Net Lease Case Study: Family Dollar

DAJK GROUP NNN

If the middle-class investor “saves” money by investing in mutual funds or 401K, then the wealthy and strategic investor “save” money by investing in net lease or triple net lease.

Highlights:

  • How much monthly fixed income will investor receive if he invest $US 713,800?
  • What other benefits when USA-investor invest in net lease?
  • How much risk when USA-investor invest in this net lease, Family Dollars?
  • Would you commit to saving and increasing your asset in next 12 months?
  • Would you commit to learning the Net Lease Strategy you’ve always wanted?
  • Would you commit to preparing both of those aforementioned objectives?

Please review our previous blogs:

  1. Top 6 Terms You Should Know Before Investing in net lease commercial real estate
  2. First Key selection of net lease Commercial Real Estate investment…?
  3. Net Leased Commercial Real Estate (NNN CRE): Step #2
  4. How much McDonald invests in net lease commercial real estate?

What are the key data from net lease listing?

  • Who is your tenant?  Family Dollar
  • How much is asking price:  $US 713,800
  • Where is the location:  1060 South Fayette Street, Beckley, West Virginia 25801
  • What is the rate of return on your investment (Cap Rate):  $US 64,599 (Annually)

NNN Case Study

You want to reduce your risk by select strong credit tenant with strong net worth $US 100+ million.  Also, you make sure the Family Dollars will be a guarantee for your lease payment.

NNN Case Study 2

How much monthly fixed income will investor receive if he invests $US 713,800?

The annual return of investment, before mortgage and tax, is $US 64,600.  If you invest all cash in this Family Dollar, you will receive $US 5,383 a month.  Please note your payment is directly from Family Dollar.

Please note this is a passive income (NOT earning income) which is taxed at lower tax rate.  The exact tax rate depends on individual entire financial structure.  Please consult with your Certified Public Accountant.

Your potential passive income is $64,600 X 15 years = $US 968,984

NNN Case Study 3

What other benefits when USA-investor invests in net lease?

Depreciation & Appreciation:  For USA-based investor, you may receive additional benefits such as depreciation and appreciation.

Scalability:  Also, you are NOT involved in daily operations of the Family Dollar neither repair & maintenance.  This means you can invest simultaneously in multiple net lease properties and different locations.  Therefore, your scalability is limitless.  It’s only limit by how much capital you can access.

Re-financeable & Transferable:  You can borrow against it if you need additional cash.  You can structure this net lease be transferred to your foundation or business entity at your death event.

How much risk when USA-investor invest in this net lease, Family Dollars?

  • Political Risk:  Select country wisely; preferable is located anywhere in USA or United Kingdom
  • Mother Nature Risk:  Make sure your property insurance cover these events
  • Tenant Risk:  Make sure your lease is guarantee by Family Dollar

Conclusion:

If the middle-class investor “saves” money by investing in mutual funds or 401K, then the wealthy and strategic investor “save” money by investing in net lease or triple net lease.

For further discussion, please contact us for our free 30-min confidential consultation.

Related resources at Amazon Corner:

Related articles:

  1. What is an alternative investment real estate versus vacation home…?
  2. Case Study: Sale-Leaseback Technique of Wendy’s and McDonald
  3. 7 Points to Consider When Seeking Business Financing
  4. In Hong Kong, the “Mosquito Apartments” sells for $US 2,872 per square foot
  5. 6 Money Links DAJK GROUP Loves to share
  6. Net lease or Triple-net Lease is an Alternative Solution for Removing 12 Headaches in Real Estate Rental

Referenced Net Lease Listing:  Case Study_Family Dollar NN

Diagram for illustrating of How using a Triple Net Lease To Create a High Taxable Revenue to a Low Taxable Revenue Legally

DAJK GROUP_How to create non-taxable income for Cash Investor

Typical Scenario:  The Digital Online Business (“DOB”) generates average $US 40 million in last 3 years.  Since this DOB has very little on overhead and management’s expenses, it is most likely DOB’s revenue will be taxed at the highest tax rate.  Its total taxes’ bill most likely is Fifty Percent (50%) or $US 20,000,000.

How can this DOB minimize his taxes’ bill legally and simultaneously increase his asset?

First, the owner of DOB just allocates $US 18 million for investment in the Net Lease or Triple Net Lease commercial real estate (“NNN CRE”).

Step #1:  DOB purchases all cash of the 1st NNN CRE for $US 18 million.

Step #2:  Refinance after 3 to 6 months of closing of the 1st NNN CRE.  The loan amount is approximately 70% Loan-to-value or $US 12,600,000.  Please note this is a debt finance, the DOB would not pay tax on this $US 12.6 million.

