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A Recession-proof Investment! Pt.1

Our New Series Starts Here!

Every week we discuss what will be the next interesting topic that we will share with you, be it financial reports, success stories or detailed access to the stories of some of our families, including all the effort put forth by Equity & Help in all the steps of the way.

We know that the Equity and Help model is recession-proof, so much so that we could include it as a slogan when promoting the program!  However, we want to go further and demonstrate this by sharing with you our results along with a comparative analysis to other business models and strategies in this new series. We will help you erase any concerns about our company and enable you to make the best financial decision by one short reading a week.

There is a topic coming up frequently in our presentations: recession. There are questions, especially on how successful a Philanthroinvestor (PI) can be, considering this is a long-term investment.

One common definition of a recession is two consecutive quarters of decline in the GDP (Gross National Product). The National Bureau of Economic Research (NBER), which dates recessions in the U.S., defines one as “a significant decline in economic activity spread across the economy, lasting more than a few months.” As long as all of these conditions are met to some degree, the NBER is willing to treat them as interchangeable. For example, the severity and pervasiveness of the COVID-19 downturn in the spring of 2020 led the NBER to call it a recession, albeit one that officially lasted just two months.

By any definition, recessions cause job losses and a contraction in economic output as consumer spending and business investment slump.”

Michael J. Boyle – Investopedia.com

 

 

Three of the main takeaways from recessions are:

Businesses both large and small face declines in sales and profits in a recession.

Recessions may curb credit access, slow collections, and spur business bankruptcies.

LACK OF CASHFLOW

 

The mass opinion of the General Public may influence the decision making of the Novice investor, but the Expert looks at high appreciation opportunities and speculation.  In general, they both know that in this situation cash flow is scarce.  For starters, our program is a good source for putting money in their pockets every month. There is no point in having a lot of upsides if you can’t live through today to reap the rewards.

How do we know Equity and Help will deliver? Recently in 2020 we went through a similar situation with the COVID pandemic which created a lot of fear in the investment world.  The government was issuing consumer protection measures within the real estate business and this created apprehension towards our system. At the same time as a company, we were going through some changes in our operation, such as adjusting to working from home, changes in responsibility, and so on.

Despite all this, it turned out to be one of the best years for our company!  Proof that there is something very special and valuable in our approach to the real estate market.

To put it simply, the answer is our Niche and Math.

 

Our promise is to generate annual net returns
between 8 to 12% to our Philanthroinvestors.

 

For this example, we will use simple math with the value of $100,000.00 as the ARV (After Repair Value) of each house.  Based on this number, the sale value per house for our Philanthroinvestors is $55,000.00 which represents 55% of the ARV.

Then there is the price approved by the PI, which is the minimum value for which we will sell the houses to families automatically without the need for the PI approval. In this case it would be $69,000.00, meaning 69% of the ARV at 12% interest for 20 years.

More or less, this is the simplified version of how our system is configured.  We give our PhilanthroInvestors the potential to produce around 15% equity on the whole portfolio and between 14 to 15% annual return per property if the family makes its payments rigorously without any delays, late installments, etc. Because we know situations happen and not everything always goes as planned, we estimate a 8-12% net return.

But if there’s a recession, why would anyone pay these prices for a house and risk dealing with a debtor family, evictions, marketing, qualifying, and selling to a new family that is also dealing with the same financial situation? Our successful PIs already know that it is a model that works, but we understand that you, wishing to become one, could have these concerns.

In a difficult market like a recession, having a fair or good investment scenario is the equivalent of an excellent scenario in a normal market, and we would be willing to sit down with you to do the complicated math.

While during any recession there is plenty of housing available on the market, there isn’t much access to financing.  Banks won’t issue loans to the general public, unless it is a highly qualified individual. The average American will not be able to purchase a house, but with Equity and Help  there is a real shot at fulfilling that dream. For the investor, our investment provides cash flow in a down market when cash is scarce.  That makes our program a hot commodity.

A secondary effect in a down market is that house prices tend to drop significantly. This applies to move-in ready homes. The type of home that we work with is already bought at a discount with some state of disrepair. So at the time of purchase, you have already protected the downside by buying low at a wholesale price with a lot of upsides.

In the following weeks we will compare our investment to other “safe” investments that you might have heard about.

So, by the end of this series, you’ll know that here at  Equity and Help, your investment is both recession-proof and COVID-proof.  Your capital is protected. It’s true turnkey investing with no headaches. AND you are helping families get back on their feet!

See you next week!

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