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Hassle-free Cashflow Minute

              Lesson 7:
     Arbitrage and Yield Spread

        Investor Educational Series by
       Professional Investor / Developer
                David Campbell

    www.HassleFreeCashFlowInvesting.com
                ©2011 All Rights Reserved
Arbitrage is the investment
strategy of borrowing money to
        invest for a profit.

       Yield spread is the
      mathematical result.

    www.HassleFreeCashFlowInvesting.com
Yield Spread = earning rate - cost of funds


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




       www.HassleFreeCashFlowInvesting.com
Case Study:
      $100,000 house @ 7 CAP
  purchased w/ 80% financing @ 5%



WHAT IS THE ROI FROM CASHFLOW?



    www.HassleFreeCashFlowInvesting.com
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


        www.HassleFreeCashFlowInvesting.com
David Campbell
              $500 million of real estate
                    experience

            real estate investor / developer
                  houses / apartments
              retail / office / land / resort
              condos / condo conversion
                   financial strategist


www.HassleFreeCashFlowInvesting.com

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Hassle-free Cashflow Minute Lesson 7: Arbitrage and Yield Spread

  • 1. Hassle-free Cashflow Minute Lesson 7: Arbitrage and Yield Spread Investor Educational Series by Professional Investor / Developer David Campbell www.HassleFreeCashFlowInvesting.com ©2011 All Rights Reserved
  • 2. Arbitrage is the investment strategy of borrowing money to invest for a profit. Yield spread is the mathematical result. www.HassleFreeCashFlowInvesting.com
  • 3. Yield Spread = earning rate - cost of funds 2% Y.S. = 7% earning - 5% borrowing www.HassleFreeCashFlowInvesting.com
  • 4. Case Study: $100,000 house @ 7 CAP purchased w/ 80% financing @ 5% WHAT IS THE ROI FROM CASHFLOW? www.HassleFreeCashFlowInvesting.com
  • 5. 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 www.HassleFreeCashFlowInvesting.com
  • 6. David Campbell $500 million of real estate experience real estate investor / developer houses / apartments retail / office / land / resort condos / condo conversion financial strategist www.HassleFreeCashFlowInvesting.com