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Zero Cash Flow Investment

A highly-leveraged property with a long-term investment-grade triple net lease guaranteed by an investment-grade credit tenant. Typically, the lease term is 20 years or more with at least a BBB credit rating. The term “Zero Cash Flow” or “Zeros” refers to the fact that initially all of the property’s net operating income goes toward the loan payment.

The financing is assumable, fixed-rate, non-recourse, and often fully amortizing. At the end of the loan term, the property is owned free and clear of debt. It is also a low cost method to obtain tax benefits associated with the ownership of real estate, especially for investors looking for a quick and efficient completion of a 1031 or 1033 tax deferred exchange. Many times the property can be refinanced and the equity can be cashed out and deployed to other properties outside the confines of the exchange.