Income Investing

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    09-May-2015
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If you need to know how to invest into cash flow investment real estate then check out this presentation. Email me at aduggal@rernj.com to request the video that further explains these slides.

Transcript of Income Investing

  • 1.Income Investing 101

2. Why Are We Here?Value investing is at its core the marriage of a contrarian streak and acalculator."- Seth Klarman 3. Value Investing 4. EDUCATION MBA- Finance Real Estate Instructor License Masters in Real Estate Finance (NYU) EXPERIENCEDInvested in over $15 million of Northern NewJersey since 2008Buy & Hold Investment in Section 8 andStudent Housing 5. My Reasons 6. 1) Personal Investment Plan2) Find Your Deal4) Analyze the Deal5) Checklist for Site Visits6) Presenting an offer7) Due Diligence Stuff8) Asset investment plan9) Sources of Capital10) Closing Table- Now What11) Getting Money Out! 7. Income Investing?Investing into instruments that providerepeat cash flow with diminishing effort 8. InvestingInstruments Multifamily Student Housing Tax Liens Discounted Notes Commercial Assets 9. I.Investor TypeII. Investment StrategyIII. Capital AvailabilityIV. Return on EquityRequirementV. Risk ToleranceVI. Target Hold Period 10. Investor Type 11. Return on Equity:Beat My Return on Equity?Return you want to makeon your invested cash! 12. High RiskMedium Risk Low Risk 13. "We dont get paid for activity, just for being right. As to how long well wait, well waitindefinitely."- Warren Buffett 14. OnlineRealtor.comLoopnet.com / Showcase.com (Commercial Asset Specific)Auction.comMLS Public SitesOfflineSigns/MarketingBankruptcy AttorneyReal Estate Brokers/Agents 15. Cash Flow? NOI?CAP Rate?....Ahhhh 16. Gross Income-Vacancy-Rent Loss-----------------------------------------Adjusted Gross Income-----------------------------------------Fixed Expenses:-Property Taxes-Property Insurance-Fees and Permits Variable Expenses: -Utilities -Maintenance -Professional Fees-----------------------------------------Net Operating Income (NOI)----------------------------------------- 17. Key RatiosTYPE OF RATIOFORMULAIDEAL RATIO RANGECAP Rate (ROA) NOI/Purchase Price6-11%Return on Equity (ROE) Net Cash Flow/Equity10-20%Break Even Ratio Debts + Expenses/GPI60%1.25 18. Back of Envelope AnalysisAssumptions ROA 10% (Cap Rate) Vacancy Rate10% Management Fee5%Asset Case Facts: Total Units:4 Purchase Price: $200,000 Gross Income: $40,000 Operating Expenses: $20,000 NOI:$ Market Rent/Unit: $1,500 19. Analysis & Legal Tools 20. Prospect Deal 21. Checklist ItemsLocationAssetTenant 22. Littleton Investment- FactsAsset FactsAsset Type: 3 Family AssetIn-place Rents: $(What is the number?)Expenses: $12,000 (As provided by Seller)Sale type:Short SaleDeal Source:GSMLS 23. EQUITY + DEBT = CAPITAL STACKDebt Sources -Mortgage -Preferred Equity -Bridge Financing -Mezzanine CapitalEquity Sources-Self Directed IRA -Syndicate Capital -Operator Equity/Cash 24. Littleton Investment-CAPITAL TABLEInvestor FactsRe: 10%+Risk: Moderate to HighCapital Source: Equity & Debt Combination 25. Legal agreements to learn:-Letter of Intent-Purchase & Sale Contract-Option Contract 26. Home Inspection Environmental Inspection Municipal Inspection Financial Analysis Market Analysis 27. Asset Plan Investment Target StrategyAsset Current Financials Value Add Opportunities Stabilized FinancialsExit Plan 28. HUD Statement Mortgage Document Note Document Title Report Insurance 29. Get Your Cash Out:Open Market SaleAuction SaleRollup SaleTIC SaleSeller Financed Sale 30. @Ankit_RERFacebook Real Estate Roundtable