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					Investors


  Being Prepared for a Changed Market
Today’s Presenters


• Judy Yriarte – Prudential Real Estate Professionals
• Rosi Green – Ticor Title
• Dina Schmidt – Reliance Mortgage
Prosper from a down market
Many of the greatest fortunes
 in history were made during
 tough times. In fact, most
 savvy investors, business
 people and wealth builders
 actually prefer tough times
 and a tough market
 because they know
 everyone else is running
 scared. They know others
 are fearful of taking action,
 so what do they do? They
 DO take action, while
 everyone else “waits for
 things to settle down.”
Who is the investor?

• They have liquid assets and they’re interested in the
  opportunity that this market offers.

• They have a change of attitude about this
  investment, looking for stable long term gain, want
  to pay off/down the property for future income flow.
What do they want from you?

• They want to feel like you have access to ALL the
  information from Foreclosure to Short Sale.

• They want to know that you’re constantly looking for
  these opportunities and prepared to act quickly on
  their behalf.

• They expect you to be an EXPERT. Know your
  market statistics and inventory. Understand 1031
  and finance options…
Where do you find them?

• Start with your sphere

• People with multiple properties

• People with higher incomes looking for safe
  investment
When will they make the
investment?


• At the time they are convinced this is a great
  opportunity for them
Why would they make this
investment?
• Because they believe that the time has never been
  better to purchase.

• They are rethinking their investment portfolios and
  they see that distressed property is an advantage for
  them.

• You have helped them see why now is a good time
  to buy.
Two important documents that
you must become familiar with


• Buyers Broker Agreement

• Short Sale Addendum
OREFonline.com
Conversations to have
   with investors
The Rule of 72

• Divide your rate of return into 72 and that’s how long
  it takes your money to double.

• For example if you get 6% on a savings account it
  will take you 12 years for your money to double in
  value.

• 72 divided by 6 equals 12
The Rule of Leverage
• Real Estate can be leveraged by getting a loan on
  the property.

• If you purchase a property for $100,000 cash and it
  goes up by 5% you have earned 5% on your money.

• If you purchase this home with a 20% down
  payment and an $80,000 loan your rate of return will
  be 20 times greater or 40%
Remember

• You’ve had a 5% increase in value and you divided
  that by your actual investment of $20,000. You
  have a 40% return on your investment.
What if there is no return the first
year? Why would you purchase?

• Cash flow when the property        • Tax Savings – write off expenses.
  becomes free and clear.
                                     • Appreciation over time - the
                                       property historically appreciates
• Leverage you can control             in value
  $100,000 investment with
  $20,000 down.

• Debt reduction – Real Estate is
  one of the few investments where
  someone else will make your
  payments.
Looking at the
long term investment
                       Example based
                       on averages
                       10 year investment:


                       1998 Purchase
                       $115k


                       2008 Sale
                       $210k


                       Profit
                       $95k
Change of Perspective

• The Realtor must be willing to see that a huge
  change has been made with a large section of our
  potential buyers.

• They’re investors and they have the cash.

• They perceive an opportunity to make money in their
  future because of low prices and interest rates.
The investors perspective has
changed
• For the first time in a decade they see that with their 20%
  down a property can potentially carry itself financially making
  it more interesting to them than it has been.

• Additionally an old way of thinking is emerging, the idea that
  if you can purchase correctly and have someone pay off your
  property it will eventually be a cash flow opportunity.
Tips for creating wealth with
Real Estate
• Buy residential              • Don’t wait to buy Real
                                 estate. Buy Real estate
                                 and WAIT!
• Purchase mainstream
                               • Know your limit
• Don’t buy with partners
                               • Work with knowledgeable
• Believe in the long run        people


• Take care of your property   • Purchase properties that
                                 can carry themselves
Example

•   236 Steelhammer      $149,000.00
•   20% down at          $29,800.00
•   Loan Amount          $119,200.00
•   Principal/Interest   $753.00
•   Taxes/insurance      $140.50
•   Total Payment        $943.57
•   Rents for            $975.00
5 major benefits
to owning this house
• Cash Flow $31.43 times 12 equals $377.16
• Leverage you own $149,000 property with $29,800 down.
• Debt Reduction $1,182 in principal reduction the first year.
  $1,182 divided by down payment of 29,800 equals a 4%
  return on that portion of the investment.
• Tax Savings- Approximately $3,000 a year in depreciation
  meaning that your income from this property will not be
  subject to tax.
• Potential Appreciation. When this house goes up in Value
  you will calculate the rate of return on your initial investment.
  Let’s say it goes up 5% or $7450. remember if you divide that
  by your initial investment of $29,800. you will have a 25%
  return on your invested money.
Let’s apply the Rule of 72

