Joint Venture with Investors for Real Estate Business

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Real Estate presentation for investors that want to joint venture to gain experience in the acquisition of residential and commercial distressed real estate assets.

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Joint Venture with Investors for Real Estate Business

  1. 1. Residential Real Estate For Investors (Minimum $200K investment) JOINT VENTURE PROGRAM
  2. 2. Investors: What are we looking for? Investors with at least $200K commitment for our Leveraged Joint Venture Program. Leveraged JV Program (“dating system”) initiate relationship with investor with the ultimate goal of proving ourselves and turning this into a long term relationship. Long term investor relationship (“marriage system”) to maximize investor profit splits.
  3. 3. Investment Criteria •Distressed Residential Real Estate Assets •Single Family Residences – Two to Four Units •Southern California-Los Angeles, Orange, San Diego, Ventura, Riverside & San Bernardino Counties. •Properties acquired will be under 70% of Fair Market Value •Properties over 70% FMV only considered when one or more of the compensating factors apply; a)End buyer lined up. b)Hot local market activity. c)Days on market is under 15 days. d)Minimum rehab required. Leveraged Joint Venture Option for Investor
  4. 4. •100% of invested capital at work on one property •No risk on management team •Investor takes on all risk and liability for purchase and rehab of property. •Generally no option to leverage capital •Many investors are unknowledgeable and make unwise decisions. •Investor is not on the frontline which which causes delays in decision making and lost opportunities. Joint Venture Options •Investor more reliant on management •Investor receives a smaller % split from Net Profit. •Investor has 2nd position at liquidation •Investor has less control of funds •Asset is NOT free and clear Traditional Joint Venture Leveraged Joint Venture DISADVANTAGES
  5. 5. •Investor has complete control of the deal •Investor is in first position when the asset is liquidated •Investor controls all the funds •Asset is owned free and clear •4:1 increase in purchase power •Exposure to capital is minimized •Cash on Cash ROI improves •Investor has a diversified portfolio •Reaction time improves=better inventory •Expert manager makes most decisions based on local experience •Relationships are maximized as reaction time improves. •Management shares majority of the risk by securing 1st Deed of Trust •Investor’s capital= Down Payment + rehab, is always secured by the R.E. Traditional Joint Venture Leveraged Joint Venture ADVANTAGES Joint Venture Options
  6. 6. Real Scenario: Investor with $215K commitment Purchase Debits Credits Purchase Price $200,000.00 Initial Deposit $2,000.00 Title Charges $1,500.00 Recording Charges $100.00 Escrow Charges $1000.00 Other misc. charges $400.00 Total Closing Cost $3,000.00 Balance due at closing $199,000.00 $199,000.00 Totals Acquisition COST $203,000.00 $203,000.00 TRADITIONAL JV. Buyer HUD Purchase Debits Credits Purchase Price $200,000.00 Initial Deposit $2,000.00 New Deed of Trust $185,250.00 Title Charges $1,500.00 Recording + misc. Charges $500.00 Escrow Charges $1,000.00 New Loan Charges Loan Origination Fee $925.00 Discount Fee $6,,475.00 Underwriting Fee $1,500.00 Total Investor due at closing $24,650.00 Totals Acquisition COST $211,900.00 $211,900.00 Purchase: @ 70% FMV Leverage: @ 65% ARV LEVERAGE JV. Buyer HUD Capital Required
  7. 7. Real Scenario: Investor with $215K commitment TRADITIONAL JV. Buyer HUD Purchase: @ 70% FMV Leverage: @ 65% ARV LEVERAGE JV. Buyer HUD Resale Net. Resale Debits Credits Resale Price $285,500 Title Charges $1,400.00 Recording Charges $100.00 Escrow Charges $900.00 Real Estate Commissions 5% $14,275.00 Credit towards Buyer’s closing cost . 2% $5,710.00 Total closing cost $22,385.00 $285,000.00 Total Resale NET $263,115.00 $263,115.00 Resale Debits Credits Resale Price $285,500.00 Title Charges $1,400.00 Recording Charges $100.00 Escrow Charges $900.00 Real Estate Comm. 5% $14,275.00 Credit to Buyers’ c.c. 2% $5,710.00 Total closing cost $22,385.00 $285,000.00 Total Resale NET $263,115.00 $263,115.00
  8. 8. TRADITIONAL J.V. Total Resale net $263,115.00 Totals Acquisition cost $203,000.00 Total Revenue (acquisition – resale) $60,115.00 Total Construction Cost (7.5% of purchase price) $14,000.00 LEVERAGE J.V. Totals Acquisition cost $211,900.00 Total Resale net $263,115.00 Total Revenue (acquisition – resale) $51,215.00 Total Construction Cost (7.5% of purchase price) $14,000.00 Debt Service (90days) $5,557.50 Net Profit $31,657.50 Net Profit on Investment *All ROIs are for informational or speculative purposes only. No investment guarantees are made on any investment shown on this presentation. Please consult your investment advisor before investing with our group. Net Profit $46,115.00
  9. 9. TRADITIONAL J.V. Net Profit $46,115.00 Investor Split 40% LEVERAGE J.V. Net Profit $31,657.50 Investor Split 25% Investor’s Cash out of Pocket (D.P + rehab) $38,650.00 Investor ROI $ $18,846.00 Investor’s Cash out of Pocket $217,000.00 Investor ROI % 8.68% Investor ROI % 20.47% Net Profit on Investment *All ROIs are for informational or speculative purposes only. No investment guarantees are made on any investment shown on this presentation. Please consult your investment advisor before investing with our group. Investor ROI $ $7,914.38
  10. 10. Traditional J.V. Investor’s Capital secured by real estate $203,000.00 Investor’s Capital unsecured by R.E. $14,000.00 Leverage J.V. Capital secured by management 1st DOT $185,250.00 Investors capital secured w/ 2nd DOT $38,650.00 *Transactions with committed capital 5 Total commitment for 1 transaction $217,000.00 Transactions with committed capital 1 *Cash on cash ROI 8.68% * Possible ROI $ with committed capital * $158,287.50 Net Profit on Investment Cash on cash ROI 72.95% *All ROIs are for informational or speculative purposes only. No investment guarantees are made on any investment shown on this presentation. Please consult your investment advisor before investing with our group. Investor’s Commitment $217,000.00
  11. 11. Leveraged Joint Venture Program. How do I get started? 1) Pledge minimum capital commitment 2) Sign Joint Venture Agreement 3) 20% in shared trust account ( EMD & 33% of Construction) 4) Property under contract 5) Closing day (67% of rehab and down payment) 6) Investor to receive 2nd Deed of Trust.

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