1. Tony Alvarez 1 Presented By © Copyright Tony Alvarez 2012

2. Copyright © 2012 by The REO Mentor All rights reserved. No portion of this presentation/outline may be reproduced, stored in a retrieval system, or transmitted in any form or by any means – electronic, mechanical, photocopy, recording, scanning, or other, without the prior written permission of the presenter/publisher. 2 © Copyright Tony Alvarez 2012

3. This presentation/publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is offered with the understanding that the presenter/publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is requite, the services of a competent professional person should be sought. Adopted from the Declaration of Principles jointly adopted by a committee of the American Bar Association and a Committee of Publishers and Associations. Disclaimer 3 © Copyright Tony Alvarez 2012

4. Today’s Topics  Types of Real Estate  Methods of Investing  How to Identify Your Role in Real Estate  Choosing Your Entry Point 4 Things I Know to be True! © Copyright Tony Alvarez 2012

5. I hate Disneyland! 5 © Copyright Tony Alvarez 2012

6. 6 You are HERE © Copyright Tony Alvarez 2012

7. Types of Real Estate 7 © Copyright Tony Alvarez 2012

8. Types of Real Estate  Residential (SFR, Condo, Multi [2-4 or 5+], Mobile, etc.)  Commercial (office, retail, hotels, etc.)  Industrial (manufacturing, warehouse, etc.)  Vacant Land (raw land, finished lots, etc.)  Agricultural (farms, ranches, orchards, etc.)  Special Use (hospital, retirement comm., parking lot, RV parks, mobile home park, marinas, etc.) 8 © Copyright Tony Alvarez 2012

9. Apartments Condos Duplexes Houseboats Toll Roads Freeways Jails Prisons 1-4 Units Co-op Airports Air Space Beaches Golf Courses Country Clubs Schools Sports ArenasTheme Parks Entertainment Venues Libraries Retail Shops Campgrounds Mineral Rights Nuclear Plants Nature Trails RV Parks Fairgrounds Age Restricted Trailer Parks Mobilehome Parks T.V Antennas Cell Phone Towers Medical Buildings Hospitals Stadiums Churches Warehouses Factories REITS Halfway House Discounted Notes Manufactured 9 SFR Motels Marinas © Copyright Tony Alvarez 2012

10. Methods of Investing 10 © Copyright Tony Alvarez 2012

11. Different Methods of Investing 11 Active Passive Direct Indirect Short-term Long-term Fast Cash Cash Flow Appreciation Depreciation IRA Roth Individually Entity LLC C-Corporation Sub-Chapter S Corp. Land Trust Irrevocable Family Trust Limited Partnership General Partnership Charity Remainder Trust Tax Shelter Asset Protection Entity Bird Dogging Seller Finance Creative Investing Lease Option Sandwich Lease Option Short Sale Pre-foreclosure Wholesaling Hard Money Lenders Tax Liens Tax Lien StateTax Deed State Flipping Land TrustREITs Paper Notes Mortgage Investing © Copyright Tony Alvarez 2012

12. 12 “Being Like Soros in Buying Farmland Reaps Annual Gains of 16%” http://www.bloomberg.com/news/print/2011-08-10/being-like-soros-in- buying-farm-land-lets-investors-reap-16-annual-gains.html “Rising rents could signal housing market strength” Source: http://www.sanluisobispo.com/2012/03/15/1990244/rising-rents- could-signal-housing.html#storylink=cpy “Hispanics Projected to be Mega-Consumer in Housing Market” http://www.dsnews.com/articles/hispanics-projected-to-be-mega- consumer-in-housing-market-2012-03-12 Articles © Copyright Tony Alvarez 2012

13. Articles “Buying Foreclosures: One Investor’s Key to Success” http://www.cnbc.com/id/46630208 “Investors target property tax deadbeats” http://money.cnn.com2012/03/05/real_estate/tax-liens/index.htm “Survey: Commercial real estate outlook brightens” http://www.miamiherald.com/2012/03/15/2696192/survey-commercial-real- estate.html “Commercial condo in Chester a creative choice for businessman” http://www.recordonline.com/apps/pbcs.dll/article?AID=/20120318/BIZ/203180 315/-1/NEWS “Miami Condo Market on the Mend” http://www.usnews.com/news/blogs/home-front/2012/03/16/miami-condo- market-on-the-mend 13 © Copyright Tony Alvarez 2012

