Embed Size (px)
Citation preview
Building Wealth in Today’s Economy Through Alternative
Investments
Double Digit Returns, No Commissions & Predictable Results
• 10,000 boomers turning 65 every day
Reckless speculation leads to wild worldwide stock volatility
What Are Your Investment Objectives?
• Security
– CDs
– Corporate Bonds
– Government Bonds
– Fixed Annuities
• Higher returns
– Stocks
– Mutual Funds
– Variable Annuities
Suntrust CD Rates
Annuity Rates:
Bond Rates:
S&P 500: Last 5 Years:
13.73% over 5 years = 2.75% avg per year. Our
Investors get 10% minimum or more with bonus kicker
Fees for $500,000 Mutual Fund Investment • American Funds = Small Cap World • Exp ratio = %1.09 (paid to the fund manager)
– @ 10% = $50,000 Profit / ROI– @ 8.91% = $44,550 Profit / ROI
• “A” Share Commission – (paid to the financial advisor who sells this mutual fund to their client)– $500,000 = 2% (breakpoint) = $10,000
• $500,000 - $10,000 = $490,000 - $5,341 (%1.09 exp ratio) = $484,659 left (zero ROI)
• $15,341 dollars in FEES for American Funds (3% in the hole to start) • $1,500 dollars in FEES for Equity Trust (self directed IRA)
Volatility is not your friend
Real Estate prices go up and down slowly, not 20% overnight!
This one was even worse!
Oglethorpe Properties Inc. Mission Statement
“To provide our investing partners passive double digitrates of return by acquiring undervalued real estate assets with investor capital seeking investment alternatives which can yield higher returns with less risk than traditional paper investment vehicles”
How We Acquire Properties
• Private Individuals
• Realtors
• Pre-Foreclosures
• Foreclosures & REOs
• Auctions
Private Lending Program Overview
• We buy houses for cash
• We borrow money from private lenders to fund our deals
• We pay 10% APR fixed returns ~OR~ 10% of the profit, WHICHEVER IS GREATER
• We have a formal closing and you get a mortgage on the home at a reasonable L.T.V.
• Title Insurance and hazard insurance protect you.
• Private cash funds allow us to purchase at a discount.
Adding Value… Before and After
COMPLETED PROJECT: 35 Stonelake Circle Savannah• Deal identified via HUD REO: Purchase Price $35,000 ( 32% After Repair Value)
• Repair Costs: $3,000 (new AC and some minor repairs)
• Contract sale price $89,900 in 21 days, closed in 90 days due to FHA seasoning deed restriction
• Appraised after repair at $109,000 by the buyer’s lender
• Gross capital gain 89,900-35,000-3,000 = $51,900
• Cash-on-cash ROI = 136% in 90 days
Private Money Investor would have made….
• At 10% APR for 3 months…
• $38,000*0.10/12 * 3 = $950 guaranteed or -
• $51,900 * 0.10 = $5,190 whichever is greater!
• Comparable 3 month CD @ ½% = $48!
COMPLETED PROJECT: 104 Oak Grove Savannah• Deal identified via Fannie Mae REO: Purchase Price: $50,000 (31.4% ARV)
• Repair Costs: $16,500 (drywall repair, paint, flooring, appliances)
• Retained as long term rental at $1300 a month
• Gross annual cash-on-cash ROI = 24% Net after taxes, ins. & vacancy allow. ROI = 18.5% for the first 5.4 years and infinite thereafter! (all initial capital investment recovered)
• Appraised at $159,000 after repair (unrealized cap gain $ 94,000)
Private Money Investor would have made….
• At 10% APR for 6 months…
• $65,000*0.10/12 * 6 = $3,250 guaranteed or-
• $94,000 * 0.10 = $9,400 whichever is greater!
• Comparable 6 month CD @ ½% = $162!
COMPLETED PROJECT: 50 Bushwood Dr Pooler• Deal identified via drive by: Purchase via bank short sale: $77,000 (57% ARV)
• Repair Costs: $27,600 (Mold remediation, repair, flooring, granite counters, cabinets, paint)
• Sold to owner occupant for $130,000 Net 130,000 -8% - 77,000 - 27,600 = $15,000 profit/6 mo
Private Money Investor would have made….
• At 10% APR for 6 months…
• $104,600*0.10/12 * 6 = $5,230 guaranteed or-
• $15,000 * 0.10 = $1,500 whichever is greater!
• Comparable 6 month CD @ ½% = $262!
START: OGP Locates & Presents
Deal
YOU Decide
You Fund the Deal
We Remodel The Home for flip or long term
rental
Sell property or place
tenant w. bank loan
YOU GET PAID!
The DEAL WHEEL:
Timeline for Flips: 3-9 M0
Timeline for Rental Refi 6 M0
Summary of the last 6 OGP 2013 deals:
Address Total Investment
Profit % ROI Days to cash out
272 Hilltop Circle $79,573 $8,976 11.3 49
2235 Louis Mills $82,853 $34,057 41.1 109
1805 Blair Ct $88,923 $23,777 26.7 105
5 Lakeside Dr $92,283 $13,357 14.5 76
74 Stonelake Cir $78,534 $14,673 18.7 67
122 Sonata Cir $71,788 $16,212 22.3 30
AVERAGE $82,325 $18,508 22.4 72
Private Investor interest would have averaged $1,623 on each deal!
Real Estate is an IRA Eligible Investment
• Individual Retirement Accounts qualify, including Roth’s.
• Allows you to self-direct your investments.
• 3rd Party Administrator sends money to title agent’s escrow account.
• Title agent sends all money back to 3rd Party Administrator.– Equity Trust Company.
– Nation’s foremost self-directed custodian.
– Premier customer service.
