How one investor turned a 7% problem into a Triple Net Win
Let's talk about every real estate investor's nightmare scenario—the one that makes you spit out your morning coffee and question all your life choices.
Picture this: You're a successful single-family portfolio owner. Your properties are humming along nicely, tenants are paying (mostly on time), and you're feeling pretty good about your real estate empire. Then your 3-year adjustable-rate mortgage matures, and suddenly your interest rate doesn't just increase—it “doubles” to 7%.
Our client found himself in that exact situation. Overnight, positive cash flow became negative cash flow. The irony? His properties were sitting on substantial unrecognized appreciation. He had equity coming out of his ears, but his monthly statements were bleeding red ink.
It's like owning a classic car that's worth a fortune but costs more to insure and maintain than you make in a month. Sure, you're "asset rich," but your bank account is telling a different story.
The “Do Something” Moment
When this investor reached out to us, he wasn't panicking (okay, maybe a little), but he knew he needed a solution—fast. Negative cash flow has a way of focusing the mind like nothing else.
Here's where things get interesting. While many investors might have considered:
Selling everything and licking their wounds
Refinancing into another potentially problematic loan
Emptying the aspirin bottle and hoping rates would magically drop
We saw an opportunity that checked all the boxes: A 1031 exchange into a triple net lease property with quality credit tenants.
The Triple Net Sweet Spot
For those unfamiliar, a triple net (NNN) lease property is basically the "set it and forget it" of real estate investing.
The tenant pays:
Rent (obviously)
Property taxes
Insurance
Maintenance
It's like being a landlord without the midnight calls about broken toilets or the property management headaches.
We identified a quality credit tenant property that would:
Provide immediate positive cash flow (goodbye, negative numbers!)
Defer capital gains taxes through the 1031 exchange
Free up trapped equity for better use
Deliver predictable, passive income aligned with his investment goals
The Happy Ending (Yes, They Exist in Real Estate)
Our client went from watching his portfolio drain his bank account to enjoying stable, positive monthly cash flow. The best part? He accomplished this without triggering a massive tax bill, and he's now positioned in a property type that actually lets him sleep at night.
No more tenant drama. No more rate anxiety. Just clean, predictable income from a credit-worthy tenant on a long-term lease. The Moral of the Story When your ARM rate doubles and your cash flow goes negative, it's not game over—it's game *change*. The key is having a lending partner who understands creative financing solutions and can move quickly when the market throws you a curveball.
Interest rate volatility isn't going anywhere. But with the right strategy and the right team, you don't have to be a victim of market conditions. Sometimes the best move isn't refinancing your current problem—it's pivoting into a better asset class altogether.
Facing Your Own Rate Reality Check? If you're staring down an ARM maturity, dealing with negative cash flow, or just wondering if there's a better way to structure your real estate portfolio, let's talk. We specialize in finding creative solutions that turn real estate challenges into opportunities.
Because at the end of the day, your investments should work for you—not keep you up at night wondering how you'll cover next month's shortfall.
Contact us today to explore your options. We promise we're better at solving rate problems than making jokes about them.