14. How do you Eat an Elephant? 14 © Copyright Tony Alvarez 2012

15. Understanding Valuation 15 © Copyright Tony Alvarez 2012

16.  SFR, Condos, 2-4 Residential Units  Comparables  5+ Residential Income Units  GRM (Gross Rent Multiplier)  Cap Rate (Capitalization Rate)  Commercial, etc.–  Cap Rates (Capitalization Rate) 16 Understanding Valuation © Copyright Tony Alvarez 2012

17. Comparables Definition: Able to be likened to another; similar; Of equivalent quality worthy of comparison 17 SuperiorSimilarInferior © Copyright Tony Alvarez 2012

18. GRM (Gross Market Rent) Definition: The ratio of the price of a real estate investment to its annual rental income before expenses GRM = sales price / yearly gross income 18 © Copyright Tony Alvarez 2012

19. Capitalization Rate 19 Definition: Capitalization rate defines the percentage number used to determine the current value of a property based on estimated future operating income. The Numbers in Play 6 unit apartment sold for $300,000 Rental Income after expenses is $24,000 $24,000 / $300,000 =.08 or 8% Capitalization Rate © Copyright Tony Alvarez 2012

20. Identifying Your Role in Real Estate Investing 20 © Copyright Tony Alvarez 2012

21. Identifying Your Role in RE or…  Speculator – Buy & Sell –Short Term- High Risk  Investor – Buy & Hold – Long Term - Low Risk  Entrepreneur – Does it all! - Brings Speculator & Investor Together Real Estate Agent Wholesaler Contractor Developer Bird Dog 21 © Copyright Tony Alvarez 2012

22. Superman of Real Estate  Does ALL 3 - Speculator - Investor - Entrepreneur 22 For the most part ALL of us are RE Entrepreneurs © Copyright Tony Alvarez 2012

23. Choosing Your Entry Point 23 © Copyright Tony Alvarez 2012

24. 24 The Ultimate Beginner  No Cash  No Credit  No RE Experience  No RE Education  No RE Contacts  Desire & Determination © Copyright Tony Alvarez 2012

25. Assessing Your Value: What Do You Bring to the Table?  Money – Cash  Credit – Borrowing Power  Knowledge of Market– Appraiser/Agent/ Lender  Skills – Contractor, Internet, Computer, Office  Experience – Prior Deals (good or bad)  Time – Unskilled Labor  Contacts – Provides all of the above  Confidence Ability to deal w/risk/stress/loss  Desire – Determination 25 © Copyright Tony Alvarez 2012

26. Assessing Your Value: What Do You Bring to the Table?  Money – Cash  Credit – Borrowing Power  Knowledge of Market– Appraiser/Agent/ Lender  Skills – Contractor, Internet, Computer, Office  Experience – Prior Deals (good or bad)  Time – Unskilled Labor  Contacts – Provides all of the above  Confidence Ability to deal w/risk/stress/loss  Desire – Determination 26 © Copyright Tony Alvarez 2012

27. 8 Steps of a Real Estate Deal 27 1. Find It 2. Inspect, Estimate & Appraise 3. Buy It 4. Finance it 5. Fix It 6. Rent it 7. Sell – Wholesale or Retail 8. Reevaluate, Improve, Repeat 3. Buyer’s Agent 4. Loan Agent 5. Contractor 6. Property Manager 7. Sales Agent 8. Deal Coordinator (Assistant) 2. Property Inspector 1.Bird Dog Or Agent Improve Your Value By Specializing! (specialty???) Getting Your Foot in the Door © Copyright Tony Alvarez 2012

28. Getting Your Foot in the Door (cont.)  Intern Large Company  Research Assistant to Small Investor  Section 8 Rental Expert  Middle Man for City Code Enforcement  Trash Out, Handyman, Cleaning, Staging 28 © Copyright Tony Alvarez 2012

