Real Estate
It just makes sense!
With negative interest rates around the market and instability, the US real estate market has become a great investment. But how can you access the market if you are not a US citizen or don’t have the minimum requirement for investing in the US?
How RealNOI Loans Work
Our Mechanism is Simple and Secure
Our mechanism is simple. We offer Real Estate Rent Streams. Investors can pick through our marketplace to buy Rental Streams.
Each Rental Stream is valued based on the present value of a 20 years agreement. For example. If a Property has $1,000,000 of rental income annually. Over 20 years that is $20,000,000. We would offer the building owner approximately $10,000,000 for those rents. We would offer each apartments Rental Stream individually. So you could by Unit 305 and Unit 706. Investors can look at the historical performance and buy the Rental Stream that works for them. Each month, as the rent comes in, the Rental Stream holders would receive their share of the rent.
It’s an easy simple process. The dashboard will show the actual rent versus what we predicted in real-time.
1.
Property Rental Cash Flow Stream is purchased from the Property Owner
2.
Property analysis done and individual apartment Rent Streams created.
3.
Each period we send rent to the Rental Stream holders.
4.
Real Time reporting is available to track investments and returns.
Cash flow
Real estate is all about CASH FLOW.
A building is only worth what CASH it can produce. It is valued by professionals, based on the CASH it generates.
With negative interest rates around the market and instability, the US real estate market has become a great investment. But how can you access the market if you are not a US citizen or don’t have the minimum requirement for investing in the US?
Investing in real estate is really a little misunderstood. Most people believe that the bricks and mortars have some intrinsic value and that purchasing those bricks and mortar means you cannot lose your investment. After all, they aren’t making land anymore… says everyone who wants your money in their real estate investment project. The truth, sometimes they are right and sometimes they are wrong. Every long-time real estate investor has successes and losses. Most of those are tied to valuation, i.e. I bought a property for $1 mm and now it is worth $700,000.
As veteran real estate professionals, with more than 30 years of experience, dealing with billions of dollars worth of properties and lenders internationally, We can tell you… Real estate is all about CASH FLOW. A building is only worth what CASH it can produce. It is valued by professionals, based on the CASH it generates.
"Revenue is Vanity, Profit is Sanity, but Cash is King!"
- Unknown | Visionary
banking secret
Banks NEVER Lose!
The bank understands that the best place to be, better than owning the property, is collecting the rents. That is why they take control of the rents in exchange for the mortgage loan. Banks rarely lose. When the investors lose, the bank ends up with the property. The bank NEVER loses.
How would you like to be the bank? How would you like to control the rents on hundreds of prime real estate properties in the US, without having to own the properties that are generating the rent?
“With RealNOI you are the BANK!”
– Peter Gallic | President RealNOI
banking secret
Banks focus on Cash Flow!
Banks use depositer money. So when you put cash in the bank, the bank uses that money to make loans. They pay you 1.5% and charge a borrower 6%. The difference goes into their pocket. Even better for them is getting access to deposits in a country with real low rates, like Switzerland. Normal investors didn’t have the same access to cheap money, until RealNOI came along. Now you can be the bank.
“That’s $1,600,000 in pure profit!”
One of our original investors. Not bad for having an investment, secured by prime US real estate.
“Entrepreneurs believe that profit is what matters most in a new enterprise. But profit is secondary. Cash flow matters most.”
Peter Drucker | Management Consultant, Educator and Author
Relaxed and Flexible
Need to get out Early?
We make sure there is always a market for our Loans. We are a guaranteed monthly purchaser, but we put the loans on other exchanges so that other investors can buy and sell them.
We constantly are issuing and repurchasing loans so you can exit at anytime. No penalty. Just put your loans up for sale.
“Cash Flow is the basis of value in the digital world!”
Peter Gallic | President RealNOI
Available To Everyone
What if I am not a US Citizen?
We don’t care. This is about giving everyone the opportunity to do what wealthy people have been doing for years. Securing your wealth with prime real estate.
Imagine, you are visiting the US and you look at the Freedom Tower, seeing all the people going in and out, knowing, with smug satisfaction, that you receive rent for that building and a bunch of other landmark buildings every month through your RealNOI Portfolio.
This is your opportunity to move beyond your means, your neighborhood, your world. To move into the world of the elite property owners. 2% of the world that owns 70% of the real estate.
Move into the world of the elite property owners. 2% of the world that owns 70% of the real estate.
The opportunity will not be around forever!
Cash Flow is the basis of value in the digital world!
It is fair to say that cash flow is the number one determinant of value in today’s financial market. Assets are not valued on the basis of the cost of creation, they are valued based on the cash flow they can generate. Companies are traded at multiple of earnings, properties are purchased based on capitalization rates and net operating income. While there are valuation anomalies in the market, caused primarily by the hope for future cash flow revenue, for most investors, the question is always the same…how much will I make on my investment?… cash on cash return?
