What is a zero cash flow?

Also known as “Zeros”, zero cash flow deals are structured so that all the rent paid by the lessee or tenant goes to the lender. These types of properties are ideal investment option, if you are are focused on growing your portfolio but with the least risk. They allow investors to leverage investment grade credit rating of the tenants and thus allow purchasing property with as little as 10% down. Zero cash flow is a much beneficial investment, as it enables investors to cash out their gain and postpone tax recognition.

Zero properties are in fact long-term estate products in which cash flow is not currently desired. Once the debt is amortized, these type of real estate investments offer great potential residual value and attractive secure cash flows. Zeros are the most cost effective way of satisfying both 1031 and 1033 exchange replacement property requirements. 1031 exchanges and zeros are now commonly utilized to defer recapture and capital gain taxes for the sale of highly leveraged properties.

1033 investors who want to maximize the amount of cash they maintain after satisfying their 1033 replacement property requirement, they also use zero cash flow properties. Properly structured zero leases are like a bond to be backed by investment grade tenants (BBB- or better) with an initial lease term, which is longer than the time needed to fully amortize the debt on the concerned property. Zeros are now quite popular in the United States and many people are investing in zero offers and deals.

For additional information regarding real estate investments, 1031 exchange, 1033 exchange, 1033 investors and Lease Triple Net Properties, please contact NNN Investment Group today.

Safeway 1031 exchange, Zero properties, real estate investments, 1033 investors

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