2. © 2002 Society of Industrial and Office REALTORS® WEALTH BUILDING in the 21 st CENTURY ROBERT J. NAHIGIAN, FRICS, SIOR, CRE SIOR 2006 FALL AUBURNDALE REALTY CO. CONFERENCE NEWTON, MASS.

3. INVESTMENT CHOICES STOCKSREAL ESTATE BONDS MUTUAL FUNDS COMPANIESCOMMODITIES BTS EXISTING SPEC

4. REAL ESTATE CYCLES SECULAR PEAK?? PEAK BID-ASK SPREADS “Denial Phase” “YIELD CHASERS” RECOVERY BOTTOM BUY LOW/SELL HIGH

5. © 2002 Society of Industrial and Office REALTORS® Why Real Estate? Why do people invest in real estate? TO MAKE MONEY? Really?

6. © 2002 Society of Industrial and Office REALTORS® MILLIONAIRE PROFILE Identifying the RE Investor MILLIONAIRES = $1-10 ML AVER. HSHLD NET WORTH = $3.7 MILL AVERAGE HSHLD INCOME= $131,000 MANY BETWEEN= $50-75,000 Source: Money Fall 2002, Millionaire Next Door/

7. © 2002 Society of Industrial and Office REALTORS® U.S. AVERAGE MILLIONAIRE Aver. Median Hsehld Income = $ 131,000Aver. Median Hsehld Income = $ 131,000 Aver. Income = $ 247,000Aver. Income = $ 247,000 Aver. Hsehld Net Worth ’05 = $ 2.2 MillionAver. Hsehld Net Worth ’05 = $ 2.2 Million Total Hsehlds Millionaires ’05 = 8.9 MillionTotal Hsehlds Millionaires ’05 = 8.9 Million Total Hsehlds ’05 Millionaires w/o RE = 2.5 MillionTotal Hsehlds ’05 Millionaires w/o RE = 2.5 Million Source: Wikipedia.org/Millionaire Next DoorSource: Wikipedia.org/Millionaire Next Door

8. © 2002 Society of Industrial and Office REALTORS® CAN THEY INVEST? ALL U.S. NET WORTH CAN THEY INVEST? Median Income 2004 = $ 44,389 Aver. US Salary ‘06= $ 17.00 / Hour Net Worth 2004 = $ 100,894 Aver. Median Hshld Net Worth 2005 = $40,200 Source: US Census Bureau/CNN Money 8/20/04

9. © 2002 Society of Industrial and Office REALTORS® BIG HAT, NO CATTLE

10. © 2002 Society of Industrial and Office REALTORS® Wealth Building Biggest Consumption Category Income Taxes Lifestyle

11. © 2002 Society of Industrial and Office REALTORS® HOW DID THEY GET THERE?

12. © 2002 Society of Industrial and Office REALTORS® Wealth Building Income Taxes: 2003 IncomeFederal EarnersRevenues 1%= 34.27% 5%= 54.36% 50%= 96.54% Source: TaxFoundation 2/2/06; IRS 2003

13. © 2002 Society of Industrial and Office REALTORS® Wealth Building Lifestyle Feds 33  38% State 5.0 –9.0 % Self-Employment 12.4 % Medicare 2.9% Deduction Phaseouts $_??_______  60%/92%

14. © 2002 Society of Industrial and Office REALTORS® BUILDING WEALTH INCOME IS NOT WEALTH BEING RICH IS NOT BEING WEALTHY CONSUMPTION vs. ACCUMULATION

15. © 2002 Society of Industrial and Office REALTORS® Investing Discretionary Income (Surplus) Placing It/ Commodity Future Consumption

16. © 2002 Society of Industrial and Office REALTORS® U.S. MILLIONAIRES ’05 INVESTMENTS Investment Real Estate = 46% of mllnresInvestment Real Estate = 46% of mllnres Investment Real Estate ’04 = 13% of portfolioInvestment Real Estate ’04 = 13% of portfolio Stocks and Bonds= 70%Stocks and Bonds= 70% Mutual Funds= 68%Mutual Funds= 68% Source: CNN Money 3/29/06/6/9/05Source: CNN Money 3/29/06/6/9/05

17. © 2002 Society of Industrial and Office REALTORS® Returns Double Your Investment 2/10 Rule 14 7/8 % compounded

18. © 2002 Society of Industrial and Office REALTORS® WHAT YOU NEED TO SAVE T.ROWE: NEED 15% OF SALARY FIDELITY: NEED 14% OF SALARY THE OLD 10% MAY NOT WORK SOURCE: WALL ST. J 7/1/06

19. © 2002 Society of Industrial and Office REALTORS® After Tax Household Savings Rate WHICH COUNTRIES CAN INVEST? U.S. 2000 = - 1.3% LBYM U.S. 2005 = - 0.5% Japan 2004 = 7.7% = $117,000 French 2004 = 16.0% Your Client: 15-20% = $ 2.24 Tril. 9/06 Source: US New 2/10/03; 3/24/03; MSNBC 1/30/06/Las Vegas Journal 3/2/06

20. © 2002 Society of Industrial and Office REALTORS® NATIONAL SAVINGS RATE US: 200413.6% OF GDP JAPAN: 200425% OF GDP CHINA: 200450% OF GDP Source: Boston Globe 1/30/05

21. © 2002 Society of Industrial and Office REALTORS® U.S. CONSUMER DEBT 2004 U.S. Average Credit Card Debt: $9,312 Aug. 2006: US Households at Record Debt 2006 Consumer Debt = $2.17 Trillion Source: Smart Money 9/05MSNBC 8/9/06

22. © 2002 Society of Industrial and Office REALTORS® U.S. CONSUMER DEBT June, 2006 = 90,000 Homes Foreclosed June, 2006 = 17% higher than June, 2005 2006 AMR To Reset = $1. 0 Trillion A House = ATM Source: Investor Business 8/24/06

23. © 2002 Society of Industrial and Office REALTORS® ENTRANCE STRATEGIES WHEN INVESTING PERSONAL GOALS/OBJECTIVES W PERSONAL GOALS/OBJECTIVES W RISK THRESHOLD W AGE W MARITAL STATUS W RETIREMENT ($1,300,000.00) W TUITION ($200,000 per child)

24. © 2002 Society of Industrial and Office REALTORS® THANK YOU SIOR