hassle-free cashflow minute lesson 7: arbitrage and yield spread

Hassle-free Cashflow Minute

Investor Educational Series by Professional Investor / Developer

David Campbell

Lesson 7: Arbitrage and Yield Spread

www.HassleFreeCashFlowInvesting.com

Arbitrage is the investment strategy of borrowing money to

invest for a profit.

Yield spread is the mathematical result.

Yield Spread = earning rate - cost of funds

2% Y.S. = 7% earning - 5% borrowing

Case Study: $100,000 house @ 7 CAP

purchased w/ 80% financing @ 5%

WHAT IS THE ROI FROM CASHFLOW?

Case Study:

$100,000 house @ 7 CAP = $7,000 NOI$80,000 mortgage @ 5% = $4,000 interest exp.

$3,000 profit

15% ROI = $3,000 profit / $20,000 capital invested

David Campbell$500 million of real estate

experience

real estate investor / developer houses / apartments

retail / office / land / resortcondos / condo conversion

financial strategist

Real Estate