Presentation on theme: "Cell: 916-412-7141 Fax: 916-660-1790 www.dcventureproperties.com DC Venture Properties, Inc. 8690 Woodrock Way, Granite Bay CA 95746 First Time Sacramento."— Presentation transcript:
Cell: Fax: DC Venture Properties, Inc Woodrock Way, Granite Bay CA First Time Sacramento Area Investors Welcome to the First Time Sacramento Area Investor presentation prepared by DC Venture Properties, Inc., a full-service real estate company providing sales, financing and property management services. Experienced Investors Will appreciate our efficiency in finding, rehabilitating and managing properties for maximum financial benefit. Seasoned investors should click here to go directly to market/financial data. First Time Investors Get the guidance and support you need to reduce risk and make your first investment experience a pleasant and profitable one.
Cell: Fax: DC Venture Properties, Inc Woodrock Way, Granite Bay CA Investment Strategy While there are many variations in real estate investment strategies, they generally fit into one of the three main approaches to residential property investing in California. Appreciation Model Income/Cash flow Model Mixed Investment Model These investment strategies have all been very successful in California’s rapidly growing real estate market. Historically, success was virtually guaranteed due to the high annual appreciation rates experienced over the last several decades. However, times have changed, and investors can no longer count on high appreciation rates to achieve their ROI goals.
Cell: Fax: DC Venture Properties, Inc Woodrock Way, Granite Bay CA Investment Strategy – Appreciation Model The Appreciation Model has certainly been one of the most popular among California investors. In fact, many California homeowners can be described as informal investors since they have often stretched their buying power to maximize the benefits of high annual appreciation rates. This strategy is characterized as follows: Buy property in desirable, high appreciation growth areas Minimize negative cash flow to the extent possible Hold property until investor’s ROI target is achieved While this strategy may still be successful, investors will have to hold property for much longer in order to achieve their goals. Local real estate markets will not improve until the economy and jobs numbers improve.
Cell: Fax: DC Venture Properties, Inc Woodrock Way, Granite Bay CA Investment Strategy – Income/Cash Flow Model The Income/Cash Flow Model refers to generating a monthly return (income) on an investment. Cash Flow investors generally prefer multi- family properties, where the economies of scale and acquisition cost per rental unit make it more profitable. These types of property are usually valued on a multiple of earnings, not on the appreciation of properties in the surrounding areas. This strategy is characterized as follows: Buy multi-family properties, with low cost per unit Maximize positive cash flow to achieve investor’s ROI target Hold as long-term investment These properties will benefit from the increasing pool of renters resulting from mortgage defaults and a 4% to 5% increase in rental fees in 2012.
Cell: Fax: DC Venture Properties, Inc Woodrock Way, Granite Bay CA Investment Strategy – Mixed Investment Model The Mixed Investment Model is about getting the benefits of appreciation and a regular positive cash flow. Unlike multi-family properties that are priced based on earning capacity, single family properties will appreciate on the basis of desirability and demand for housing as the economy improves. With low acquisition costs resulting from the dramatic drop in values for most properties, investors can now achieve high single or low double digit ROI’s. This strategy is characterized as follows: Buy distressed single family properties in low cost areas Maximize positive cash flow to achieve investor’s cash flow target Hold property until investor’s ROI target is achieved These properties represent the target market recommended by DCVP.
Ave Monthly Inventory = 2385 Ave Monthly Units Sold = 1072 Ave Unit Price ($000) = 126 Ave DOM (cumulative) = 120 Ave Months of Inventory = 2.2 Cell: Fax: DC Venture Properties, Inc Woodrock Way, Granite Bay CA Market Overview Sacramento County was hit hard by the 2008 real estate market collapse. Some areas have seen property values drop by 50%, 60% and even 70%. The best opportunity for investors is the segment of this market made up of single family units (SFR’s) priced under $200k. This segment averages 2385 units of monthly inventory, and is dominated by distressed properties as shown in the Inventory Composition chart below.
REO Ave Monthly Inventory = 661 Ave Unit Price ($000) = 116 Ave DOM (cumulative) = 60 Non-REO/Non-Short Sale Ave Monthly Inventory = 671 Ave Unit Price ($000) = 138 Ave DOM (cumulative) = 60 Short Sale Ave Monthly Inventory = 1331 Ave Unit Price ($000) = 132 Ave DOM (cumulative) = 120 Cell: Fax: DC Venture Properties, Inc Woodrock Way, Granite Bay CA Market Overview (Cont’d) The data below provides additional details describing the three main categories of properties that make up the under $200k single family unit (SFR) market segment.
Cell: Fax: DC Venture Properties, Inc Woodrock Way, Granite Bay CA Target Market DCVP’s target market is a subset of the under $200k single family unit (SFR) inventory available in Sacramento county. Short Sale properties are not suitable opportunities for investors due to their time consuming processes and unpredictable results. Instead we recommend REO and Non-Short Sale properties. There are ample inventories of both REO’s and Non-Short Sale properties available on a consistent basis. The default rates are expected to remain high, and as a result REO’s will continue to replenish inventories.
$1k to $60k Ave Monthly Inventory = 70 Ave Unit Price ($000) = 48 Ave DOM (cumulative) = 65 $61k to $120k Ave Monthly Inventory = 421 Ave Unit Price ($000) = 94 Ave DOM (cumulative) = 88 $121k to $180k Ave Monthly Inventory = 514 Ave Unit Price ($000) = 152 Ave DOM (cumulative) = 74 Cell: Fax: DC Venture Properties, Inc Woodrock Way, Granite Bay CA Target Market (Cont’d) A snapshot of the mid-November target market inventory is shown below. These statistics may vary slightly in future months, but we do not expect major changes in inventories until after 2012.
Cell: Fax: DC Venture Properties, Inc Woodrock Way, Granite Bay CA Investment Analysis The simplified financial analysis below provides an indication of the cash flow investors can expect based on their investment preferences such as property price range and cash vs. financed acquisitions.
Rental Vacancy Rate = 4.5% Typical Monthly Rent 2 Bedroom = $ 929 Typical Monthly Rent 3 Bedroom = $1249 Lawn/Garden Maintenance Service= $60 (cut, trim & sweep twice monthly) DCVP Property Management Fees = 10% (of gross monthly rent up to $100/unit) Local Property Tax Rate= 1.25% (most areas in Sacramento County) Cell: Fax: DC Venture Properties, Inc Woodrock Way, Granite Bay CA Rental Market Statistics All statistics presented are averages based on data collected from cities across the County of Sacramento (where appropriate), or based on specific knowledge of service costs. It should be noted that actual costs may vary by area based on property conditions, location and prevailing rates.
DC Venture Properties, Inc. is located in Granite Bay, and operates as an independent real estate company with no affiliations -- since DRE License # NMLS Identification # Professional Associations: National Association of Realtors California Association of Realtors Placer County Association of Realtors National Short Sale Council DC Venture Properties, Inc Woodrock Way, Granite Bay CA Cell: Fax: Professional Designations: Company Profile