Recommended
More Related Content
Viewers also liked
Viewers also liked (18)
Similar to Ventures Plus Real Estate Presentation Amk 01 20 09
Similar to Ventures Plus Real Estate Presentation Amk 01 20 09 (20)
Recently uploaded
Recently uploaded (9)
Ventures Plus Real Estate Presentation Amk 01 20 09
- 1. Ventures Plus ForumVentures Plus Forum “ A Recap of Real Estate in 2008” Presented by Andrew Kraling CSOM MBA 2004 Entrepreneurship & Operations
- 2. Personal Background + Active Investor, Advisor, Property Manager, Leasing Agent and Licensed Realtor Specializing in Investment/Commercial Property for Buyers and Sellers + Leveraged initial investment into $1.4M investment portfolio + Started in 2001 with cabin renovation + Purchased at $85K with $3K Cash Investment + Purchased Last Property with Seller Financing + Three Partnerships – One with a CSOM Graduate!
- 3. MEMBERSHIPS AND ASSOCIATIONS + MINNEAPOLIS ASSOCIATION OF REALTORS (MAR) + ST. PAUL AREA ASSOCIATION OF REALTORS (SPAAR) + NATIONAL ASSOCIATION OF REALTORS (NAR) + MINNESOTA REAL ESTATE EXCHANGORS (MREE) + NATIONAL COUNCIL OF EXHCANGORS (NCE) + MINNESOTA REAL ESTATE INVESTORS ASSOCIATION (MNREIA) + MINNEAPOLIS REAL ESTATE INVESTORS ASSOCIATION (MPLSREIA) + NATIONAL REAL ESTATE INVESTORS ASSOCIATION (NREIA) + NATIONAL ASSOCIATION OF CONDO HOTEL OWNERS (NACHO) + ST. PAUL ASSOCIATION OF RESPONSIBLE LANDLORDS (SPARL) + MINNESOTA MULTI HOUSING ASSOCIATION (MMHA) + BETTER BUSINESS BUREAU (BBB)
- 4. Step 1: Develop Your Strategy
- 5. Reasons to Invest in Real Estate Donald Trump Sam Zell + The Power of “Cash Leverage” and “OPM” + Diversification of Investment/Retirement Portfolio + Investment in a True Asset + Cash Flow + Appreciation + Depreciation/Tax Savings + Equity/Principal Pay-Down + Personal Use
- 6. Why Buy Real Estate in the US? All Numbers Are Estimates Based Upon Our Best Historical Knowledge. Nothing In This Presentation is Meant to Infer the Offering of Investment, Legal, or Tax Advice. + Appreciation & Leverage (OPM) + 10-20% down to access 100% ownership…gain appreciation on 100% + Nationally Recognized Depreciation/Tax Benefits + Specific to each owner, but may be able to depreciate assets (seek advice from Your tax accountant) + Amortization/Principal Pay Down/Equity + Rental revenue may pay down principal + PSI/Cash Flow + Rental revenues may exceed operating expenses, resulting in positive cash flow + Lifestyle/Personal Use + A managed vacation home with potential for rent/lease income + Diversification of investment/retirement portfolio
- 7. The First Deal is the Hardest… Commit To Action 1. Develop Your Strategy 2. Assemble Your Team 3. Find Your Deal Just like manufacturing or service industry, there is a repetitive system and process.
