7 Secrets Every Real Estate Investor Needs to Know How to Prosper in Any Economy!
By Randy Bett
With Chad Bett and Nicole Gardiner The Residential Investor Edition Bonus Chapter-Multi Family Investing
Second Edition
INTRODUCTION “Things may come to those who wait-but only the things left by those who hustle” Abraham Lincoln
¾ Would you like to learn more about real estate
investing? ¾ Would you like to maximize your real estate
opportunities?
This book was created to supplement your education and to carry it to the next step in your real estate investing. Within the seven sections of this book you will find a “secret” that you can apply to your real estate investing. As a matter of fact you’ll find even more secrets in the tips and expert appendices that we’ve included. For more FREE bonuses including spreadsheets, reports, interviews and case studies follow the website link at the back of the book for your FREE bonuses. To Your Success. Randy Bett
Secret # 1 WHY INVEST IN REAL ESTATE Think about the best investments your parents ever made. Most people can reflect back and say it was their home. If that’s the case, what would have happened if they had purchased two more homes 30 years ago? Would they be better off today? We both know the answer. Of course! The Fear of Investing So why don’t more Canadians invest in real estate? It really boils down to fear and lack of education. Many people believe investing in real estate is risky. Risk really means that you have a sense of little or no control. By educating yourself and reading books like this, surrounding yourself with like-minded people and obtaining the expertise of a professional team you can move beyond that fear. You’ll quickly realize, “Hey, if my grandparents had purchased two more homes 30 or 40 years ago and simply held on to them, would we all have been better off?” Absolutely! That’s why we want to educate you about the amazing possibilities of real estate investing.
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WHY INVEST IN REAL ESTATE Benefits of Real Estate Investing Why invest in real estate? First of all, real estate provides various income streams. If you have a rental property, you will receive monthly income. This income allows for mortgage paydown and equity growth. Appreciation occurs in markets over a period of time, and as with any business, there are tax benefits to running your own real estate investment business. What is the real reason real estate is such an incredible wealthbuilding machine? Real estate is stable and relatively slow moving and the majority of your profit is locked up. Your wealth isn’t very liquid; it’s harder to access, so you can’t go out and spend it on a whim.
Types of Investors There are two types of investors: 1. Investors who buy the solution, like a stock, bond or mutual fund – something that has already been prepared. 2. Creative Investors. These individuals put together investments and present them to the market for the solution buyer. More money is made because you are solving problems – people problems and property problems. Required Investment Skills You need certain skills to become successful in real estate investing. You need to find opportunities that others missed. Learn how to raise money. Understand that investing is more than just buying.
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WHY INVEST IN REAL ESTATE It is more a case of knowing, especially how to organize smart people and seek their advice. Know a little about each part of your business. However, specialize in finding and selling deals in your niche market. Look for opportunities to work and then learn.
Real Estate Industry Trends The real estate industry is complex and complicated in nature, life will be much easier if you can forecast the direction in which the market will go. You can accomplish this by following trends around which real estate market revolves. Here are some of the real estate trends/fundamentals you should analyze: Population: Population and housing demand are directly proportionate; this means an increase in population equals an increase in housing demand which usually results in lower vacancy rates and higher rents. Rental Rates: Rental rates are also a very good tool to forecast future market trends. Are rents in your area increasing or declining? Are landlords making any concessions or offering any incentives to attract new tenants?
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Interest Rates: The current interest rates affect buyers, sellers and renters as it is directly proportional to the cost of obtaining capital. An increase in the interest rate increases the cost of financing new homes or apartment buildings and makes them harder to sell. However, it also motivates more people to rent rather than buy. Employment: New local job growth is a positive sign for the rental business. With an increase in the local employment rate, people start to migrate. This results in population growth which is followed by lower vacancies. New Home Starts: Simple supply and demand law applies here; You can contact your local home builders association or chamber of commerce to find out more about new house starts and completions.
