The Speed of Money

I sat in front of an excel for 3 months modelling out the financials of constructing a condo building to keep as a rental.

I started with a blank excel. 

At the end it integrated:

1. Cost of the building
2. Mortgage to build it
3. Mortgage to keep it
4. Cash flow analysis of keeping it
5. Investor returns

What was interesting was the speed of money for investors.

Example:

For a $10,000,000 project, investment would be $2,500,000 up front. 

At the end the project it could be worth $14,000,000.  

You then refinance and get a new mortgage for $10,000,000. 

The $2,500,000 is returned to investors and the ownership is maintained.  

The key is keeping the property and getting all your money out fast as possible.

Why?  So you can re-invest into another building again and again.  

If you have a 2.5 year cycle per building, over a decade the same dollars can be invested 4 times. 

I never thought of the speed of money until I was putting this excel and performa together. 

It should be part of your calculation for any investment you make.