Golden opportunity to invest


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How to Invest in Forclosures and Short Sales

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  • What we are facing right is market correction. Historically, the market had corrected it self. By its natural trend, the market will average itself
  • Someone else pays for your investment - Your tenants literally pay for your investments.. Over time, the value of the property increases, your mortgage payments decrease, as the principal is paid off effortlessly.
  • Golden opportunity to invest

    1. 1. A Golden Opportunity to Invest <ul><li>Why you should not miss this unique opportunity </li></ul><ul><li>What investment is good in today’s market? </li></ul><ul><li>How you can minimize your investment risk </li></ul>
    2. 2. Welcome to <ul><li>Mission Statement </li></ul><ul><li>Become be the Leader in foreclosure/investing with proven strategies. </li></ul><ul><li>Create a network club of investors, rehabbers, construction workers and hard money lenders. Where we can each learn and benefit from each others knowledge. </li></ul><ul><li>Market our products and services. </li></ul>
    3. 3. Who we are? <ul><li>We area a group of like-minded real estate Entrepreneurs and investors that are uniting our capital and expertise resources in order to take advantage of the real estate opportunities in today’s market </li></ul>
    4. 4. Our Code Of Ethics <ul><li>These are our 4 core values in our Organization. . We expect each member to comply with these principles: </li></ul><ul><li>ETHICS OF COMPROMISE </li></ul><ul><li>PROFESSIONALISM </li></ul><ul><li>TEAMWORK </li></ul><ul><li>HONESTY AND CONFORMITY WITH THE LAW </li></ul>
    5. 5. Our Management Team <ul><li>Fausto Cuzco: Founder : Realtor ,Loan Officer, Auction, Foreclosure and Short Sale expert: Over $15,000, 000 in sold properties </li></ul><ul><li>Bachelor Degree in Marketing , Masters Degree in Political Science {Northeastern IL University ,2006} </li></ul><ul><li>Daria Vasko: Marketing and Project director … Law student </li></ul><ul><li>Fausto Guaman: Development Advisor: Architect with over 3 years on field experience. Graduated from UIC , 2006 </li></ul><ul><li>Benita Delgado... Financial Advisor : CPA, TAX Consultant... Graduated from Northeastern IL U 2006 </li></ul><ul><li>Juan Chichay : Senior Construction Manager .. Over 10 years in the construction and development business </li></ul><ul><li>Rene Celis: Attorney , Our legal Adviser </li></ul><ul><li>Robert Boban: Mortgage Broker </li></ul>
    6. 6. Recent sold Properties: 90% Foreclosed: Joint the Wining team
    7. 7. Our Current Projects 2009 <ul><li>HADDON STRATEGY </li></ul><ul><li>A) flip over Buy and Sell </li></ul><ul><li>Time Frame 2-4 months </li></ul><ul><li>Sell below market Price 21-24K each </li></ul><ul><li>Time frame:May-Agust </li></ul><ul><li>3) Another Property </li></ul><ul><li>Another Property </li></ul><ul><li>Time Frame: October-December </li></ul><ul><li>1145 Central Project </li></ul><ul><li>Project Completed </li></ul><ul><li>Property Under contract </li></ul><ul><li>Closing April –May 2009 </li></ul><ul><li>2) Walton Strategy </li></ul><ul><li>Flip-Over buy and Sell </li></ul><ul><li>Time frame 2-4 months </li></ul><ul><li>Sell Below Market 21k </li></ul><ul><li>August-October </li></ul>Secure al least 3 properties in 2009
    8. 8. Our Business Strategy and Goals <ul><li>A)     Secure at least 2-3  Properties this Year in our Target Areas </li></ul><ul><li>B)      Follow our work plan by minimizing our labor and material expenses </li></ul><ul><li>C)      Sell  those properties at or below market price for fast sell </li></ul><ul><li>D)     Make at least 21-24k profit individually in all our projects </li></ul>
