investors toolkit
DESCRIPTION
Powerpoint Slide show describing the issues regarding a rental propertyTRANSCRIPT
Rocio [email protected]
Are you looking for optional investment opportunities?
This presentation shows you that rental property is a great investment, and an average return of roughly 11% for each year for a 5 year commitment.
Single Family Residents RentalMultifamily Residents RentalUndeveloped LandCommercial Spaces
• Single Family has highest rate of return with lowest risk
• Undeveloped land is speculative and many of the variables that affect the rate of return are out of control of the purchaser.
• Multifamily takes management skills and can have legal risks and liabilities and tax issues
• Commercial Spaces take a certain level of experience and expertise
Rate of returnLiabilityMaintenanceRisks such as abandonment.
• High Rate of Foreclosures allow for some real deals
• Limited credit for purchasers means high demand for rentals pushing the “rental revenue amount” higher than normal
• Usually only requires small amount of money down
• Properties are easy to source and evaluate
• You are earning on the renters money as well as on the increased value of the property
• Professional or Small Business owner in their 30’s-50’s with interest in growing their investment opportunity
• Responsible, hardworking, but conservative
• Future issues such as college expenses for children, eventual retirement, and limited current career path growth
• Frustrated with other investment opportunities
• Set Goals for amount of money you can commit to secure rental property (Money can be cash, home equity loans, loan from 401K, etc)
• Decide type of Residential property to source • How the property is going to be managed depends
on your time, number of properties, location• Decide on time period for holding the property. (EG:
5 years, 10 years, etc)• Source financing options and evaluate investment
properties• Agent does comparison to set expected rental rate,
and Inspector determines if there are key repair issues to deal with.
• Decision to purchase is based on the ROI, goals, and expectations for property based on holding period.
• Experience, Knowledge, and Competency as as a Real Estate Consultant for Clear Lake, Houston area
• Research and Comparative Evaluations in order to have a good idea of ROI
• Savings Benefits which include partners in the area of lending, construction, moving and other home services willing to offer discounts
• Flexible Commission rate based on number of units purchased in 12 month period.
Loan Origination Fee: Usually 1% Appraisal fee: roughly $275 Credit Report: about $65 Tax Service Fee about $75 Underwriting Fee about $300 Flood Certificate about $25 Prepaid items: Interest (1-30 days), Hazard Insurance 1
year premium Reserves: Hazard Insurance (2mths), Taxes (2 months),
Mortgage Insurance (2 mnths) Title Charges: roughly $500 depending on type of loan Recording Charges: roughly $200 Survey Charges: roughly $100 Closing costs guess: 4.5 % of the cost of the home
Initial investment of $24,000 brings a return of roughly $14,400 Assumptions:
A. Holding period is 5 years B. Monthly rent is approximately $1,000 C. Loan is at a rate of 7% B. Appreciation is minimal over 5 years with sale price of
$114,000 C. Overage of monthly rent is used to pay off note D. Total maintenance costs are roughly $3,000 over 5 years. E. Purchase Closing costs are $4,000 and sellers closing costs
are $6,000. F. If any of these costs are lower, or appreciation greater, rate
of return will be greater
Rate of return on 5 year CD is roughly 3.5% so a $24,500 investment will be worth $28,787 in 5 years.
So payment for your time and trouble to manage a rental home for 5 years is roughly $12,000 as compared to a conservative 5 year CD
Turn $24,500 into $38,900 in 5 years by buying a $100,000 rental property.
Now is a great time to purchase Forclosures with a 5 year appreciation rate to be very promising.
If this looks of interest to you, please call me. I would love to help you with your investment interest.
Sincerely, Rocio Moore. 832-878-0776