How to Buy Your 1st Investment Property

How to Buy Your 1st Investment Property

“It all begins with that first step”

Meet Scott Pastel VP of Marketing/Co-Owner

10 years of experience in Real Estate

Licensed Real Estate Agent

BS Degree in Business Administration from Chapman University

Owns 3 rental properties from AZ to AL

Purchased first investment property at age 24

Personally mentored over 500 real estate investors

TOPICS WE WILL COVER TODAY: Tax Benefits of Owning Investment Property

5 Steps to Owning Investment Real Estate

How to Obtain the Best Financing for Investors

Property Management In’s and Out’s

Which Markets in the Country to Invest

How to Analyze the Financials (Actual Deals)

How to Eliminate as Much Risk as Possible!

UNCLE SAM WANTS YOU TO BUY REAL ESTATE!

1. Mortgage Interest 2. Insurance 3. Property Taxes 4. HOA payments 5. Property Mgmt. fees 6. Depreciation 7. Repairs and Improvements

Treat your real estate as a business! *Consult with your CPA or Tax Advisor first. If you do not have one, the Network has excellent referals!

TAX Benefits of Owning Rental Property:

MY PROPERTIES

Two Most Important Market Factors in Real Estate:


• Location, Location, Location

• Location, Location, Location

•Timing, Timing, Timing


Phoenix, AZ • Built 2007, 3 bed, 2.5 bath, 1,749 sq/ft

Bought in 10/2007 Purchase Price: $207,000 At that time it would have rented for $950


How much would you need to pay out of pocket to make the property have a positive cash flow?



$107,000 Down $113,210 Out of Pocket with Closing Costs




52% DOWN PAYMENT




52% DOWN PAYMENT

$150 A MONTH POSITIVE CASH FLOW 1.6% Cash-on-Cash Return

Phoenix, AZ • Built 2007, 3 bed, 2.5 bath, 1,749 sq/ft

Bought in 10/2010 Purchase Price: $96,000 Rented for $850


Minimum down payment on residential investment property?







20% DOWN PAYMENT




20% DOWN PAYMENT

$250 A MONTH POSITIVE CASH FLOW 13.57% Cash-on-Cash Return

The 5 Steps to Owning Investment

Real Estate

Step 1: GOAL SETTING

Specific Measurable Attainable Result? Timeframe

It all depends on the following…

1. Your Goals 2. Age 3. Experience 4. Risk Tolerance 5. Amount of Capital 6. Qualifying capabilities

Setting your Real Estate Investing Criteria

Phone: (949)885-8180 Website: www.marshallreddick.com

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Michelle Suiter: Real Estate Advisor No charge

Over the phone or in person

Whether you are experienced or just getting started

Customized plans that fit YOU best

We walk you through the entire process start to finish

Step 2: FINANCING

Borrowers with 4 or less properties financed: 1 Unit - 80% financed (20% down) - 680 Fico 2-4 Units - 75% financed (25% down) – 680 Fico

Borrowers with 5 to 10 properties financed:

1 Unit - 75% financed (25% down) - 720 Fico 2-4 Units - 70% financed (30% down) – 720 Fico

How to calculate your debt to income ratio?

DEBT Divided into Gross (before tax) monthly income = Debt to income ratio

Debts include the following: Minimum payments on Credit cards, Auto loans, mortgages including property taxes and insurance, student loans, any other loan on credit. Debts that do not count against DTI ratios include the following: Auto/Health insurance, cell phone and utilities (including cable), loans to family and friends that are not recorded, business loans.

640-660 mid fico score = 43.00% Max 660-680 mid fico score = 45.00% Max 680-700 mid fico score = 45.00% Max 700 mid fico score and above = 45.00% -

49.99% Max What are compensating factors?

*With our Credit Analyzer Software we can help IMPROVE a borrower’s credit score in some cases by ordering a “Rapid Rescore”

Please save yourself the trouble and DON’T use a Broker or your

local retail bank! In almost all cases you will either

lose the deal or have major delays. I can’t stress this enough…

Reed Hazard Branch Manager Cell: 949-973-5226 Email: [email protected] www.reedhazardloans.com

How to Choose Where to Invest:

1. Job Market 2. Vacancy Rate 3. Economic Diversity 4. Housing Affordability 5. Landlord Friendly? 6. Strong Education 7. Reliable Property Management

Step 3: Due Diligence

Unemployment Rate = Vacancy Rate

Over 6 million people live in the greater Atlanta Metro!

