real estate ira investment packages - main street planners
DESCRIPTION
http://MainStreetPlanners.com offers Self Directed IRA Real Estate packages. If you are an investor looking for ira investment options, then please view this presentation. Many of our clients ask "can i invest my ira in real estate?" The answer of course is yes. You can also use 401k real estate investment as well. We specialize in alternative assets for your retirement account.TRANSCRIPT
Real Estate Packages
MAAP “Core Four” Pillars
Asset Class Summary
Bought at Auction
• Saves SO much time• Not shotgunning low-
ball offers• Short-sales take 2-3
times as long• Don’t have to get
money to the courthouse in 24 hours
Rehabbed
• Financing fix up• Not keeping crews on
budget• Try to get a contractor
to finish the job• Don’t over-improve• Don’t have to supervise
Tenants in Place
• Cash flow now• Most important tenant
is the first one• 12-24 month leases• Managers screen for
quality
Property Managers
• Find the best in the area• Does the heavy lifting• Day-to-day tenant
interface• On staff maintenance• Only paid when tenant
occupied
Melbourne Street, SLC
• Purchased in 1992 for $87,500– Rents $1,300– Net $1,000
• Cash on cash $12,000/$87,500 = 13.7%• 1996 appraised for $240,00• 2008 appraised for $390,000• 2012 worth $230,000
The Power of Leverage• Increases returns 3-4%• Allows buyer to secure double the properties• “Non-Recourse” lending • Based on the property only
– No application– No collecting from the borrower– Required financing if using retirement dollars
• Banks don’t like it – 1 national bank says they do it– Minimum loan sizes, deny deals for whatever reason
• Our vendors have it
How to value properties
• Property Tax notice• Values estimated by neighborhood area• Every 2-3 years
• Online Data • Zillow is common
– Pulls data from public records like property tax, or sales in area, not accurate, includes short sales and foreclosures
• Appraisal-best and closest
How to value properties
• Appraisers\Appraisal report– Comparable Sales– Income Approach– Replacement cost
How to value properties-Comparable Sales
Comparable Sales-subjective• 3 “like” properties sold in last 6 months• Distance within a mile• Adjustments for differences
– No garage vs 2 car– Covered patio vs no pation– Lot size– Number of bathrooms– Number of bedrooms
How to value properties-Income Approach
Value based on the income-commercial properties– Income approach-Melbourne Street, SLC• Net income $10,000• Divide by a common rate of return (cap rate)
• At 8%– $10,000\.08 = $125,000 value
• At 6%– $10,000\.06 = $166,666 value
How to value properties-Replacement Cost
• Replacement cost• How homeowners insurance looks at a property• $80 per square foot x square footage• Deduct depreciation• Value of lot added on
Melbourne Street SLC• 1600 sq ft upstairs x $80 = $128,000• 1600 sq ft downstairs x $40 = $64,000 totals $192,000
– Add the land
• Significant remodel creates “effective age” estimate
How do our vendors value properties?
• Cost to build comparison• Florida condos, what would I pay down the street• Instant equity
• Replacement cost-cuts out non-market type sales• How homeowners insurance looks at a property @ $80\ft• Replacement cost is a watermark for value over time.• If we can get a property in the $40-50\ft, it is a good price
Significant remodel creates “effective age” estimateChange out plumbing, HVAC, electrical, windows, kitchen in a 100 yr
old property, how old is the property?
Newer properties 10-14%
14.2% return Doubles every 5 yrs
Year 0 $60,000
Year 5 $120,000
Year 10 $240,000
Year 15 $480,000
Year 20 $960,000
Year 25 $1,920,000
Real Estate Returns HopeCan start with less money, same result
Returns safely secured
People understand the risks
Loans are repaid in 4-5 years
To compound, we need to reinvest the rents
Gives people returns high enough to get back on track
People understand the risks
18% return Money doubles every 4 years
Year 0 $30,000
Year 4 $60,000
Year 8 $120,000
Year 12 $240,000
Year 16 $480,000
Year 20 $960,000
Year 24 $1,920,000
Cornerstone of a portfolio
Ideal Portfolio Contents