David Campbell, professional real estate investor and developer gives the definition of arbitrage and yield spread. Learn how to calculate yield spread and your return on investment on cashflow.

1. Hassle-free Cashflow Minute
Lesson 7:
Arbitrage and Yield Spread
Investor Educational Series by
Professional Investor / Developer
David Campbell
www.HassleFreeCashFlowInvesting.com
©2011 All Rights Reserved

2. Arbitrage is the investment
strategy of borrowing money to
invest for a profit.
Yield spread is the
mathematical result.
www.HassleFreeCashFlowInvesting.com

3. Yield Spread = earning rate - cost of funds
2% Y.S. = 7% earning - 5% borrowing
www.HassleFreeCashFlowInvesting.com

4. Case Study:
$100,000 house @ 7 CAP
purchased w/ 80% financing @ 5%
WHAT IS THE ROI FROM CASHFLOW?
www.HassleFreeCashFlowInvesting.com

5. Case Study:
$100,000 house @ 7 CAP = $7,000 NOI
$80,000 mortgage @ 5% = $4,000 interest exp.
$3,000 profit
15% ROI = $3,000 profit / $20,000 capital invested
www.HassleFreeCashFlowInvesting.com

6. David Campbell
$500 million of real estate
experience
real estate investor / developer
houses / apartments
retail / office / land / resort
condos / condo conversion
financial strategist
www.HassleFreeCashFlowInvesting.com