KEYAREA#4: THE FINANCING If you are a passive investor, the likely case of you being an expert in real estate finance is slim. That’s why it’s so important to know you are working with competent sponsors. However, understanding some basic assumptions the sponsor is making and also the level of risk they are taking on in terms of lever- age can help you make a final decision if this is the correct investment for you. Here are a few red-flag questions you might ask during this phase: • How much leverage is being used to purchase the property? • What is the duration of the loan term? • What is the breakeven occu- pancy for this project? You might notice that these are NOT yes or no questions. One man’s trash can truly still be anoth- er man’s treasure. Use these questions as a guide to help you more accurately decide if your next investment is a good deal for you! •
Ellis Hammond manages a private network of investors seeking passive investment opportunities in multifamily syndications across the United States. Ellis is passionate about the intersection of faith and capital and hosts a weekly podcast show, Kingdom REI, in order to educate and inspire other investors and entrepreneurs to see capital as a means for greater Kingdom influence. To learn how you can invest alongside Ellis and this community, visit EllisHammond.com.
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