is a huge opportunity for Private Lenders.
Here I asked them about it…
EVG Research Team: “So what’s going on right now? What’s new the past few weeks in your world?”
Private Lender: “We’re seeing a lot of capital from all over the US coming into Texas trying to purchase as much multi-family (properties) as they can. We’re seeing continued growth in both job growth and population growth.”
EVG Research Team: “What’s driving this growth?”
Private Lender: “A lot of people who study real estate know that in Texas … the demographics are strong right now. Austin is growing right now by 50,000 people a year. Our unemployment rate is just about to hit below 6%.”
They attributed this to a few things:
* Affordable cost of living.
* No income tax.
* Pro-business environments.
And for these reasons, a lot of companies are moving to Texas. Especially technology companies.
Private Lender: “We’re seeing that a lot of the headquarters of Apple, Facebook, Google are either relocating or expanding here. Apple just committed to 3,600 new jobs in Austin.”
Texas Universities are also expanding and will add to the rental demand.
Private Lender: “Texas A&M is starting their medical school. And then the University of Texas is also starting a medical school. And that’s going to bring an influx of people to Austin.”
Demand Explodes As Profit Margins Widen
Not only are the opportunities to invest as a private lender growing, the profit margins are growing too.
Take a look:
Private Lender: “Typically as a real estate investor there is a 1.5-2% spread between what the current interest rate is and what the capitalization rate is. The “cap rate” is kind of like the Price/Earnings ratio for a stock…
What you’re seeing right now instead of a 2% spread, because interest rates remain low, you have a 3% spread right now. It is changing, but we’re still managing to snag them at close to 3% spreads. So we’re going to do that as long as we can. That’s a great spread.”
Comparing the cap rate to the interest rate is a ratio that doesn’t mean much by itself. But generally, when the cap rate grows more than 2% over the interest rate it means profits are high at a time when costs are low.
And so a 3% spread is worth shouting about. It allows an investor to jump in and quickly make an 18-19% cash on cash return… or even higher!
In contrast, interest rates grew higher than the cap rate during the housing bubble. And this should have been a HUGE sign that properties were too expensive to be profitable. Yet it was completely ignored by most.
What Else Has Changed?
EVG Research Team: What has changed since the Elevation Group lesson last July?
Private Lender: “Real estate values are going up. Occupancy rates are going up. Rent prices are going up.”
“We’re seeing more opportunities to purchase apartments that have 90%+ occupancy already. So we think that some of the risk is mitigated as soon as we buy the property because it’s already cash-flowing on day one.”
Less risk and rising prices.
Can it really be this easy? YES.
And it actually just gets better…
Private Lender: “The other advantage is in managing the properties well. A lot of the sellers that are currently selling their properties have owned the property for a while and they’re ready to just get out.”
“They haven’t taken care of the buildings, or raised rents. If you don’t manage your building well and you don’t rehab it, then you’re worried about raising rents because then people will leave. So we have the advantage of already having the tenants in place, coming in, doing slight renovations and getting immediate increases in rent.”
“So it’s a huge advantage. No longer is it ‘Can we raise rent?’ but ‘How quickly can we raise rent?”
In short, the investment returns from Texas real estate just keep getting better and better.
Last July when we first met with this Private Lender, we were hoping to see 27% returns.
Are 27% Returns Still Realistic?
YES. In fact, Mike just held a live webinar for Elevation Group members revealing that his returns made 27% look small.
Mike’s returns with this private lending company are an astonishing 40% so far!
And he gets to invest in Texas real estate without any of the hassles. No maintenance, no paperwork, no insurance and no being a landlord.
If a no-hassle 40% return is the kind of investment that interests you, then I highly recommend joining The Elevation Group
What is The Elevation Wealth? It’s an exclusive community started by Mike Dillard for sharing the “Black Box” investment strategies of the utlra-rich.
Mike and his advisers believe we’re on the verge of the greatest wealth-transfer in history.
And those who invest wisely stand to earn their lion’s share of the world’s wealth. Those who do nothing could lose everything.
To find out more about the great wealth transfer you need to watch this free presentation now.
Click Here To Watch The Free Presentation
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Your Partner in Prosperity,
The EVW Research Team
On Monday, the National Association of Home Builders said that its housing market index, which measures the outlook for home builders, held steady at 28 in March from the same level in February, its highest level in five years. While still far below the 70s it reached in 2005 during the housing boom, the index has doubled in the last six months.