    9. 9. How we calculate profit? <ul><li>                                                                </li></ul><ul><li>1)  Scenario one (in a 18k purchase price) </li></ul><ul><li>Purchase price                                                               $18,000 </li></ul><ul><li>Minus labor and material expenses                         $29,000 </li></ul><ul><li>Total                                                                                 $47,000 </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>Selling price (Minimum)                                               $129,000 </li></ul><ul><li>Minus seller closing costs                                             $5,000 </li></ul><ul><li>Minus 2.5% seller commit ion                                     3,225 </li></ul><ul><li>Minus other labor charge (100x6x4x2)                $4,800 (100/ day/ 6 days/ 4 weeks/ 2 months) </li></ul><ul><li>                                                                                         $115,975 </li></ul><ul><li>  Minus our total investment                                       47,000    </li></ul><ul><li>Net profit                                                                            68,975/3=23,000+- </li></ul>
    10. 10. The best time to invest <ul><ul><li>There are massive foreclosures and things are getting worse. </li></ul></ul><ul><ul><li>Since many people have lost their homes and the lending institutions are unable to borrow to folks with less than stellar credit, you can owner finance (ask me how) </li></ul></ul><ul><ul><li>Interest rates are historically &quot;low” </li></ul></ul>
    11. 11. RENTAL INCOME PROJECTION <ul><li>  </li></ul><ul><li>Property can be rented for $1,600 section 8 families </li></ul><ul><li>Capitalization Rate=costs (or value)/ annual net operating income </li></ul><ul><li>1,600X12=$19,200 </li></ul><ul><li>          19,200/53,000=36%   100/36=2.7(year/month) </li></ul><ul><li>The property will payoff for itself in 2.7 (year) or 31 months </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>The rate of Return of our investment is 63% </li></ul><ul><li>((Return - Capital) / Capital) × 100% = Rate of Return </li></ul><ul><li>  ((19,200-53,000)/53, 00) x100%=63% </li></ul>
    12. 12. Default means the home owner stops making payments,, Reo, the bank owns already the property/ Auction, when the property is being Auctioned
    13. 13. Nationally, foreclosures are still in the rise
    14. 14. As of today, there are 78,263 foreclosures records in Cook county Updated as March 2008 Updated ilFLS Database info: Wed Mar 26 2008 ACTIVE LISTINGS 120433 Last Update: 16:18:49 Mar 26 2008 County: Records: Auctions   Cook County: 78263 35374   Lake County: 8512 3949   Kane County: 6760 3723   Dupage County: 7680 3779   Will County: 10782 5259   McHenry County: 3990 1639   Kendall County: 1482 550   Winnebago: 2899 1149
    15. 15. The subprime mortgage crises will cost Illinois about 5.4 billion 2009
    16. 16. Three Ways to Invest in Today’s Market <ul><li>Fix and flip </li></ul><ul><li>Buy and hold Real Estate </li></ul><ul><li>Rental Investing </li></ul>
    17. 17. What it takes to be an Investor <ul><li>If you are purchasing a property that is not your primary residence, you are an investor </li></ul><ul><li>Your Responsibility </li></ul><ul><li>Network with people, companies that share your goals . </li></ul><ul><li>Don’t be pessimist, negative about the market, the world. </li></ul><ul><li>People with this attitude will never grow financially or personally </li></ul><ul><li>Cause-Effect ( nothing will happen tomorrow unless you make a decision today) </li></ul>
    18. 18. Avoid this Novice Mentality <ul><li>Investing in real estate should not be approached as a hobby. It takes experience, understanding and knowledge to formulate and execute a plan. You are mistaking if you think that you can watch a DVD or read a book and instantly gain enough knowledge to thoroughly research markets </li></ul><ul><li>AVOID </li></ul><ul><li>1. Real Estate = Get Rich Quick Mindset (Please, Get a College Degree) </li></ul><ul><li>2. Believing Cheapest is Best ( remember the 4P’S of marketing. Place, Price, Promotion & Product, these factors are vital) </li></ul><ul><li>3. Do-it-Yourself Investing ( I don’t want to be rude but 80% chances you will fail). </li></ul><ul><li>4. Thinking Markets Can Be Timed ( &quot;You can't time real estate markets, therefore there is no right time to invest.) </li></ul><ul><li>5. Prioritizing Cash Flow Over Appreciation ( positive cash flow is not bad, but long-term appreciation is the goal) </li></ul><ul><li>7. Sacrificing Profits Because of Proximity ( have an open mind ) </li></ul>