Phone: (949)885-8180 Website: marshallreddick.com

CNN Money-September 30, 2013

•MSN Money-


HOW TO CREATE “Worry-Free” Investing

No condos or townhomes Must Cash Flow! Buy Rent-Ready Buy Tenant Occupied Target suburbs of Large Metropolitan markets 3-4 bedroom units Hire a Home Inspector Hire a Professional Property Manager


Step 4: Escrow Process

• Read and Sign Purchase Agreement • Home Inspection • Appraisal • Select Rental Insurance • Title Insurance • Notarize Documents

Step 5: Select Property Manager and

Get Property Rented!

How to Ensure “Worry-Free” Property Management

What a GOOD Property Manager Does: Estimates fix-up costs Gets your property fixed up quickly Advertises and shows the property Finds and screens applicants Gets the tenant to sign a lease Collects the rent Provides a monthly and year-end statement Conducts periodic inspections

How Much Will It Cost? Leasing Fee

Management Fee is usually 8%-10% but

varies depending on the geographic location

We have REDUCED fees (6%-8%) for anyone who invests through the Marshall Reddick!

IF YOU BUY IN THE RIGHT AREAS IT WILL

STILL CASH FLOW!

Tenant Laws

California is a “tenant state,” meaning that the laws favor tenants’ rights, such as rent control or making it difficult to evict problem tenants.

Sources: http://realestate.msn.com/article.aspx?cp-documentid=13108353

http://www.landlord.com/lawresoverview.htm

www.rentlaw.com

Tenant Laws

• In California, it takes a minimum of 3 months before a judge hears and decides on a case.

• In “Landlord-Friendly” states it can be as little as 2 days before a trial is held!

Sources: http://realestate.msn.com/article.aspx?cp-documentid=13108353

http://www.landlord.com/lawresoverview.htm

www.rentlaw.com

Rule of thumb for investors:

“Live where you want, invest where the numbers make sense.”

WHAT DOES 90K GET YOU IN LA? What property class does this property fall into? How much maintenance and vacancy will you encounter?

20%? 30%? 40%?

351 E 97th St Los Angeles, CA 90003 (Near Watts) Price: $90,000 3 Bed and 1 Bath 630 Sq Ft Year Built 1927

LETS COMPARE…PROPERTIES Memphis, Tennessee Riverside, California

Price: $335,000 4 BED/3 BATH Sq Ft: 2,288 Year Built: 1988 Price/sq ft: $146

Price: $ 109,900 4 BED/2.5 BATH Sq Ft: 2,529 Year Built: 1985 Price/sq ft: $43.46

Sources: http://www.realtor.com/realestateandhomes-detail/137-Gracefield-Way_Riverside_CA_92506_M22634-25635#SendFc http://www.realtor.com/realestateandhomes-detail/24511-Highpine-Rd_Lake-Forest_CA_92630_M21748-21378

Top Investment Markets in the Country:

We choose real estate markets based on the latest research and data!

Top Investment Markets in the Country:

We choose real estate markets based on the latest research and data!

Every Investment has its Risks

Main Risks Associated with Real Estate Investing:

Vacancy

Maintenance

Property Values

Natural Disasters

The Beauty of Real Estate!

You can Eliminate as much Risk as Possible!

Vacancy Large City/Job Market/Good P.M

Maintenance

Property Values

Natural Disasters

How can we Eliminate as much Risk as Possible?


Maintenance Newer Properties/A&B Class

Property Values

Natural Disasters




Property Values Must have Positive Cash Flow

Natural Disasters




Property Values Must have Positive Cash Flow

Natural Disasters Rental Property Insurance


How to Get Started: 1. Email Michelle Suiter to schedule a free phone consultation

2. The no-obligation consultation will consist of: 1. Creating your investment criteria 2. Which markets fit your criteria 3. Analyzing potential investments 4. Ask any and as many questions as you would like!

Michelle Suiter Real Estate Advisor Direct: (949) 885-5162 Email: [email protected]

Call: (949) 885-8180

Email: [email protected]

Website: www.marshallreddick.com

4299 MacArthur Blvd. Suite 102, Newport Beach, CA 92660