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Tony Alvarez 1 Presented By © Copyright Tony Alvarez 2012
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
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
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
I hate Disneyland! 5 © Copyright Tony Alvarez 2012
6 You are HERE © Copyright Tony Alvarez 2012
Types of Real Estate 7 © Copyright Tony Alvarez 2012
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
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
Methods of Investing 10 © Copyright Tony Alvarez 2012
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 “Being Like Soros in Buying Farmland Reaps Annual Gains of 16%” buying-farm-land-lets-investors-reap-16-annual-gains.html “Rising rents could signal housing market strength” Source: could-signal-housing.html#storylink=cpy “Hispanics Projected to be Mega-Consumer in Housing Market” consumer-in-housing-market Articles © Copyright Tony Alvarez 2012
Articles “Buying Foreclosures: One Investor’s Key to Success” “Investors target property tax deadbeats” “Survey: Commercial real estate outlook brightens” estate.html “Commercial condo in Chester a creative choice for businessman” 315/-1/NEWS “Miami Condo Market on the Mend” market-on-the-mend 13 © Copyright Tony Alvarez 2012
How do you Eat an Elephant? 14 © Copyright Tony Alvarez 2012
Understanding Valuation 15 © Copyright Tony Alvarez 2012
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
Comparables Definition: Able to be likened to another; similar; Of equivalent quality worthy of comparison 17 SuperiorSimilarInferior © Copyright Tony Alvarez 2012
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
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
Identifying Your Role in Real Estate Investing 20 © Copyright Tony Alvarez 2012
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
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
Choosing Your Entry Point 23 © Copyright Tony Alvarez 2012
24 The Ultimate Beginner No Cash No Credit No RE Experience No RE Education No RE Contacts Desire & Determination © Copyright Tony Alvarez 2012
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
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
8 Steps of a Real Estate Deal 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
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
Acquisition Strategies in © Copyright Tony Alvarez 2012
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
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 © Copyright Tony Alvarez 2012
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
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
Favorites in © Copyright Tony Alvarez 2012
Types of Real Estate 36 SFRs Condos 2-4 Res. Income 5+ Res. Income © Copyright Tony Alvarez 2012
Types of Purchases 37 REOs Short Sales HUD VA FSBO – Direct Sellers © Copyright Tony Alvarez 2012
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
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
Tips for 2012 & Beyond 40 © Copyright Tony Alvarez 2012
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
Performance & Relationships Performance 42 = Competition = False Conception © Copyright Tony Alvarez 2012
Performance & Relationships Relationship building = Cooperation Higher Level of Communication 43 © Copyright Tony Alvarez 2012
Performance & Relationships How do you invite cooperation Self-Improvement Honesty Integrity Transparency Unrelenting Dedication to your business 44 © Copyright Tony Alvarez 2012
45 You are HERE © Copyright Tony Alvarez 2012
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
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, years = $7.2 Million Example © Copyright Tony Alvarez
Thanks Again, Bruce! 36 $10,000,000 © Copyright Tony Alvarez
Re-vamped website w/new investor FREE Starter Kit 49 © Copyright Tony Alvarez 2012
© 2002 By Default! A Free sample background from Slide 1.
Washington Real Estate Fundamentals Lesson 11: Applying for a Residential Loan © 2011 Rockwell Publishing.
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Lesson 17 Buying a Home. Key Terms Adjustable Rate Mortgage (ARM) Closing Costs Condominium Down Payment Equity Fixed Rate Mortgage Mortgage Points Private.
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