    19. 19. Formula To Investing <ul><li>You should not put all of your money into only one Investment </li></ul><ul><li>Diversify your investment </li></ul><ul><li>Fix and flip * Property appreciation * Cash flow * Other people's money paying your mortgage. </li></ul><ul><li>Lest focus on property appreciation Here's a simple example: Pretend you find a desirable property for $100,000, and you buy it for 25% down ($25,000). 1) Appreciation: Property goes up in value by 5% in year 1. It's now worth $105,000. Return after one year is 5000/25000 = 20% on your $25,000 investment in the first year! 2) Cash flow: Rent each month is $1000. Your mortgage, insurance, taxes and miscellaneous expenses are $900/month. Income minus expenses = $100/month. 12 months x $100 = $1200/year income. Add that to the appreciation and you have made 6200/25000 = 25% in the first year through appreciation and cash flow. 3) Other people's money paying down your mortgage: Assuming you have a mortgage at a 5% fixed rate, at the end of the first year you will owe $73,440 on your $75,000 mortgage. You have now built an additional $1560 equity into the property ($75,000 - $73,440 = $1560). Your return including appreciation, cash flow and reduced principal give you a first year return of 7760/25000 = 31%. </li></ul>
    20. 20. How I made $23,000 in 5 months <ul><li>It might not be a lot of money but yes it true I made that money after taxes. Below, I give a scenario I used, also, most of my clients are using this method. </li></ul><ul><li>Long term investment 4 unit </li></ul><ul><li>4 unit building scenario </li></ul><ul><li>100,000 </li></ul><ul><li>+20,000( 20%down) </li></ul><ul><li>40,000 (repairs) </li></ul><ul><li>------------------------ </li></ul><ul><li>160,000 </li></ul><ul><li>Rental </li></ul><ul><li>800x4=3,200x12=38,400x2.5=96,000 </li></ul><ul><li>Your monthly payments including taxes and insurance </li></ul><ul><li>900x12x2.5=27,000-96,000=67,500-60,000 total investment=7,500 </li></ul><ul><li>1600x12x2.5=54,000 (sell in 5 years 240,000-160,000=80,000+54,000=$135,000 </li></ul><ul><li>Short time investing single family, condo </li></ul><ul><li>You purchase a single family </li></ul><ul><li>50,000 </li></ul><ul><li>35,000 ( invest, repairs) </li></ul><ul><li>----------------------- </li></ul><ul><li>75,000 total </li></ul><ul><li>Sell for 130,000-75,000=55,000-15,000(closing cots, selling agent)= 40,000 profit </li></ul><ul><li>Note if you don’t sell, property is rented at $ 800 per month which is still paying for it self </li></ul><ul><li>The goal, the property has to pay by itself in either scenario. </li></ul>
    21. 21. Target Areas <ul><li>Virtually, You can invest any where in Chicago, but as a matter of preference we focus in this development areas </li></ul><ul><li>AUSTIN </li></ul><ul><li>HUMBOLDT PARK </li></ul><ul><li>EAST GARFIELD </li></ul><ul><li>SOUTH LAWNDALE </li></ul>
    22. 22. Historically, Real Estate had always been a good investment.
    23. 23. The Power Of Leverage (If your $100,000 investment produces a 30,000 net gain in two years than your annual rate of return is 15%. The stock Market produces ( historically) an average annual rate of return of 8-9% <ul><li>MMM </li></ul> 
    24. 24. My final thoughts <ul><li>Weak men will always wait for opportunities to happen; strong men and woman will seize the moment and make them happen because they know that an obstacle, a difficulty is often an unrecognized opportunity. </li></ul><ul><li>Remember. Nothing will happen unless you take action today. </li></ul><ul><li>Thank you </li></ul><ul><li>Fausto Cuzco </li></ul>