The emphasis of many traditional real estate markets is focused on the actual brick and mortar structure for two reasons. One, the brick and mortar structure provides non-cash expenses i.e. depreciation and amortization, that allows returns to be maximized. Second, the brick and mortar are always deteriorating and there is a real cash expense in maintaining the asset. Therefore, when underwriting physical properties there is a focus on the actual physical structure. Even an appraisal will have a replacement value of the physical structure for the purposes of property insurance and maintenance reserves. But that focus is used to determine how much effect any maintenance or expense will have on the cash flow that the investors want.
Investments in real estate have long been handled by funds and groups that specialize in managing those two aspects of the property. They use third parties to help with leasing, repairs, and other annual expenses, keeping employee count to a minimum. They focus on the management of the physical asset, after all, if the building is falling apart no one will want to lease space. No lessors, no cash flow and value goes down.
Investors in real estate deals tie up equity. Typically, at least 20% of the value of the building is tied up at the outset of a property deal. As debt service pays down the outstanding debt, the equity investment increases. Even if the market stays neutral, investors increase the equity trapped in leveraged real estate investments as time goes by. Increasing their risk, while possibly changing their reward up or down. As interest rates move into nontraditionally low levels, investors increasingly face risk that the cash flow of the property may be subject to higher valuations, which would decrease asset value. Equity risk is part and parcel of brick and mortar real estate investing.
Cash flow generated by rental properties is much less risky. Cash flow is subject to two risks… non-payment or vacancy. Over a decade of studying real estate investments, these two risks are the major determinants of success but are rarely non-predictable. Most savvy real estate owners and developers, take these factors into account when purchasing or developing properties. They look for credit tenants that have strong financials, they get longer term contracts, they ask for cash reserves from weaker tenants. Less than .01 % of credit tenant financing and investments go bad. This is why bonds used to finance those properties get the highest credit rating.
The Rates
Historic Rates
Cumulative Historic Default Rates (in percent)
Moody’s | S&P | |||
Rating category | Muni | Corp | Muni | Corp |
Aaa/AAA | 0.00 | 0.52 | 0.00 | 0.60 |
Aa/AA | 0.06 | 0.52 | 0.00 | 1.50 |
A/A | 0.03 | 1.29 | 0.23 | 2.91 |
Baa/BBB | 0.13 | 4.64 | 0.32 | 10.29 |
Ba/BB | 2.65 | 19.12 | 1.74 | 29.93 |
B/B | 11.86 | 43.34 | 8.48 | 53.72 |
Caa-C/CCC-C | 16.58 | 69.18 | 44.81 | 69.19 |
All | 0.10 | 9.70 | 0.29 | 12.98 |
Source: U.S. Municipal Bond Fairness Act
Average Historic Rates (in percent)
Moody’s | S&P | |||
Rating category | Muni | Corp | Muni | Corp |
Investment grade | 0.07 | 2.09 | 0.20 | 4.14 |
Non-investment grade | 4.29 | 31.37 | 7.37 | 42.35 |
All | 0.10 | 9.70 | 0.29 | 12.98 |
Source: U.S. Municipal Bond Fairness Act
“The fact is that one of the earlist lessons I learned in business was that balance sheets and income statements are fiction. Cash Flow is reality!”
Chris Chocola | American Businessman and Former Politician
US Market Size
If the market is $14.4 Trillion than $2.8 Trillion is locked up equity.
For real estate financings that are rated, it is very rare for the underlying cash flow to dissipate. Because of this most real estate bonds get high ratings. Given the volume of CMBS financings, this means that there are very dependable cash flow streams in the market, represented by the equity that is trapped in real estate investments.
Conservatively speaking that would represent $400 billion of cash flow. USD that flows through properties to owners each year as gross profit.
We have established the size of the market potential. It’s enormous. If we can free up any portion of the equity tied up in the traditional real estate market, we would have a large market to work with. And this is only the US Market, property markets exist worldwide.
Summary of CMBS Issuance12/31/2018
U.S. | Non-U.S. | Global | Agency | CDO | |
Full Year | ($Mil.) | ($Mil.) | ($Mil.) | ($Mil.) | ($Mil.) |
1999 | 56,556.0 | 9,085.0 | 65,641.0 | 1,678.9 | 548.3 |
2010 | 10,882.8 | 2,983.4 | 13,866.2 | 23,914.1 | 7,504.4 |
2011 | 30,770.4 | 3,340.3 | 34,110.7 | 35,836.1 | 2,632.1 |
2012 | 45,004.5 | 4,252.3 | 49,256.8 | 54,159.3 | 3,808.4 |
2013 | 81,530.7 | 12,532.6 | 94,063.3 | 63,731.9 | 4,310.0 |
2014 | 90,448.4 | 5,753.6 | 96,202.0 | 53,686.9 | 5,085.2 |
2015 | 94,974.1 | 4,457.6 | 99,431.7 | 67,071.6 | 5,966.2 |
2016 | 69,075.2 | 1,689.1 | 70,764.3 | 81,294.5 | 3,844.0 |
2017 | 87,812.4 | 1,143.5 | 88,955.9 | 95,102.3 | 7,685.1 |
2018 | 76,978.8 | 5,981.6 | 82,960.4 | 95,295.6 | 14,304.9 |
About Equity
How to Free Up Equity
Equity in real estate is, at its basic level, the right to collect the cash flow generated by the underlying property. Whether it is the rent, the proceeds from a sale, or any other revenue generated by the property, your equity gives you the right to collect that cash flow. Cash flows in properties, for the most part, are predictable enough for lenders and rating agencies to provide future guidance on them. Lenders limit lending to only a portion of the cash flow to hedge the risk of fluctuations in property valuation. Changes in the capitalization rates used in markets and changes in central bank rates can affect valuations, while not necessarily changing the underlying cash flow. Because lenders use a loan-to-value measure as a risk abatement tool, they give themselves room for valuation fluctuation.
