How Blackstone Group of US Makes 100% Risk Free Money in Tonns? Read and learn.

How Blackstone Group of US Makes 100% Risk Free Money in Tonns? Read and learn.

Today I am going to shares with you a top money making formulae of one of the smartest US based Private Equity Group. Yes, I am taking about Blackstone Group.

Bloomberg reposted that “Blackstone Group has already spent $2.5 billion to buy 16,000 homes to manage as rentals and eventually sell them when prices appreciate high enough. Blackstone says it’s finding that the going price for homes sold at foreclosure auctions and out of bank inventories are rising quicker than anticipated.

But Blackstone, which some believe could spend up to $5 billion on single family home space, isn’t alone in racing to snap-up foreclosed homes in states like Florida, Georgia, California, Nevada and Arizona. American Homes 4 Rent, a firm that has $600 million from the Alaska Permanent Fund, is buying up hundreds of homes a month, industry sources say. Colony Capital, the other big institutional player is no less aggressive.”

Let us Look at the Money Making Calculations:-

The home was sold for USD 2 lakhs in 2005. The interest rate on loan was 6% at that time. The person who bought the house had to pay USD 12000 for Interest + USD 3000 for loan amortization. So, he used to Pay USD 15000 per year or USD 1250 a month.

Now this guy is not able to pay the money…..so home was given for foreclosure while he was staying in the same house.

Now Blackstone comes into the picture……they buy this house for USD 100000 ( 50% of the original value). They pay USD 10000 of their own money and take a loan of USD 90000. the real advantage now is they are getting this money at 3.5%. So their out go is USD 3150 close to USD 265 a month.

Now, they reduce the rent to USD 1000 per month (Relief to the poor home buyer from USD 1250 to USD 1000). They are getting rent of USD 12000 and they have to pay USD 3150 as interest + USD 2500 as loan amortization. 

On an investment of USD 10000 they are making closed to USD 5000 (USD 12000 – (USD 3150+USD 2500))…..mind blowing 50% return in a year!!!

Now the Real Secret….How do they have got this USD 10000 to pay for buying the house????

They have made a big bet on US BOND Interest rates…..they have shorted the same……they expect the bond rate to go down…..(When you sell……you get the premium, do you understand???). So, USD 10000 they are investing is paid by somebody else !!! Now, calculate their return on investments!!!

My Personal Call:-

They know the answer of one simple question…..WHY THEY WANT TO MAKE MONEY? Most investors do not know the answer of this simple questions…..they waste lot of time in HOW? The great NANI PALKHIWALA had once said… “The life style of too many politicians and businessmen bears eloquent testimony to the truth of dictum that the single minded pursuit of money impoverishes the mind, shrivels the imagination and desiccates the heart.” 

If you have missed 2012…but do not wish to Miss 2013-2014, then look into your heart and find out your purpose. If you have The PURPOSE, we have the PATH of PROSPERITY ready for you. Do write to us. Hitesh Parikh.