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Presenting Real Estate Investment Numbers to J.V. Partners What my slide deck looks like  (with a little bit of explanation) ChrisDavies.ca
Purchase $190,000.00 Down Payment $19,000 Legal Fees $  1,000 Reserve Fund $  4,500 Title Insurance $  1,000 Insurance $  1,000 Assessment $  3,300 Cash to Close $29,800
Purchase $190,000.00 Down Payment $19,000 Legal Fees $  1,000 Reserve Fund $  4,500 Title Insurance $  1,000 Insurance $  1,000 Assessment $  3,300 Cash to Close $29,800 Plus Renovations $25,000 (that’s $54,800 in total)
Purchase $190,000.00 Down Payment $19,000 Legal Fees $  1,000 Reserve Fund $  4,500 Title Insurance $  1,000 Insurance $  1,000 Assessment $  3,300 Cash to Close $29,800 Plus Renovations $25,000 (that’s $54,800 in total)
Purchase $190,000.00 Down Payment $19,000 Legal Fees $  1,000 Reserve Fund $  4,500 Title Insurance $  1,000 Insurance $  1,000 Assessment $  3,300 Cash to Close $29,800 Plus Renovations $25,000 (that’s $54,800 in total)
Purchase $190,000.00 Renovations $25,000 Appraised Value After Renovations:  $250,000
A Warning About These Numbers: Renovation Costs are estimates. In reality (Aug/08), the actual cost was  $25,323.34. Renovation costs can change rapidly, and $25,000 is an estimate only.
A Warning About These Numbers: The analysis beyond this point is based on a few rules, and is an projection and estimate only.  All calculations are simple, rather than compound. NEVER use these as anything but an estimation, a best guess, or a projection. Do your own homework!
Cash Flow Analysis Income Rent $1,500.00  Expenses Property Mgmt (8%) $  120.00  Condo Fees   $  255.00  Property Taxes   $  88.00  Vacancy (4%)   $  60.00  Repairs & Maint (4%) $  60.00  Mortgage (4.5%, I Only)  $  671.71  Total Expense $1,254.71  Net (Monthly):   $ 245.29
 
Annual and Total  Positive Cash Flow    Annual   Total Year 1  $2,943.49   $2,943.49  Year 2  $3,643.69   $6,587.18  Year 3  $4,288.90   $10,876.07  Year 4  $4,966.37   $15,842.44  Year 5  $5,677.71   $21,520.15
Appreciation Model: Estimated 5% per Year for Five Years Value at Purchase $250,000.00 Estimated Value 2013 $312,500.00 Mortgage Outstanding $179,122.50 Appreciation $133,377.50 Cash Flow  $21,520.15 Estimated Gross Profit $154,897.65
Gross Profit $154,897.65 Investment Returned $54,800.00 Net Profit $100,097.65 Split 50/50 $50,048.83
Investment  $54,800.00 Estimated Return $50,048.83 Return on Investment 91% (Five Years) 18% Per Year
Investment  $54,800.00 Cost of Borrowing  $13,700 $54,800 for five years  at 5%.
Investment  $54,800.00 So instead of costing you $54,800 in cash, it can actually cost you $13,700.
Investment  $54,800 $13,700
Investment  $54,800 $13,700 That’s like getting a real estate investment on sale for 75% off! You could buy 4 properties for the same amount of cash.  Assuming you can borrow $250,000 (or so) for the down payments, closing costs, and renovations.  And find 4 properties just like this one.
Investment  $54,800 $13,700 But the real point is:
Investment  $54,800 $13,700 Estimated Return $50,048.83 Return on Investment 365% (Five Years) 73%  (Per Year)
Investment  $13,700 Estimated Return $50,048.83 Return on Investment 365% (Five Years) 73% Per Year You find me a stock or mutual fund that will do 73% a year on the conservative side.
Investment  $13,700 Estimated Return $50,048.83 Return on Investment 365% (Five Years) 73% Per Year This projection uses 5% per year as an estimated increase in property values.  The average in  Edmonton since 1962  is 7.91% per year.  Imagine what one year with a 10% increase would do….
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Credits: From Stock Exchange (click to link) Taken by me, circa August 2005. For more real estate investor resources, check out my  Real Estate and Property Management Blog

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Presenting Real Estate Investment Numbers to J.V. Partners

