Here’s
a 2-minute story that compares the profitability of our passive business
opportunity.
There were two investment clubs…
Both were looking for passive income opportunities.
Investment
Club A – contacted Adrienne, a real
estate agent, who recommended buying an apartment. Adrienne also represented a property
management company who could manage the day-to-day management of the apartment
building for the new owner. A great
passive investment priced at $100K.
Investment Club B – contacted Bill, a business broker,
who recommended buying a partial ownership interest in a business; in this case,
a real estate brokerage business. The present owner would handle day-to-day to
management duties. A great passive investment
priced at $100K.
And so, Investment Club A bought an apartment; and Investment Club B bought a
business. Each paid cash for their investment. Each broker made a commission on
the sale, and each buyer enjoyed passive earnings while someone else operated
the business for them.
8 years later… Here is how each investment
club fared (amounts are rounded):
|
|
Investment Club A |
Investment Club B |
|
Type of investment: |
4-Family Apartment Bldg |
Real Estate Brokerage Biz |
|
Total cash investment: |
4 units @ $25K = $100K |
20 units @ $5K = $100K |
|
(Assumes 3% growth rate) |
(Projected) |
(Projected) |
|
Year-1 earnings: |
$14,300 |
$7,000 |
|
Year-2 earnings: |
$14,700 |
$19,800 |
|
Year-3 earnings: |
$15,100 |
$34,300 |
|
Year-4 earnings: |
$15,600 |
$35,300 |
|
Year-5 earnings: |
$16,100 |
$36,400 |
|
Year-6 earnings: |
$16,600 |
$37,500 |
|
Year-7 earnings: |
$17,000 |
$38,600 |
|
Year-8 earnings: |
$17,600 |
$39,700 |
|
Cumulative earnings: |
$127,200 |
$248,500 |
|
Average
annual earnings: |
$15,900 |
$31,100 |
|
Average annual ROI: |
15.9% |
31% |
Investor
Club A – earned back 60% of their initial investment in 4 years.
Investor
Club B – earned back 96% of their initial investment in 4 years.
Investor
Club A – earned an average of 15.9% annually.
Investor
Club B – earned an average of 31.0% annually, growing from 7% to 39% annually,
over 8 years.
NOTE: Investment Club B – having
gotten their investment capital back so quickly – purchased additional units
($5K each) each year with earnings, resulting in 40 units owned by start of 5th
year. This increased their annual earnings to more than $78K per year by Year 8
on an initial investment of $100K.
Question:
Which investment club would you choose to join?
To learn more about how you can profit from owning a third-party-managed
real estate business with as little as a $5,000 per unit investment:
Contact Bob Vanderselt – An independent business
broker representing:
314.414.4242