Investment Obstacles There are many obstacles you may face when it comes to real estate investing. 1. Fear of losing money or not knowing enough – You have to learn how to overcome fear and failure. Realize that people can be so afraid of losing that they do just that. Therefore, the pain of losing money is greater than the joy of being wealthy. TIP: Focus. Wealthy people are focused, not balanced.
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2. Cynicism – Don’t hang out with negative people. Remember, cynics criticize and winners analyze. TIP: A great property manager is more important than the real estate. 3. Laziness - Busy people are often the laziest. They are usually overcommitted in time, so they become lazy when it comes to investing. 4. Habits - Our lives are a reflection of our habits. We need to grow our asset column. Get into that habit. 5. Arrogance - Arrogance is defined as ego mixed with ignorance. Why Real Estate is a Sound Investment It is not impossible to make money on your real estate investments. It does have risks and pitfalls as in any other investment. But by prudent use of proven techniques and strategies we’ll discuss you can increase the likelihood of making a profit and adding value to your personal wealth. The advantages are manifold, and the disadvantages are manageable. The Advantages Real estate investments offer diverse advantages, and many of them are interrelated.
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WHY INVEST IN REAL ESTATE
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Less Risk. Though there is some risk, real estate is more secure than other investments. Its comparatively low risk will vary with respect to geographical location, market conditions, and factors such as population growth, availability of land, proportion of renters in the area (can reach 50% in metropolitan areas), availability and comparative costs of financing, core demand and need for real estate, and performance consistency of land values appreciating at rates above inflation rate. Real estate markets move in cycles but eventually trend upward over time.
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Low Capital Requirement. Starting a real estate investment is not so capital intensive — about $15,000 to $40,000 should be enough to get you started. You can borrow against the property to raise the rest of the money.
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Skills easy to learn. Getting into real estate is relatively easy. The skills and knowledge needed are easy to acquire, regardless of experience, education, age or background. As your investment appetite grows, you can continue educating yourself in the necessary knowledge and skills.
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Less time demands. You don’t need to spend all your available time in real estate investing activities. You will learn to make more efficient use of time once you have mastered the techniques.
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Leverage capital. The power of leverage allows you to invest only a small amount and borrow the rest. A 9:1 or 8:1 ratio of borrowings to capital is possible on real estate because the property is the security. However, a high
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WHY INVEST IN REAL ESTATE leverage ratio in a declining market will put you at risk. Thus, the bigger the mortgage amount, the higher the lender’s risk and therefore the higher the interest rate needed to cover that risk. Insurance coverage on the mortgage can reduce the risk. x
Value appreciation. Your original investment experiences a natural growth, as property values increase over time.
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Equity build-up. Regular payments pay down the principal on your mortgage, decreasing debt burden and increasing accumulated equity. This equity is separate from natural appreciation on property values. If you sold the house, the true equity is the net sales proceeds you would receive after deducting all commissions and closing costs.
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Hedge against inflation. Inflation erodes purchasing power. Real estate investment provides some protection against inflation since the rate of appreciation is usually higher than the inflation rate — thus you have real growth. Historically, residential homes have appreciated at 2% to 4% (or higher) above the inflation rate.
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Tax breaks. Real estate investments, whether in rental property or principal residences, enjoy a number of tax advantages, including: o Zero tax-rate on capital gains from principal residence o Write-off rental income from principal residence rooms against home expenses o Write-off home-based business income against home expenses
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WHY INVEST IN REAL ESTATE Only a percentage of the capital gain from real estate investment is subject to tax o Property investment expenses are deductible against income o Negative cash flow losses can offset income from other sources x
Regular income. A good investment has the potential to earn positive cash flow income each month, after deducting expenses and debt service payments. This provides income and, more important, adds value to the real estate investment.
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High ROI. Real estate investments have very high potential to generate ample returns on investment — both beforeand, more important, after-tax.
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Rising demand for land. The supply of land is finite while population numbers keep going up. With rising demand and limited supply, prices of real estate can only go up. Even people who already own homes want second homes, which further drives up demand — and prices.