- 8. Investment Vehicles and Nichẽ Markets Within Real Estate + REITS + TICS + IRA + Contract For Deed + Assignment + Options + Notes + Wraparound Mortgage + Lease with Option + Leasing + Building + Contracting + Property Management + Tax Liens + Residential + Multi Unit/ Commercial/Industrial + Retail/Office/Warehouse + Land + Vacation + Senior Housing + Non-Profits + Rehab/Unfinished + Maximum Utility + Development + Subdivide + Rejuvenate + Conversion + Wholesale Markets + Short Sale + Foreclosure/REO + International
- 9. What Type of Investor do you Want to be? Active Owner/Active Income + Owns and Manages the Property + May Yield Expendable Cash Passive Owner/Passive Income + Owns, but does not Manage + May Yield Cash at the Time of Sale Passive Investor/Portfolio Income + Owns Shares in an Investment + May Yield Dividend Income
- 10. What Type of Investor Can you be? Take Stock of your Personal Resources… Do you Have: + Cash to Invest + Equity to Leverage + Credit Worthiness to Borrow Funds + A Partner(s) to Share the Responsibilities How About: + Time to Find Deals and/or Manage Property + Attitude Toward Others – are you a People Person? + Knowledge About Money Concepts and Tax Consequences
- 11. Ways to make a Profit in Real Estate + Serial Purchaser + Buy a home and use as a rental when upgrading to a larger home then continue to buy (and hold onto) additional properties + Use Property management company with more than 3 properties/units + Buy, Improve, and Resell + Gain greater profit with your own sweat equity OR + Hire a qualified contractor who specializes in renovation + Priority is fast turn around time + Buy and Scrap + Tear down an existing home and build new in areas where home prices are rising, vacant lots are few, and there’s an inventory of older homes + Buy and Split + Buy one house and subdivide it into two homes + Buy a larger house and develop each floor into multiple condominiums + Buy a house with large lot, subdivide the lot, rent out the house, and sell the additional property
- 12. Financing Strategy to Maximize Leverage + Proper financial leverage is required to make money in real estate + Improve credit score by managing debt + A true investor is never desperate to purchase a property + Develop a system and network to create efficiency + Key Questions + How long are you planning on owning the property? + How are your personal debts managed? + Have you prepared and reviewed your own financial projections of income and expenses? + Information to provide to lenders + Term of employment, debt to income ratio, credit scores, down payment amount + Tax records, reserves, savings + Underlying asset (Property) + Intangibles; experience and relationships
- 13. Loan Programs + Conventional + Interest Only + Principal and Interest (P&I) + Fixed Rate + Adjustable Rate Mortgage (ARM) + Construction to Perm (Rehab) + Balloon/Bridge/Private Funding + 100% Financing + 80/10/10 + 80/20 + FHA/VA + Non-Recourse + REITs + IRA’s + Down Payment Options + Typical Percentage + 1031 Exchange + Gifting/Private Money + FHA Assistance + Partnerships + Cash, Credit or Time + Lines of Credit + Home equity + Portfolio Reallocation (sell stocks or other underperforming assets) + IRA + Inheritance Defining the Terms
- 14. Step 2: Assemble Your Team
- 15. Who do you Need on your Team? + Realtor + Attorney + Mortgage Broker + Financial Advisor + Buyers + Sellers + Investors + Tenants-in Common Expert + 1031 Exchange Administrator + Hard Money Lenders + Local Investment Clubs + National Investment Clubs + Developers + Builders + Property Management/Leasing Companies + Accountant + Self-Directed IRA Administrator + Insurance Agent + Title & Credit Repair Companies + Contractors + Inspectors + Commercial Banker + Residential Banker + Mortgage Broker + Estate Planner + Friends + Family + Current & Former Co-Workers
- 16. Partner/Entity Structures + Partnerships + LLCs + LLPs + Sole Proprietor + C Corp + S Corp + Real Estate - Most Commonly Used + LLCs + TIC + Fractional + LLPs/Trusts
- 17. Step 3: Find Your Deal
- 18. Market is About Timing Opportunities are Everywhere Good planning and execution can easily save $10,000-$20,000. Markets are cyclical and rents and sale prices have equilibrated to financially justify purchasing!