What is a Self Directed I.R.A? • A Self Directed IRA is an IRA where the owner is required to make
their own Investment decisions. • Non- Traditional Assets: Like real estate, LLC’s, oil and gas, etc • Self Directed IRA custodians (Like The iPlan Group who I use) set up
real estate investments inside of an IRA. • Any 401k, IRA, ROTH IRA, SEP IRA or HSA acct owner can make
investments like real estate in those accts • Sample Investments
– Note (I.O.U) w/ Mortgage – Buy stock in a company – Partnerships– Rental Properties
• The benefits of tax deferred (traditional IRA) or tax free (Roth IRA) returns over time
$50,000 Investment Example
Type Yield12-Month
Return
Bank CD 1.5% $750
RE Investor 10.00% $5,000
Annual Increase $4,250
In 5 years, your investment could grow to $75,000!
Investment Documents
• Promissory Note for loan amount.
• Recorded Mortgage at reasonable 75% L.T.V. or less
• Hazard Insurance Policy, lender named as a loss payee paid for by borrower.
• Title Insurance lender’s policy paid for by borrower.
BEFORE AFTER
Asset-backed Collateralized Security Mortgage Note
Rent To Own Homes• Growing demand due to foreclosure crisis & credit crunch.
• We help families go from renters to owners.
• They can achieve the American dream of homeownership.
• They treat the house like it is theirs because of large down payments.
3 Step Process 1. Set Up A IRA Acct (Equity Trust) 2. Fund The Acct =
1. Rollover = from 401k or 203b 2. Transfer = from another IRA
3. Make An Investment – taxes on profit is deferred or eliminated (if in a Roth IRA)Or – just skip to step 3 if not using an IRA
Rate of Return Offered:
• 10% simple interest guaranteed ($ invested/365 * #days borrowed)
• ~OR~
• BONUS 10% of the profit whichever is greater
• Profit kicker only if entire project is funded by private investor ($ to purchase + $ to repair)
• All Principal + Interest earned paid back at end of project
We Work Hard So You Can Relax:
• Locate potential properties.
• Perform property analysis and due diligence.
• Process and evaluate foreclosures from “Legal News.”
• Monitor property’s foreclosure proceedings at courthouse and through media.
• Address Realtor questions.
• Interface with Equity Trust Co.
• Provide presentations to investors.
• Negotiate offers.
• Coordinate and oversee inspections.
• Coordinate closings.
• Research marketplace.
• Perform marketplace analysis.
• Develop marketing plan.
• Coordinate title searches.
• Arrange and oversee inspections.
• Review settlements for accuracy.
• Inspect properties on an on-going basis to ensure tenants adhere to lease agreement.
• Procure tenants for rentals and lease-purchases.
• Screen tenants for credit worthiness, employment and rental history.
• Create ads and signs for advertising available properties.
• Put out lock boxes and signs.
• Obtain constant training through Real Estate Investment Assoc. of Cleveland and National Real Estate Investing Association.
• Manage database.
• Call lenders weekly.
• Interface with insurance company.
• Schedule showings.
• Hold open houses.
• Coordinate and monitor property renovations.
• Negotiate with subcontractors.
• Monitor property renovation budgets.
• Negotiate with homeowners.
• Prospect for new clients.
• Collect monthly rentals.
We Work Hard So You Can Relax:
Program Guidelines• Each loan gets a mortgage.
• $50,000 and above, you typically get a 1st mortgage.
• $10,000 to $50,000, you typically get a 2nd mortgage.
• No bundling or combining of funds
• You wire funds directly from you account to closing attorney escrow account
• We never touch the money
Investor Payments
• Interest accrues monthly –full payment of principal and interest when property is sold
• 100% return of principal at closing, no keeping of funds “on deposit” You pay no
transaction fees or closing costs!
Early CD Withdrawal• A bank’s average penalty on a $50,000 CD is $750 (6
months interest @ 3%).
• Oglethorpe Properties may pay your withdrawal penalty.
Passive Investor Profile
• Want to increase your R.O.I. with no direct
involvement
• Want secured collateral to protect investment capital
• Have liquid assets ($50k) available to invest for 1-5+
year term
– Savings accounts
– CDs
– IRA
What Do Smart Banks Know About Investing? Plenty!
• Banks lend heavily in Real Estate
• They take in money on CDs (ex. 2%)
• They loan money out at a higher rate of interest on houses (ex. 5%)
• This is called “Arbitrage” or “Spread” lending
• Who’s name is typically on the tallest buildings in any city?
You can be the bank
Program Guidelines• Each loan is secured by a note
• A mortgage is recorded in public record to secure the note.
• We typically need $50,000 -$100,000 for quick-turn loans
Protection of Principal
• #1 Rule: Money borrowed is no higher than 75% loan-to-value; after repair value.
• We then build in more equity by renovating the property.
• Comps and CMA will establish ARV (after repair value)
Because we don’t over-leverage the property, you get additional
security.
We Don’t Break This Rule!
75% Loan-To-Value (ARV) Rule
75% loan to value
100% appraised value
Safety Margin
Total invested
capital is 25%
less than Fair
Market Value
After Repair
Building Wealth By Becoming “The Bank”
• The Bottom Line on Private Lender Program
– Dramatically higher rates of return
– Secured investing collateral
– Passive on your part, No hassles, no fees
– You can drive by your investment any time!
Give Yourself the Gift of Time
Your Quality of Life Is Important
We now enjoy a more relaxed lifestyle
Thanks, Mom and Dad, for the gift of education
Peace of mind for us in retirement is priceless
The Next Step?• We will answer any questions you have
• Now that you know how you can earn double-digit returns on your investments…
– Sign up today for a private meeting … you maintain control of funds until a deal begins
• Also, do you know someone else who may want to earn double-digit returns?
Join our team of Private Lenders
