Sample Investment Strategies
Equity Recycle
Objectives: Wealth Growth
Diversification: Property Class (mix of A & B properties); Location
Plan:
PHASE I: (Years 1-3) Purchase one investment property in each of the first three years.
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PHASE II: (Years 4-10) Use a cash-out refinance of the first property to fund the purchase of property #4 in year four. Continue pulling equity out using cash-out refinances to fund another property each year, until the investor now owns 10 investment properties.
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PHASE II: (Years 11 and beyond) Options include
(1) holding the portfolio for another ten years, then selling the entire portfolio to exchange for an apartment building;
(2) Hold portfolio through retirement for cash flow;
(3) Use all cash flows as extra principal payments on one property at a time to pay down properties at a more rapid pace, then convert to heavy cash-flowing asset for retirement.
Year 1. Year 2. Year 3. Year 4. Year 5. Year 6. Year 7. Year 8. Year 9. Year 10
Cash-flowing Properties
Cash flow (which is likely all protected from taxes due to depreciation expense) during the portfolio-building years can be reinvested by applying toward purchasing the next property.
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After the portfolio is complete, cash flows can be reinvested in stocks/mutual funds OR used a living expenses if the investor begins retirement.
Year
1
2
3
4
5
6
7
8
9
10