The Zero Cash Flow sector is a very active niche market. The investor composition is typically focus on tax and financial planning solutions including highly leveraged 1031 exchange transactions. Values for zero cash flow properties are usually expressed as equity component (initial upfront cash) as percentage over the debt.

Elements of a Zero Cash Flow Deal:

  • Real estate investment subject to high leverage (approx. 90%), non-recourse, long-term loan based primarily on the creditworthiness of the tenant
  • Absolute NNN leased, single tenant property, no landlord responsibilities
  • High credit, investment grade rated tenant of a retail, commercial, medical or industrial property
  • Long term lease (20+ years)
  • Rent structured to equal debt service (DSCR = 1.0). Loans are self-liquidating.
  • Required equity is priced as a percentage of the debt