Step #3:  DOB purchases all cash of the 2nd NNN CRE for $US 12 million from his debt finance.

Please note DOB can repeat step #2 and #3 again if he wants to.

After approximately 12 months, DOB creates at least 3 favorable and strategic objectives?

  1. Create a passive residual income approximately $US 1.1 million annually
  2. Create an asset’s value is approximately $US 30 million
  3. His total taxes’ bill is reduced at least Fifty (50%) percent to $US 10 million from $US 20 million.

Please note this NNN CRE strategy can work with lower initial investment.  We recommend the minimum is $US 1 million for the time and efforts involving and executing these steps.  There is no maximum amount; however it will be fewer selections of NNN CRE once its purchase price begins from more than $US 100 million.  Therefore, this investor should anticipate a little bit longer.  We would say about 24 months it is more realistic time frame.

For further discussion, please sign-up for our free 30-min confidential consultation.


If you would like to inquire about our Concierge Services, please sign-in our free consultation

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DAJK GROUP is the place where investors, business owners and entrepreneurs can research and find useful information, insight, resources, advice, guidance and inspiration for acquiring funds for their project, acquisition for their net lease commercial real estate, increasing their assets and running their profitable business.

Our group of expert Oil Trader, Commercial Real Estate Specialist, Asset Management, and Business & Financial Analyst, can help to answer all your questions and to provide you with investment alternative and options catered to your investment strategy.  Sign-up for a free 30-minute consultation with us now!

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Fine Artwork Can Leverage for Additional Liquidity – Creative Finance

Art Collection 3


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Our recent study showing creative investors especially net lease commercial real estate have increased using their art collections as collateral loan.  The question is WHY?

The value of their art collection has increased significantly for last several years now.  However many art collectors do not want to sell their arts because of too expensive when they sell as mentioned in our previous blog, “The Best Way Creating Liquidity Value of Your Art Collection – Borrow

There are more willingness banks and smaller art lenders are aggressively offering loan secured by art collector.

For art collector (borrower), it depends on what type of loan, the loan-to-value (LTV), annual interest rate and terms.


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There are two types of secured art-loans

  1. Recourse
  2. Non-recourse.

Recourse loan where art is required as collateral for the loan but the borrower also has to provide a personal guarantee of payment.  That means if the borrower defaults and the bank can’t recover the full amount of the loan by selling the art, it can make a claim on the borrower’s other assets.

Non-recourse loan where it does not require borrower’s personal guarantee.  The artwork is the only asset that is the security for the loan.

Because of the low risk associates with the recourse loan, lender offer much lower rates.  It’s also a part of an overall relationship with a wealthy client.  Borrowers may be able to get rates as low as prime plus 2% or 3%.  Conversely, the non-recourse loan, annual interest rates vary largely but typically range from prime plus 6% to 13%.

The minimum loan is $US 5 million for an art-secured loan.  Since loans typically are around 50% of the appraised value of the art, the borrower’s collection would need to be worth around $10 million or more. Also the minimum value of each piece is $200,000.

These are typical requirements for these art-loans.

Borrower requires proof of authenticity such as purchase document, exhibition history, sale history and inclusion in a catalog.

Borrowers also need to prove that they own the art outright, with no possibility of anyone else claiming it in situations like divorce or a disputed inheritance.

In addition, certain lender prefer a certain type of art collections.  They make better collateral than other.  For instance, some lender prefers artworks from ancient civilization; other lender prefers artworks between 19th century impressionist painting and postwar or contemporary art.

Where the money goes are stated in our previous blog: ““The Best Way Creating Liquidity Value of Your Art Collection – Borrow

CONTACT US… Collectors interested in arranging financing should contact us for free consultation.  We will assist to identify the borrowing need, determine what type of financing makes the most sense, and facilitate the appropriate lender.  Please note minimum appraisal report is at $US 5 million.  There is no maximum amount.

Related resources at Amazon Corner:

  1. Structured Finance and Insurance: The ART of Managing Capital and Risk
  2. The Art of Buying Art: An Insider’s Guide to Collecting Contemporary Art
  3. The Art Business
  4. Art as an Investment
  5. Risk and Uncertainty in the Art World
  6. The Explosion of the Art Market in the 21st Century
  7. Fine Art and High Finance: Expert Advice on the Economics of Ownership

If you would like to inquire about our Concierge Services, please sign-in our free consultation

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To optimize your success as a small business owner, create a blueprint for financing—before you need it to drive growth. 


DAJK GROUP is the place where investors, business owners and entrepreneurs can research and find useful information, insight, resources, advice, guidance and inspiration for acquiring funds for their project, acquisition for their net lease commercial real estate, increasing their assets and running their profitable business.