In laymen’s terms, let’s assume the bank lends you 70% of a million-dollar building for ten years. They want to ensure you can sell the building in ten years and have enough money to repay their loan. The market can drop by 30%, and they would still be paid back. Loan-to-value has more to do with market capitalization and interest rates than rental income. There are very few commercial loans that generate enough cash flow to fully repay the principal and interest over a ten-year period.
In conclusion, lenders have left behind some cash flow. Over time, that remaining cash flow will flow to the equity holder of a property. That is our opportunity. By purchasing that cash flow at a discount, we can essentially accelerate the equity holder’s realization of their profit from the building. The profit we accelerate doesn’t affect the value of their equity; it only allows them to realize their profit today, rather than waiting ten years. This is very attractive to many real estate owners. It provides them with capital to reinvest in other locations, helps investors in their properties see more immediate benefits, and gives them funds to accelerate improvements on the buildings.
Buyer Charactaristics
Who should invest in RealNOI Loans?
Right now, there is a lot of negative interest rate markets around the world. Investors in those markets are essentially being told…look elsewhere for returns. But going elsewhere is difficult. If you live in Denmark, investing in the US Commercial Property Markets is almost impossible. It’s hard enough to buy US equities. What if you are in China, already trade tensions are making it increasingly difficult. What if you were in Venezuela and you wanted to move your family fortune to a safer environment? There are a multitude of people who want the safety of the US economics, but cannot get here.
Our Loans are universally available. By listing on multiple exchanges, you can safely buy them from anywhere. We will allocate purchasing based on Loans present in each exchange so that everyone gets a fair shot at liquidity. Plus we can sell loans in any form of fiat or crypto the market will take.
By selling to wholesalers and limiting our company sales to 3 regional purchasers, we support the market. Loans get into trouble when founders token dilutes the market…but there are not any here. The management takes 5% of the funds from token sales and 5% of the receipts from rents. That is all they get unless they want to purchase Loans on the same basis as anyone else.
The Benefits
How RealNOI Token Investors Benefit!
Secured by Real Estate
The underlying cash flow is secured by US real estate initially. As we expand we would expand to other well known markets, like London or Hong Kong.
Cash Flow Income
Income is always greater than purchase – because we are discounting the cash flow, the market purchase will always exceed the amount of token that were issued for that period. This means that there will always be a positive pressure and a floor that will make the token worth more than their issuance.
Open To Everyone
Foreigners can invest in the US without hassle.
Comfort of Flexibility
Market make sit possible to exit market in short amount of time. Liquidity is present because of the portable and tradable nature of the token.
The Numbers
What do the financial terms look like?
Following is a simple illustration:
Building | Yr1 | Yr2 | Yr3 | Yr10 |
Rental Income | 100,000 | 100,000 | 100,000 | 100,000 |
MG&A | -10,000 | -10,000 | -10,000 | -10,000 |
Net Profit | 90,000 | 90,000 | 90,000 | 90,000 |
Debt Service | -60,000 | -60,000 | -60,000 | -60,000 |
Distribution | 30,000 | 30,000 | 30,000 | 30,000 |
In this example, an equity holder would receive $30,000 a year for ten years or $300,000.
Financial Results
The offer amount corresponding with NPV
We would offer an amount corresponding with an NPV
NPV | Offer |
6% | $220,802.61 |
5% | $231,652.05 |
4% | $243,326.87 |
3% | $255,906.09 |
For that cash flow. Each period would see the following margin.
NPV | Spread | Percentage |
6% | $ 7,919.74 | 36% |
5% | $ 6,834.80 | 30% |
4% | $ 5,667.31 | 23% |
3% | $ 4,409.39 | 17% |
At 6%, our cost for the first period would be $22,080.26 and we would receive $30,000. The margin between would be $7,919.74 for that period.
That is a 36% difference between what we paid and what we received. Over ten years we would receive $79,197.40 on our $220,802.21 investment. That return is what is represented in our Projection Analysis.
Want to discover why RealNOI is the superior approach for real estate investors? Click here.
Discover the power of RealNOI: the ultimate platform for real estate investors. Unlock the hidden potential of your equity and tap into a wealth of profitable opportunities. With our innovative approach, you’ll experience immediate cash flow, allowing you to reinvest and accelerate improvements on your properties. Whether you’re a seasoned investor or new to the real estate market, RealNOI offers comfort and flexibility for all. Join us today and start maximizing your investment with RealNOI Loans, backed by US real estate and a positive cash flow. Click Here to understand more