Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The CBCM Real Estate Group states in their prospectus that they buy buildings for cash and rent them out to tenants under a triple net

image text in transcribed
The CBCM Real Estate Group states in their prospectus that they buy buildings for cash and rent them out to tenants under a triple net lease. Which statement is generally TRUE about this strategy when compared with buildings that are financed with debt? ( MARK ALL THOSE THAT APPLY) For the owner who has bought a building for all cash, there is a greater concern about future appreciation than cash flow than an owner who is highly leveraged. This will be a more risky venture for the owners than if they had financed the building with a conventional mortgage at 80% of the appraised value but will generate higher rates of return than the industry average. For the owner who has bought a building with all cash, inflation is of less concern given the tenant must pay insurance, taxes and maintenance costs. Without debt payments to make on a mortgage, there is a greater potential for generating significant cash flows on an annual basis

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Multinational Finance

Authors: Kirt C. Butler

3rd Edition

0324177453, 978-0324177459

More Books

Students also viewed these Finance questions