The Disadvantages There are expectations and planning parameters that may seem like disadvantages for real estate investments. Some of these are which for the most part are manageable to reduce risk. x
Liquidity. Tedious selling processes mean real estate is not quickly convertible to cash. You can raise cash though from real estate by borrowing on the property.
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WHY INVEST IN REAL ESTATE x
Extended time frames. Holding periods for real estate investments are longer (e.g. 3-7 years), so investment recovery is extended. There usually are investment options/exit strategies (as discussed later in this book) to address time period concerns.
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Commitment of time. Some people spend large chunks of time managing their real estate investments. Good planning and time management can optimize your time.
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Minimal comparability. Real estate does not lend itself to standardized comparisons, since each property is unique. But there are formulas and other guidelines that help make effective comparisons.
In summary balance the risks with the rewards and be diligent to mitigate the risks-seek expert advice-work with mentors and you’ll be on your way to successful investing.
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Secret #2 GOAL SETTING & FINANCIAL INDEPENDENCE “If you do this year what you did last year where will you be next year?” Anonymous Importance of Creating Money When you are first considering investing in real estate, you need to ask yourself the following question: Is it easier to make money or create money? Well, making money simply means that we’re busy at our own jobs and our own careers, making the money. We’ll probably be maxed out eventually. How about creating money? Well, creating money can be done in your own business. Your real estate investment needs to be looked at as your own business. How can you create more money? Invest in other properties. Possibly, sell another property and buy two properties. Again, thinking back to your parents or grandparents, buy two more properties. Try that again. Buy those properties for your children/grandchildren or for your lifestyle/retirement.
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GOAL SETTING & FINANCIAL INDEPENDENCE “One of your job’s/business’s purposes is to buy investments/assets that will eventually replace your job/business!!” Focus on Financial Independence If you prioritize what you or your children are going to do with any investment income, focus on their financial independence. That’s probably more important than paying their college tuition in advance. With financial independence, your children won’t be bound to a specific job or career. When your children are 18 or 20, they may want to travel the world. Perhaps they decide to take four months and travel to Australia, then hop over to Asia and travel across Europe. Why not ensure you have the funds available at that time so they can maintain their financial independence? Use the second home you purchased that is in their name to fund their education. Ultimately, that financial independence and freedom will be a great education in itself. Hint: To make your investment more valuable, you have to increase the demand for your property. Think about that and consider it when you buy the property. That’s part of your exit strategy. Take a look at some of the strategies other people employ. Perhaps you haven’t found the right property yet.
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Enjoy Long-Term Profits with a Hybrid Investment Strategy In an upcoming book we’ll take a look at a hybrid strategy of using conventional buy and hold investing with the rent to own/lease option model. This allows you to create cash now, cash flow and cash later. For example we take the time to search for tenant buyers for our investors. Let’s assume we have 10 tenant buyers who are filtered, screened, have a sufficient down payment, can afford the monthly payments and option credits, but we don’t have a place for them.
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GOAL SETTING & FINANCIAL INDEPENDENCE Could you be the investor who buys a property and helps out a family out or individual? I believe you could be. Take a look at the long term implications of using both technique. By taking this hybrid approach of finding tenant buyers first, you know what your profits will be, even before you buy the property. If that 35% of the tenant/buyers do not close, who do want to buy your property in that one, two or three-year period, do it all over again. If you have to sell at that time, do so. Sell that one. Take the investment and move on to another property. We’ve included a summary of the lease option strategy later in the book. Why Some Investors Fail Even with best intentions and goals planned and written down many investors will fail. A couple of reasons are: 1. Information Overload: with an anbundance of information available online and in courses/weekend bootcamps one can be left feeling inadequate-the feeling that you need to know even more before you get started. This leads to inaction because there are so many things you could do so you stop trying all together. 2. No Definite Plan: With no specific niche and plan in place the temptation is to try and do everything-which leads to frustration-then inactivity and finally failure.