Our group of expert Oil Trader, Commercial Real Estate Specialist, Asset Management, and Business & Financial Analyst, can help to answer all your questions and to provide you with investment alternative and options catered to your investment strategy.  Sign-up for a free 30-minute consultation with us now!

Growing, Evolving and Pushing Forward!

The Best Way Creating Liquidity Value of Your Art Collection – Borrow

Art Collection 2


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Unlocking the Value of Your Art Collection

Art collectors have high value inaccessible in their art collections.  If they need to access of this value, they do not have to sell their art to create liquidity – Borrow.  They can borrow funds and retain possession for their art.

There are big advantages to borrowing – avoiding selling cost, capital gain and taxes.  It could be up to 65+ percent.  These combination can make it VERY expensive to sell.

What is the alternative to access its liquidity?  Borrow.

For example:  A collector sells his art for $US 10 million. Assuming selling costs of 20 percent (20 percent of $US 10 million = $2 million) and an original cost of $US 1,000,000 for the art.

  • Funds realizes a before-tax profit: $US 7 million.
  • Net to collector:  $US 4.2 million  (this profit is subject to capital gains tax. Assuming a rate of 40 percent (28 percent federal plus 12 percent state), the collector pays $2.8 million in capital gains tax, and nets $4.2 million.
  • Net to heirs:  $US 2.1 million (these net proceeds are subject to estate taxes at the collector’s death. Assuming a 50 percent rate, the heirs receive only $2.1 million — on art sold for $US 10 million! This represents a loss of 79 percent across a single generation, and underscores the cost of selling art.)

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By selling during his lifetime, the collector pays 2 levels of tax: capital gains and estate. By borrowing to create liquidity, the collector can keep the art during his lifetime and have his estate benefit from a step-up in tax basis. This enables collectors to pay just one level (estate tax) rather than two. In this example, the collector could borrow as much as $US 5 million (up to half the art’s value) and keep his art. Art collector would be responsible for debt service on the loan, but he would also benefit from any appreciation on his art.

What art collectors do with the proceeds?  These are few:

  • Entrepreneurs frequently borrow against their art to invest in their existing businesses or new ventures
  • People also borrow against their art to make charitable contributions, pay medical expenses, and fund divorce settlements.
  • An art-based loan is a low-cost option for art collectors in need of cash flow who can enjoy their art while making scheduled payments.
  • In these uncertain economic times, art collectors also borrow to avoid the risk of having their art “bought in” (or “burned”) at auction, which makes it difficult to sell for years to come.
  • Faced with estate taxes that must be paid within a short time frame, executors frequently liquidate art collections quickly. But borrowing funds to pay estate taxes and administration costs makes it possible for executors to maximize the value of the estate’s assets by selling the art over time, thus avoiding a “fire sale.”
  • Many arrange lines of credit and term loans to invest more art.
  • Some whose wealth is concentrated in art borrow funds to invest in other asset classes, such as stocks, bonds, real estate, oil, gas, private equity, and hedge funds, thereby diversifying their holdings.

Consult your financial adviser, accountant, attorney, or estate planner while making these decisions.

  • Does art collector want the flexibility of a line of credit or a term loan of 3-10 years?
  • Does art collector want a six-month loan to fund short-term liquidity needs?
  • Or an advance against art that art collector plans to sell later this year?

CONTACT US… Collectors interested in arranging financing should contact us for free consultation.  We will assist to identify the borrowing need, determine what type of financing makes the most sense, and facilitate the appropriate lender.  Please note minimum appraisal report is at $US 5 million.

Related resources at Amazon Corner:

  1. Fine Art and High Finance: Expert Advice on the Economics of Ownership
  2. Structured Finance and Insurance: The ART of Managing Capital and Risk
  3. The Art of Buying Art: An Insider’s Guide to Collecting Contemporary Art
  4. The Art Business
  5. Art as an Investment
  6. Risk and Uncertainty in the Art World
  7. The Explosion of the Art Market in the 21st Century

If you would like to inquire about our Concierge Services, please sign-in our free consultation

Concierge Services  2


BuildingFinancePlan 30pcOFF

Building a Finance Plan Geared to Growth *** 30% OFF for our subscribers!
To optimize your success as a small business owner, create a blueprint for financing—before you need it to drive growth. 


DAJK GROUP is the place where investors, business owners and entrepreneurs can research and find useful information, insight, resources, advice, guidance and inspiration for acquiring funds for their project, acquisition for their net lease commercial real estate, increasing their assets and running their profitable business.

Our group of expert Oil Trader, Commercial Real Estate Specialist, Asset Management, and Business & Financial Analyst, can help to answer all your questions and to provide you with investment alternative and options catered to your investment strategy.  Sign-up for a free 30-minute consultation with us now!

Growing, Evolving and Pushing Forward!