Investors Toolkit

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Powerpoint Slide show describing the issues regarding a rental property

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Investors Toolkit

  1. 1. Rocio Moore [email_address]
  2. 2. <ul><li>Are you looking for optional investment opportunities? </li></ul><ul><li>This presentation shows you that rental property is a great investment, and an average return of roughly 11% for each year for a 5 year commitment. </li></ul>
  3. 3. <ul><li>Single Family Residents Rental </li></ul><ul><li>Multifamily Residents Rental </li></ul><ul><li>Undeveloped Land </li></ul><ul><li>Commercial Spaces </li></ul>
  4. 4. <ul><li>Single Family has highest rate of return with lowest risk </li></ul><ul><li>Undeveloped land is speculative and many of the variables that affect the rate of return are out of control of the purchaser. </li></ul><ul><li>Multifamily takes management skills and can have legal risks and liabilities and tax issues </li></ul><ul><li>Commercial Spaces take a certain level of experience and expertise </li></ul>
  5. 5. <ul><li>Rate of return </li></ul><ul><li>Liability </li></ul><ul><li>Maintenance </li></ul><ul><li>Risks such as abandonment. </li></ul>
  6. 6. <ul><li>High Rate of Foreclosures allow for some real deals </li></ul><ul><li>Limited credit for purchasers means high demand for rentals pushing the “rental revenue amount” higher than normal </li></ul><ul><li>Usually only requires small amount of money down </li></ul><ul><li>Properties are easy to source and evaluate </li></ul><ul><li>You are earning on the renters money as well as on the increased value of the property </li></ul>
  7. 7. <ul><li>Professional or Small Business owner in their 30’s-50’s with interest in growing their investment opportunity </li></ul><ul><li>Responsible, hardworking, but conservative </li></ul><ul><li>Future issues such as college expenses for children, eventual retirement, and limited current career path growth </li></ul><ul><li>Frustrated with other investment opportunities </li></ul>
  8. 8. <ul><li>Set Goals for amount of money you can commit to secure rental property (Money can be cash, home equity loans, loan from 401K, etc) </li></ul><ul><li>Decide type of Residential property to source </li></ul><ul><li>How the property is going to be managed depends on your time, number of properties, location </li></ul><ul><li>Decide on time period for holding the property. (EG: 5 years, 10 years, etc) </li></ul><ul><li>Source financing options and evaluate investment properties </li></ul><ul><li>Agent does comparison to set expected rental rate, and Inspector determines if there are key repair issues to deal with. </li></ul><ul><li>Decision to purchase is based on the ROI, goals, and expectations for property based on holding period . </li></ul>
  9. 9. <ul><li>Experience, Knowledge, and Competency as as a Real Estate Consultant for Clear Lake, Houston area </li></ul><ul><li>Research and Comparative Evaluations in order to have a good idea of ROI </li></ul><ul><li>Savings Benefits which include partners in the area of lending, construction, moving and other home services willing to offer discounts </li></ul><ul><li>Flexible Commission rate based on number of units purchased in 12 month period. </li></ul>
  10. 10. <ul><li>Loan Origination Fee: Usually 1% </li></ul><ul><li>Appraisal fee: roughly $275 </li></ul><ul><li>Credit Report: about $65 </li></ul><ul><li>Tax Service Fee about $75 </li></ul><ul><li>Underwriting Fee about $300 </li></ul><ul><li>Flood Certificate about $25 </li></ul><ul><li>Prepaid items: Interest (1-30 days), Hazard Insurance 1 year premium </li></ul><ul><li>Reserves: Hazard Insurance (2mths), Taxes (2 months), Mortgage Insurance (2 mnths) </li></ul><ul><li>Title Charges: roughly $500 depending on type of loan </li></ul><ul><li>Recording Charges: roughly $200 </li></ul><ul><li>Survey Charges: roughly $100 </li></ul><ul><li>Closing costs guess: 4.5 % of the cost of the home </li></ul>
  11. 11. <ul><li>Initial investment of $24,000 brings a return of roughly $14,400 </li></ul><ul><li>Assumptions: </li></ul><ul><ul><li>A. Holding period is 5 years </li></ul></ul><ul><ul><li>B. Monthly rent is approximately $1,000 </li></ul></ul><ul><ul><li>C. Loan is at a rate of 7% </li></ul></ul><ul><ul><li>B. Appreciation is minimal over 5 years with sale price of $114,000 </li></ul></ul><ul><ul><li>C. Overage of monthly rent is used to pay off note </li></ul></ul><ul><ul><li>D. Total maintenance costs are roughly $3,000 over 5 years. </li></ul></ul><ul><ul><li>E. Purchase Closing costs are $4,000 and sellers closing costs are $6,000. </li></ul></ul><ul><ul><li>F. If any of these costs are lower, or appreciation greater, rate of return will be greater </li></ul></ul><ul><ul><li>Rate of return on 5 year CD is roughly 3.5% so a $24,500 investment will be worth $28,787 in 5 years. </li></ul></ul><ul><ul><li>So payment for your time and trouble to manage a rental home for 5 years is roughly $12,000 as compared to a conservative 5 year CD </li></ul></ul>
  12. 12. <ul><li>Turn $24,500 into $38,900 in 5 years by buying a $100,000 rental property. </li></ul><ul><li>Now is a great time to purchase Forclosures with a 5 year appreciation rate to be very promising. </li></ul><ul><li>If this looks of interest to you, please call me. I would love to help you with your investment interest. </li></ul><ul><ul><li>Sincerely, Rocio Moore. 832-878-0776 </li></ul></ul>

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