Cornerstone Capital offers billboard landowners the opportunity to sell all of your rent payments for one discounted lump sum.
Consider the following
It is a fact that the further in the future you are expecting to receive a sum of money, the less it is worth today. This is in part due to inflation and because the value of money shrinks in the coming years.
The Rule of 72
The Rule of 72 states that an investment will double over time if you know the specific interest rate and the number of years of the investment. You can calculate how soon your investment will double simply by dividing 72 by the interest rate that you are receiving for a particular investment. For example, an investment that yields 9% interest will double in approximately 8 years (72/9 = 8). By using this same example, a $25,000 investment will grow to approximately $50,000 in 8 years. This simple rule helps illustrate the power of compounding and how much a lump sum payment today will be worth in the future (excluding taxes and other investment fees).
Inflation minimizes the value of your money today
While we know that interest increases the present value of your money, in contrast inflation eats away at the present value of your money. It is a cold hard fact that if you receive a constant sum of money for a number of years in the future, it will be worth less today because of inflation. In other words, inflation will work against your current rent payment and make the value of your payments significantly less in the future. For example, if you are receiving $5,000 a year in rent payment for the next 12 years, you may think that the total amount this is worth will be $60,000. False! The Rule of 72 also works in the opposite manner as described in the above example when we wish to calculate the present value of money if we know two things: the number of years remaining of “future” payments as well as what the constant interest, or in this case, inflation rate will be. We can conclude that if you are receiving $5,000 for the next 12 years with an inflation rate of 6%, then your overall payments will be worth $30,000, not $60,000! This is calculated by concluding that your total investment of future land rent payments will approximately be cut in half because 6% x 12 years = 72.
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