Posted at November 14, 2020 Posted In Uncategorized

What is an “Infinite Return”, and can you get one?

One benefit of Investment Real Estate that stands out most for people is the idea of the “infinite return.” The concept itself is relatively straightforward. It happens when you retrieve your initial investment but still own the underlying asset and income stream.

I bought my first investment property in Houston, TX. At the time I did enough research to know Houston was a booming market, and the property was cash-flow positive.

This is not to say I didn’t run into my share of challenges.

Now, none of this is particularly flashy. In fact, collecting rent checks and letting the real estate market do the work of appreciation is about as exciting as watching paint dry. That said, if your plan is to wait on the sidelines until the economic outlook becomes more clear then real estate may not be a bad way to go.

Using general numbers, my infinite return happened as follows;

  • Purchase price $77,000 netting $440 per month (after PITI). The initial down payment plus closing costs were approximately $19,000.
  • Three years later the house was valued at $118,000 and I refinanced. $82,600 new loan – $61,600 old loan = $21,000

The net result was that I retrieved the initial $19,000 and the property still cash flowed at about $150 per month. Most importantly I retain the $118,000 asset and can potentially repeat the process several times over.

Can you do anything close by investing in stocks?!! I think not.

Lesson learned – I REALLY wish I would have followed the advice of finding a Property Manager BEFORE finding the house. After now going through three different PMs in Houston that lesson has finally sunk in.

Will this strategy work for you? Depends. What I can tell you is that the chances of doing this in your own backyard is entirely reliant on where your backyard is located.

Is there a contact person I can refer you to? Yes, absolutely. And no, they don’t pay me a referral fee, in case you’re wondering. ????

Our mission is to help passive investors become financially free by providing high-quality alternative investments — if we can help you in that way, it would be an honor to do so. Please reach out or schedule a call to discuss!

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