- 19. Property Analysis Definitions + Debt Coverage Ratio + Must Exceed 1.0 to make the Mortgage Payment + Breakeven Point + Percentage Occupancy Required to Pay all Expenses + Cash on Cash + Typically Between 4 to 10% + After Tax Return on Equity + Typically Between 5 to 12% + Cap Rate + Typically Between 8 to 12%
- 20. A Real Life Example… Purchase Price = $179,000 (now at $203,000) Annual Income= $21,000 Annual Expenses = $17,580 Annual Cash flow = $3418 Annual Depreciation = $4610 Annual Appreciation = $12,000 Annual Value = $20,000Annual Value = $20,000 0% Down, Investment Yields Infinite Returns
Editor's Notes
- Wealth Creation, Acceleration, Mgmt
- We are an Active, Consulting Resource Provide Nationwide Exclusive Inventory Develop Long Term Client Relationships Create Strategic Partnerships We are Active Investors No “MEMBERSHIP” or “PROGRAM” Costs
- Make your $ work for you! From 1980 - 2004, Home Sale Prices Increased 247% Forbes 2006 - need graphic Did You Know? 66% of a Current Retiree’s Wealth is in Their Primary Residence To increase your net worth, diversify your asset base and make your money work for you! Don’t have to HAVE money to make money in RE Income Statement Revenue - Expenses Cash Flow Depreciation and tax benefits apply Balance Sheet Assets - Liabilities Net Worth Appreciation and tax consequences apply
- you don’t have to know EVERYTHING to get started. Much is learned along the way. You won’t receive any of these benefits until you get your first deal done
- 1. Improve your credit score by managing your debt wisely (see my ways to boost credit score guide) 2. Don’t focus on your personal income, manage your cash flow and make smart investments. A true investor is never desperate to purchase a property. . Develop a system and network to create efficiency Choose contacts that you feel comfortable working with to successfully buy and sell real estate (i.e. realtor, mortgage consultant, CPA, Financial Advisor, subcontractors, property managers, etc.) The more efficient you are, the lower the costs you will incur. How the planning pays off Lower costs both monthly and per transaction Improving credit scores will lower your interest rate, knowing if the property will be a short term vs. long term purchase, confirming initial estimates, understanding ways to avoid unnecessary costs Minimizes unforeseen risks A thorough and conservative market analysis of a property you are purchasing completed by your Realtor for example, is a way to minimize your risk of overpaying for a property.
- Investors can partner to meet Guidelines. While not Restrictive, they provide a guide for the average investor. Ultimately, each investor has different Investment Goals. Why choose an FHA loan? There are lots of good reasons to choose an FHA loan, especially if one or more of the following apply to you: You're a first-time homebuyer You don't have a lot of money to put down on a house You want to keep your monthly payments as low as possible You're worried about your monthly payments going up You're worried about qualifying for a loan You don't have perfect credit Since 1934, the FHA and HUD have insured over 34 million home mortgages and 47,205 multifamily project mortgages. Currently, the FHA has 4.8 million insured single family mortgages and 13,000 insured multifamily projects in its portfolio. Lower cost: FHA loans have competitive interest rates because the Federal government insures the loans for lenders. Always compare an FHA loan with other loan types. Smaller down payment: FHA loans have a low 3% down payment and the money can come from a family member, employer or charitable organization as a gift. Other loan programs don't allow this. Easier qualification: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify. Less than perfect credit: You don't have to have perfect credit to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA loan than a conventional loan. More protection to keep your home: The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, the FHA has many options to help you keep you in your home and avoid foreclosure. The FHA does not give money to people for a home and it does not set the interest rates on mortgages it insures. FHA insures loans for lenders against defaults. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. An FHA-approved lender can help you start the loan application process. You may use an FHA-insured mortgage to purchase or refinance a new or existing 1-4 family home, a condominium unit or a manufactured or mobile home (provided it is on a permanent foundation). FHA Recent Changes Congress expected to pass seller-paid contributions. This means you, as the buyer Will need less for a down payment + Obtain financing at lower interest rates and thus a lower monthly expense
- But few things worth doing are! Real estate is a generally a longer-term investment, so take your time to find the right deals Be prepared to look at 10, make an offer on 3 and close 1, even with the best and brightest team members
- 0% Down and seller paid for all closing costs, investment yields infinite return