  • 1. Presenting Real Estate Investment Numbers to J.V. Partners What my slide deck looks like (with a little bit of explanation) ChrisDavies.ca
  • 2. Purchase $190,000.00 Down Payment $19,000 Legal Fees $ 1,000 Reserve Fund $ 4,500 Title Insurance $ 1,000 Insurance $ 1,000 Assessment $ 3,300 Cash to Close $29,800
  • 3. Purchase $190,000.00 Down Payment $19,000 Legal Fees $ 1,000 Reserve Fund $ 4,500 Title Insurance $ 1,000 Insurance $ 1,000 Assessment $ 3,300 Cash to Close $29,800 Plus Renovations $25,000 (that’s $54,800 in total)
  • 4. Purchase $190,000.00 Down Payment $19,000 Legal Fees $ 1,000 Reserve Fund $ 4,500 Title Insurance $ 1,000 Insurance $ 1,000 Assessment $ 3,300 Cash to Close $29,800 Plus Renovations $25,000 (that’s $54,800 in total)
  • 5. Purchase $190,000.00 Down Payment $19,000 Legal Fees $ 1,000 Reserve Fund $ 4,500 Title Insurance $ 1,000 Insurance $ 1,000 Assessment $ 3,300 Cash to Close $29,800 Plus Renovations $25,000 (that’s $54,800 in total)
  • 6. Purchase $190,000.00 Renovations $25,000 Appraised Value After Renovations: $250,000
  • 7. A Warning About These Numbers: Renovation Costs are estimates. In reality (Aug/08), the actual cost was $25,323.34. Renovation costs can change rapidly, and $25,000 is an estimate only.
  • 8. A Warning About These Numbers: The analysis beyond this point is based on a few rules, and is an projection and estimate only. All calculations are simple, rather than compound. NEVER use these as anything but an estimation, a best guess, or a projection. Do your own homework!
  • 9. Cash Flow Analysis Income Rent $1,500.00 Expenses Property Mgmt (8%) $ 120.00 Condo Fees $ 255.00 Property Taxes $ 88.00 Vacancy (4%) $ 60.00 Repairs & Maint (4%) $ 60.00 Mortgage (4.5%, I Only) $ 671.71 Total Expense $1,254.71 Net (Monthly): $ 245.29
  • 10.  
  • 11. Annual and Total Positive Cash Flow Annual Total Year 1 $2,943.49 $2,943.49 Year 2 $3,643.69 $6,587.18 Year 3 $4,288.90 $10,876.07 Year 4 $4,966.37 $15,842.44 Year 5 $5,677.71 $21,520.15
  • 12. Appreciation Model: Estimated 5% per Year for Five Years Value at Purchase $250,000.00 Estimated Value 2013 $312,500.00 Mortgage Outstanding $179,122.50 Appreciation $133,377.50 Cash Flow $21,520.15 Estimated Gross Profit $154,897.65
  • 13. Gross Profit $154,897.65 Investment Returned $54,800.00 Net Profit $100,097.65 Split 50/50 $50,048.83
  • 14. Investment $54,800.00 Estimated Return $50,048.83 Return on Investment 91% (Five Years) 18% Per Year
  • 15. Investment $54,800.00 Cost of Borrowing $13,700 $54,800 for five years at 5%.
  • 16. Investment $54,800.00 So instead of costing you $54,800 in cash, it can actually cost you $13,700.
  • 18. Investment $54,800 $13,700 That’s like getting a real estate investment on sale for 75% off! You could buy 4 properties for the same amount of cash. Assuming you can borrow $250,000 (or so) for the down payments, closing costs, and renovations. And find 4 properties just like this one.
  • 19. Investment $54,800 $13,700 But the real point is:
  • 20. Investment $54,800 $13,700 Estimated Return $50,048.83 Return on Investment 365% (Five Years) 73% (Per Year)
  • 21. Investment $13,700 Estimated Return $50,048.83 Return on Investment 365% (Five Years) 73% Per Year You find me a stock or mutual fund that will do 73% a year on the conservative side.
  • 22. Investment $13,700 Estimated Return $50,048.83 Return on Investment 365% (Five Years) 73% Per Year This projection uses 5% per year as an estimated increase in property values. The average in Edmonton since 1962 is 7.91% per year. Imagine what one year with a 10% increase would do….
  • 23.
  • 24. Credits: From Stock Exchange (click to link) Taken by me, circa August 2005. For more real estate investor resources, check out my Real Estate and Property Management Blog