“Leveraging equity in current assets, [and] then using the funds to purchase the investment property is the most common [solution], followed closely by paying cash from [your] savings,” he says.
“Vendor financing is sometimes available, particularly on serviced lots and raw land, but improvements, such as home building, will need financing as above, or be paid by cash.
“I usually only leverage the property when a clear income is being, or can be, realized that will carry the debt,” he continues.
“I usually only consider this [for] commercial properties or long-term residential rental properties, and only if I need the cash for a specific purpose. Otherwise, I just enjoy the cash flow and income they produce.”
Looking ahead and giving back
Jorgensen believes that one of the best ways to plan for the future is to have an exit strategy. “Each property has its own exit strategy, most with best- and worst-case scenarios,” he says.
“Some are sales to individuals, some to existing business partners or tenants who currently use the property, and some are sales to industry corporations that would use the property as it was intended.”
Jorgensen intends to use his holdings “to create a sustainable tourism economy in the Bay of Trujillo, reaching a total investment value of $300 million within 20 years.”
Although his portfolio has been profitable, Jorgensen believes his holdings have the potential to boost the Honduran economy.
“[They] will provide a much-needed industry that will support local residents, create reasonably-paying jobs for young people, create government revenue to improve public services, improve and expand recreational activities for vacationers and visitors, and expand product and service selection to improve living conditions for local residents,” he says.
Jorgensen’s plan is ambitious, but “if done correctly it will be a win for everyone involved, creating a common goal, and preserving the [country's] natural, cultural and historical assets.”
This article was first published in the October 2013 issue of CREW magazine.
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