• At a 5% increase in value. We’ve established that
  our money has increased by 25%

• If we divide 25% by 72 it would take 2.88 years for
  the investors money to double if the property
  continued to increase by 5% a year.
As an Agent for Investors
  • Be acquainted with the Buyer
    Brokerage Agreement
  • Be able to convey that you have access
    to all information concerning
    foreclosures, short sales etc.
  • Be able to discuss the rule of 72.
    Leverage, and the new opportunity that
    a property can now pay for itself,
    creating wealth in the future.
Investors


        Prospecting for Investors
   Providing Unique Value to Investors
Before you start to prospect…

• Create a profile of the real estate investor
   –   Who are they?
   –   What makes them tick?
   –   What are their motivations?
   –   What are their information resources?
   –   Do they think they can do it on their own?
   –   Create specific individual profiles / goals / strategies


• What do YOU have to offer?
   – What is the unique value that you bring to them?
   – How can you meet their needs?
   – What are your goals and strategy to secure this business?
Value Ideas

Give them what they want…
•   Investment Opportunities (NODs, Bank Owned, Listing Alerts, Neighborhood
    Prospecting, MLS notifications)
•   Be THE resource to find motivated sellers for your investors
•   Provide a “hot buy” notification to potential investors consistently
•   Neighborhood Evaluations
•   Windows of Value
•   Specific Home Values
•   Estimated net sheets
•   Education
•   Consulting / Expertise / Counsel
•   Strategy Assistance
•   Financing Ideas / Credit Scores (partner up)
•   Network with them
On-Line Resources

• Notice of Default Report
Foreclosure Library
•   Federal Reserve Foreclosure Resources for Consumers
    HUD Foreclosure Resources

    DJCoregon.com
    DJC Portland posts the actual NOD daily under the PUBLIC NOTICES section on their site for Clackamas, Multnomah, and Washington Counties. Visit their site to
    subscribe.

•   BuyBankHomes.com
    Cyberhomes.com
    Trulia.com
    ForeclosurePoint.com
    Free registration at the site allows users to search for properties by state, county, city and ZIP code area, and to specify property details such as property type
    (including residential, commercial, industrial and vacant land, among other categories), square footage, number of bedrooms and bathrooms, foreclosure filing date
    and a range for a home-value estimate supplied by Zillow.
    NorthwestTrustee.com
    Northwest Trustee's handle many of the foreclosures in the Pacific Northwest. You can search properties that have NODs posted and are scheduled for auction by
    signing up for a free account.
    Ocwen.com
    Search REO and VA homes for sale by state.
    HUD homesforsale.gov
    Find homes for sale from HUD, VA, IRS, US Marshal and more...
    Homesales.gov
    Current information about single family homes for sale by the U.S. Federal Government.
    ReconTrust.com
    Great source of NOD leads with basic filing information, Trustee#, sale date and site address.
    USA-Foreclosure.com
    User friendly Google map based search for homes in foreclosure. USA-Foreclosure.com is the nation’s largest non-subscription based Web site publicizing property
    scheduled for foreclosure auction.
    NETRonline.com
    Real estate public records and research information portal for property information, deeds & mortgages, tax records, parcel maps, assessment records, and public
    records nationwide.
    RealtyTrac.com
    Search pre-forclosures, auctions, and bank owned properties by state, county, city, zip code.
    ForeclosurePulse.com
    RealtyTrac's ForeclosurePulse blog was created for those of you in the trenches of buying, selling or investing in real estate. Find the latest foreclosure trends and
    comment or ask questions based on your experiences with the foreclosures market.
Residential
Transaction Study
                    •Study specific areas
                    •Cost per square foot
                    •Average sales price
                    •Market inventory by
                    assessed value range
                    •Sales in the last 12 months
                    by assessed value range
                    •Sales price as a percentage
                    of the total assessed value
                    •Average property
                    characteristics
                    •Length of ownership status
                    •Owner Occupied / Non-
                    Owner Occupied stats
Residential
Transaction Study
Windows of Value



                   This is a one page summary
                   of all the data from the
                   Residential Transaction Study.
ERealInvestor.com


• Provides agents and/or investors with instant analysis of
  current and prospective investment properties. This
  software program can calculate the return on investment
  information that clients need to make informed buy, sell
  or hold decisions.