29. Acquisition Strategies in 2012 29 © Copyright Tony Alvarez 2012

30. Broad Strokes Rules  Buy Low, Sell High OR ELSE!!!  NO or negative appreciation, but buyers for unrepaired or repaired inventory: Buy below present unrepaired value then wholesale to Speculator/Investor or retail to end user  Appreciation present Buy & hold rentals to peak price level & sell 30 © Copyright Tony Alvarez 2012

31. Acquisition Strategies  Buy Below As-is Value Instant equity Improve prop. value ‾ Capital Improvements ‾ Improve cash flow o Raise Rents o Reduce Debt 31 © Copyright Tony Alvarez 2012

32. 32 © Copyright Tony Alvarez 2012

33. Acquisition Strategies  Buy At or Above As-is Value  Improve prop. value - Capital Improvements ‾ Improve cash flow o Raise Rents o Reduce Debt  Creative financing o Defer Payment of debt on seller’s equity 33 © Copyright Tony Alvarez 2012

34. Risks & Rewards  Buy below “As-Is/present Market Value”  Buy below construction cost  Buy below area GRM (Gross Rent Multiplier)  Buy with below Market Rents  Buy 10-20% Cash Flow after 100% financing 34 © Copyright Tony Alvarez 2012

35. Favorites in 2012 35 © Copyright Tony Alvarez 2012

36. Types of Real Estate 36  SFRs  Condos  2-4 Res. Income  5+ Res. Income © Copyright Tony Alvarez 2012

37. Types of Purchases 37  REOs  Short Sales  HUD  VA  FSBO – Direct Sellers © Copyright Tony Alvarez 2012

38.  Retail –buy fix sell to Owner Occupant  Buy fix, rent & hold long term for Cash Flow Utilizing 100% financing  Buy & Sell Wholesale to Active Investor  Buy fix, Rent & Sell to Passive Investors “Turnkey Investments*” 38 Exit Strategies © Copyright Tony Alvarez 2012

39. Types of Financing 39  Conventional  Private Investors (IRA)  Hard Money  Local Commercial Banks  Credit Unions  HUD  FNMA Homepath - up to 10 deals  VA foreclosures – 30 yr fixed rate  Creative Financing -  Sellers Carryback or sell to 3 rd party © Copyright Tony Alvarez 2012

40. Tips for 2012 & Beyond 40 © Copyright Tony Alvarez 2012

41. 1. Mtg Calculators 15 vs 30 Year Mtg APR ARM ARM vs Fixed Rate Interest Only Maximum Mtg Rent vs Buy 41 2.Yield & CashFlow Calculators Short Form 1-4 Unit Multifamily (5+ units) 3.Mtg Payoff Calculator 4.Fixed Rate Mtg Calculator 5.Mtg Tax Savings Calculator 6.Bi-weekly Pmt Calculator © Copyright Tony Alvarez 2012

42. Performance & Relationships Performance 42 = Competition = False Conception © Copyright Tony Alvarez 2012

43. Performance & Relationships  Relationship building = Cooperation  Higher Level of Communication 43 © Copyright Tony Alvarez 2012

44. Performance & Relationships  How do you invite cooperation  Self-Improvement  Honesty  Integrity  Transparency  Unrelenting Dedication to your business 44 © Copyright Tony Alvarez 2012

45. 45 You are HERE © Copyright Tony Alvarez 2012

46. 46 “My fellow Americans, ask not what you can do for you, ask what you can do for your country.” -John F. Kennedy © Copyright Tony Alvarez 2012

47. 10 words from an Investor “Hang in a bit longer, your area isn’t done yet” 10 words 3 more years for an additional $3,000,000 37 7 years = $7.2 Million Example © Copyright Tony Alvarez 2012 47

48. Thanks Again, Bruce! 36 $10,000,000 © Copyright Tony Alvarez 2012 48

49. Re-vamped website w/new investor FREE Starter Kit 49 © Copyright Tony Alvarez 2012