Presenting Real Estate Investment Numbers to J.V. Partners

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A sample slide deck to help me teach people how to present numbers without making them excessively complicated. I'll blog a full description on http://www.chrisdavies.ca in the near future.

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Presenting Real Estate Investment Numbers to J.V. Partners

  1. 1. Presenting Real Estate Investment Numbers to J.V. Partners What my slide deck looks like (with a little bit of explanation) ChrisDavies.ca
  2. 2. Purchase $190,000.00 Down Payment $19,000 Legal Fees $ 1,000 Reserve Fund $ 4,500 Title Insurance $ 1,000 Insurance $ 1,000 Assessment $ 3,300 Cash to Close $29,800
  3. 3. Purchase $190,000.00 Down Payment $19,000 Legal Fees $ 1,000 Reserve Fund $ 4,500 Title Insurance $ 1,000 Insurance $ 1,000 Assessment $ 3,300 Cash to Close $29,800 Plus Renovations $25,000 (that’s $54,800 in total)
  4. 4. Purchase $190,000.00 Down Payment $19,000 Legal Fees $ 1,000 Reserve Fund $ 4,500 Title Insurance $ 1,000 Insurance $ 1,000 Assessment $ 3,300 Cash to Close $29,800 Plus Renovations $25,000 (that’s $54,800 in total)
  5. 5. Purchase $190,000.00 Down Payment $19,000 Legal Fees $ 1,000 Reserve Fund $ 4,500 Title Insurance $ 1,000 Insurance $ 1,000 Assessment $ 3,300 Cash to Close $29,800 Plus Renovations $25,000 (that’s $54,800 in total)
  6. 6. Purchase $190,000.00 Renovations $25,000 Appraised Value After Renovations: $250,000
  7. 7. A Warning About These Numbers: Renovation Costs are estimates. In reality (Aug/08), the actual cost was $25,323.34. Renovation costs can change rapidly, and $25,000 is an estimate only.
  8. 8. A Warning About These Numbers: The analysis beyond this point is based on a few rules, and is an projection and estimate only. All calculations are simple, rather than compound. NEVER use these as anything but an estimation, a best guess, or a projection. Do your own homework!
  9. 9. Cash Flow Analysis Income Rent $1,500.00 Expenses Property Mgmt (8%) $ 120.00 Condo Fees $ 255.00 Property Taxes $ 88.00 Vacancy (4%) $ 60.00 Repairs & Maint (4%) $ 60.00 Mortgage (4.5%, I Only) $ 671.71 Total Expense $1,254.71 Net (Monthly): $ 245.29
  10. 11. Annual and Total Positive Cash Flow Annual Total Year 1 $2,943.49 $2,943.49 Year 2 $3,643.69 $6,587.18 Year 3 $4,288.90 $10,876.07 Year 4 $4,966.37 $15,842.44 Year 5 $5,677.71 $21,520.15
  11. 12. Appreciation Model: Estimated 5% per Year for Five Years Value at Purchase $250,000.00 Estimated Value 2013 $312,500.00 Mortgage Outstanding $179,122.50 Appreciation $133,377.50 Cash Flow $21,520.15 Estimated Gross Profit $154,897.65
  12. 13. Gross Profit $154,897.65 Investment Returned $54,800.00 Net Profit $100,097.65 Split 50/50 $50,048.83
  13. 14. Investment $54,800.00 Estimated Return $50,048.83 Return on Investment 91% (Five Years) 18% Per Year
  14. 15. Investment $54,800.00 Cost of Borrowing $13,700 $54,800 for five years at 5%.
  15. 16. Investment $54,800.00 So instead of costing you $54,800 in cash, it can actually cost you $13,700.
  16. 17. Investment $54,800 $13,700
  17. 18. Investment $54,800 $13,700 That’s like getting a real estate investment on sale for 75% off! You could buy 4 properties for the same amount of cash. Assuming you can borrow $250,000 (or so) for the down payments, closing costs, and renovations. And find 4 properties just like this one.
  18. 19. Investment $54,800 $13,700 But the real point is:
  19. 20. Investment $54,800 $13,700 Estimated Return $50,048.83 Return on Investment 365% (Five Years) 73% (Per Year)
  20. 21. Investment $13,700 Estimated Return $50,048.83 Return on Investment 365% (Five Years) 73% Per Year You find me a stock or mutual fund that will do 73% a year on the conservative side.
  21. 22. Investment $13,700 Estimated Return $50,048.83 Return on Investment 365% (Five Years) 73% Per Year This projection uses 5% per year as an estimated increase in property values. The average in Edmonton since 1962 is 7.91% per year. Imagine what one year with a 10% increase would do….
  22. 23. <ul><li>Basic Rules of This Presentation: </li></ul><ul><li>This presentation, as well as the calculations, estimations and projections contained within it, have been created for the purpose of communicating the way I present information, and not the information itself. </li></ul><ul><li>Projections are calculated using simple math, and not compounded. </li></ul><ul><li>Every reasonable effort has been made to make accurate calculations. I am not immune to making mistakes when playing with rather large spreadsheets. The numbers and the estimated rates of change are not to be taken as a guarantee or promise of return. All real estate investments are speculative and you MUST do you own due diligence. </li></ul><ul><li>This is not a solicitation. This presentation is only for information purposes, intended to illustrate how I communicate. </li></ul><ul><li>Please see my Legal Disclaimer . </li></ul>
  23. 24. Credits: From Stock Exchange (click to link) Taken by me, circa August 2005. For more real estate investor resources, check out my Real Estate and Property Management Blog

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