• This tool can be integrated into your website to highlight
  your investment opportunity listings.
E-Real Investor
E-Real Investor
CyberHomes
• Homepage
  foreclosure widget:
  enter a market area
  and track.
• Advanced search >
  Refine by sales type
• Local statistics >
  Local Economics
  etc.
• The report feature
• Custom comps
  selection in “Change
  My Value”
CyberHomes Recognition

PC Magazine…
• December 2007 article - Cyberhomes was included in a
  “Best of the Internet,” article by Jennifer L. DeLeo.
• May 2008 issue - Cyberhomes was one of eight “Best
  Real Estate Sites,” offering “all the tools you need to buy
  or sell a home, like interactive maps, community stats,
  and powerful search tools.”
• November 2008 award – Cyberhomes was voted “Top
  Websites of 2008”
TicorAGENT
TicorAGENT
PITI in seconds

                  •Limited data entry
                  •Users don’t need to memorize a
                  single formula
                  •No internet connection needed
                  •Create net sheets in 10 seconds
                  •Save, e-mail or print
                  •Branded to you
                  •Built in manual
                  •Available for handheld devices,
                  laptop or desktop
Education / Networking
• Attend classes to become an expert
• Offer classes to potential investors as a value
• Join or create a local club
    –   www.reiclub.com (National)
    –   http://www.nationalreia.com (National)
    –   www.northwestreia.com (Portland / Salem & surrounding area)
    –   http://www.oreig.com/ (Eugene / Lane County & surrounding area)
    –   www.creonline.com (100’s of investment articles)
    –   www.biggerpockets.com
    –   Google it to find more!

    JUST A COUPLE CLASS IDEAS
• Short Sales / Foreclosures – Rob Lowe
• IPX1031 – Teresa Furer
• Financing / Cash Flow / Credit Scores – Your Lender Partner
IPX/1031 Education
Marketing to Investors (for Realtors) Instructor: Teresa Fuhrer 1 hour
An A-Z approach to targeting and creating long-term relationships with real estate investors. Learn how working with investors
    with multiple properties can be an efficient way to increase your commissions and garner you more repeat and referral
    business

Timing the Real Estate Market (for Realtors and their Clients) Instructor: Teresa Fuhrer 1 hour
No one can predict when to sell and when to buy real estate, not even Warren Buffett, but there are certain fundamentals that
    affect real estate cycles. Learn the seven major trends that affect pricing. Learn the differences between momentum buyers
    and contrarian buyers. There are pros and cons to each approach and each has its appropriate time. Learn the mistakes that
    even the most savvy investors make so you can avoid them.

How to Have Your Cake and Eat It Too Instructor: Toija Beutler/Teresa Fuhrer 1-3 hours
Do your clients know that their investment rental property can be eventually sold tax-free given some long term strategic
    planning? How about investment opportunities for principal residence and surrounding land? Learn tax savings techniques
    that combine the §1031 tax deferred exchange and §121 principal residence tax free treatment making you a hero in the eyes
    of your real estate clients.

Spotting the Exchange Opportunities Instructor: Toija Beutler/Teresa Fuhrer 1 hour
Failure to spot possible §1031 exchange opportunities can result in lost listing and sales opportunities. Find out what investors
     don’t know and realtors need to know.

How to Have Your Cake and Eat It, Too Instructor: Toija Beutler/Teresa Fuhrer 1-3 hours
Do your clients know that their investment rental property can be eventually sold tax-free given some long term strategic
    planning? How about investment opportunities for principal residence and surrounding land? Learn tax savings techniques
    that combine the §1031 tax deferred exchange and §121 principal residence tax free treatment making you a hero in the eyes
    of your real estate clients.
IPX/1031 Education

Spotting the Exchange Opportunities Instructor: Toija Beutler/Teresa Fuhrer 1 hour
Failure to spot possible §1031 exchange opportunities can result in lost listing and sales opportunities. Find out what
investors don’t know and realtors need to know.

War Stories Instructor: Toija Beutler 1-3 hours
“Toija’s Law: Whatever can happen, will and we have the War Stories to prove it”. Learn what not to do when working
with a client utilizing a §1031 tax deferred exchange transaction. Anecdotal stories on every-day missed exchange
opportunities.

Ten Stupid Things Smart People Do to Mess Up Their §1031 Exchanges Instructor: Toija Beutler 1 hour
Learn about the ten common errors that even savvy investors and real estate professionals make so you can avoid the
liability and tax consequence of a failed exchange.

