“Cash is Trash” to “Cash is King” Clients seeking Positive Cash Flow Net Lease Investments
In 2023 we have witnessed the abandonment of the “Cash is Trash” slogan, and “Cash is King” is strongly back in vogue. The risk free rate now pays idle cash a handsome return, making the art of real estate investing cash flow analysis that much more meaningful. We are seeing more and more multifamily property owners seeking to offload their cash hungry Class B and C properties to exchange into more predictable cash flow and less ongoing capital intensive investments.
As a side note, for any newbie multifamily investors, consider during your due diligence efforts to inquire about “Below the line” expenses. “Below the line” refers to the expenses that are recategorized “below” the Net Operating Income (NOI) and thus not reflected in the NOI. In many instances significant expenses are “Below the line” that could make the actual property cash flow negative. Accounting rules apply to what expenses qualify, generally these are capital improvements that have a useful life beyond typical repair and maintenance items.
At Triple Net Lending we continue to help property owners manage the disposition of their actively managed portfolios (multifamily, strip retail, etc.) and acquire passive portfolios of net lease investment grade properties in well located areas. Another nuance in 2023, financing is so critical that it often either makes or breaks deals. Pinpointing your lending solution early on can help narrow the asset criteria (tenant, location, etc.) in an effort to secure financing and get your deal closed successfully.