Thirteen Pitfalls of §1031 Tax Deferred Exchanges Instructor: Toija Beutler 1 hour
Learn how to avoid common pitfalls that can cause your client’s §1031 exchange to fail and create undesirable tax
consequences.

Current Developments in Like Kind Exchanges Instructor: Toija Beutler/Teresa Fuhrer 20 minutes - 1 hour
It’s difficult to stay current on all the tax law changes affecting real estate investors. Attend this class to be ahead of your
competitors on issues that could save your clients taxes.
Now that you’re an expert…
…and have a box full of value to offer your clients – let’s talk about prospecting:

•   Always, always start with a plan
•   Work your sphere! The warmest and best ROI prospecting there is.
•   Call your title company to get a list of current investors in the area
•   Call your title company for a non-owner occupied list in the area and market the owner
•   Go to www.prospectsplus.com to get a list of high income people
•   Utilize the many Notice of Default and Foreclosure websites and title company resources (don’t pay
    for reports!)
•   Use your MLS (expired, hot list, multiple price reductions) and consistently share “motivated seller”
    leads to potential investors
•   Enhance your presence on the web (ActiveRain, LinkedIN, Blog, Retaggr, Postlets, CraigsList –
    Services/Real Estate & Housing/Real Estate For Sale… drive investors to you)

•   Leverage your e-mail with a Retaggr card. Visit retaggr.com
Finally…

    Have a goal,
               be a resource,

                                  be consistent,

                                       be relentless


Rosi Green
Business Development Specialist
rosi.green@ticortitle.com
www.ticorweb.com
11/2008
Investors


       Finance Options
Non Owner Occupied
Loan Guidelines
• Maximum Number of Properties Financed: 4
• Minimum Down Payment: 20%
• Seller Concession Maximum: 2%
• Six months of PITI in reserves
• To offset the mortgage payment with the new rental
  income the investor will need to be:
• A Real Estate Investor for 24 months
Investment Property
Loan Calculations

•   Purchase Price   $149,000               $149,000
•   Down Payment 20% $29,800            25% $37,250
•   Loan Amount     $119,200               $111,750
•   Interest Rate*     7.125%                6.500%
•   APR                7.506%                6.873%
•   P&I                $803.07                $706.34
•   Taxes             $105.50                 $105.50
•   Insurance           $35.00                 $35.00
•   Total Payment     $943.57                $846.84
•   Loan Fee **         2%                     2%

• *This interest rate is for a borrower with a credit score of 740+, a single
  family residence and a loan amount greater than $110,000.
• ** Loan Fee could be paid thru Seller Concessions
When qualifying your investors here
are few questions to consider:

• How many mortgage loans do they currently have?
  Fannie Mae allows a maximum of four loans in the
  borrower’s name.
• Are there adequate funds available for at least 20%
  down and six months of PITI?
• Do they need to use the new rental income to offset
  the mortgage payment?
• Are they a seasoned Real Estate Investor? Lenders
  require 24 months proven thru tax returns.
Why Wait?
Opportunity is Knocking…                 Don’t Lock the Door

Prepared by Dina Schmidt
Source: Time and Real Estate Tidbits

The only reason to buy should be centered on your ability to pay. But if you are thinking prices are only going to get lower so
     you want to play the waiting game then you should consider this……Finance costs will rise as the economy recovers, so
     trying to time real estate might not pay off.
The time is now if you are emotionally ready to be a homeowner, have good credit, plan to stay put for five years and you have
     been waiting for the perfect entry point. It’s time to get serious—before an inevitable rise in interest rates wipes out your
     advantage. Consider a typical home that sells for $149,000. You put 20% down and get a 30-year-fixed-rate mortgage at a
     rate of 6.0%. Monthly principal and interest come to $714.66. Let’s say that 12 months from now the same house goes for
     10% less, or $134,100. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage
     costs rise a point to 7.0% your monthly payment would be $713.74. So your savings are minimal….$.92 a month.
     Meanwhile home prices might steady and then sellers become less willing to negotiate. Now you have spent a year living
     someplace you’d rather not be, you’ve probably paid out at least $12,000 in rent that went no where and received no
     mortgage interest deductions.

       TODAY                                         COST IN 12 MONTHS
      $149,000                 Home Price                   $134,100
 Put 20% down and get a                                If prices drop an
30-year-fixed-rate mortgage                              additional 10%
   6.0% (APR 6.199%)            Interest Rate           7.0% (APR 7.126%)
Current Interest Rate                                    Recession ends and the
                                                         Fed starts to raise rates
     $714.66               Monthly Payment                   $713.74


             So what are you waiting for?

				
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