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GOAL SETTING & FINANCIAL INDEPENDENCE Our intention is to eliminate those two reasons. We need to get back to ground floor basics/fundamentals and to create an action system to create forward momentum. The SUPRA Approach Systems: In real estate investing you’ll need systems to reduce your time commitments and to be effective and efficient. Start with a contact management system like Outlook, Act or similar product. This is a database of your investors, sellers, buyers and team members. Keep notes about them too. Add websites for lead generation and lead conversion. Look for sellers, buyers and investors. Once your leads come in stay in touch via an autoresponder system that will follow up automatically for you-create the next step for your leads. Finally implement an accountability system for yourself and your business. Track and measure all aspects of your business. Understanding: This means more than just getting an education or attending some courses or webinars. You’ll need to understand what you are doing and why you are doing the investing. A trap can be continuous education-nothing wrong with that-however as we’ll delve into later there has to be action too. Understand that there are two types of education-one is ‘just in case’ education/knowledge the lifelong learing aspect which is necessary and the other is ‘just in time’ education/knowledge which is vitally important. To progress quickly in a new endeavor you’ll need to apply ‘just in time’ education, understand and implement that knowledge as quickly as possible.
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GOAL SETTING & FINANCIAL INDEPENDENCE So the next time you’re looking at another course analyze is this ‘just in case’ or ‘just in time’-ask yourself what do I need right now? Plans: Plans imply action steps-they’re the step beyond your goals/dreams. For your investing you’ll need to plan on where you are going-a road map for success. Define your niche for investing-including the area, the type of property and the dollar value of the property and your exit strategies. Set up educational plans for both ‘just in case’ and ‘just in time’both will ensure continual growth. Include joining a real estate investment club, reading and online training. Map out your real estate investing steps in terms of how fast you will progress, the time you can dedicate to investing, how will you implement your marketing plans-do you rely on others for your leads or do you market yourself. Resources: Get the right players on your team-fromrealtors to property managers to lenders-assemble the right team for your investing. Use the right resource tools-have a business card printed with your company name and your contact information on it and on the back include a description of your niche or your specialty. Set up your websites and blogs to attract investors, generate leads and tell your story (marketing). In your office create a space for you real estate investing-set up your filing system and computers for your investing. Associate: Let people know that you are investing in real estate expand your network. Investing is a team sport, develop your networking skills and begin to understand the needs of others
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GOAL SETTING & FINANCIAL INDEPENDENCE and find out how you can help them and ultimately help yourself. Target groups to meet with on a monthly basis such as a real estate investment club, a Rotary club or a charitable organization. Spread the word around that you invest in real estate and that on occasion you work with others on your investments. Follow up and cultivate your contacts and ask how you can add value to them. Be accountable to them and yourself. These steps are not meant to be sequential you’ll need to apply them contiuously. Go beyond your goals and apply SUPRASystems, Understanding, Plans, Resources and Association.
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BUYING/INVESTING IN REAL ESTATE sound. Although these lenders often charge more, they are less concerned than other sources about your less-than-stellar credit history. You can always factor the higher borrowing charges into your deals. These sources may lend you up to 70% of the predicted value of the refurbished property; if you are choosing the right deals, this should take care of any cash flow issues. Don’t forget – you are hunting for motivated sellers who urgently want to close the deal quickly. An alternative way of investing in real estate is to create a limited partnership, establish an upper limit on the investor’s liability and enter into a partnership with a real estate professional. Although the investor only provides the cash, it is not a true passive investment, and it is unwise to think of it that way. In this situation, you are investing in another person as well as all the other aspects of real estate investing. #7. Not insisting on written estimates for every repair job A simple measure to avoid confusion is to insist on a properly itemized written estimate for all contracted work and repairs. Both parties will know what is expected and the costs; this will save you time and grief. For each job you award, have a signed contract that includes a scope of work section which will detail necessary specifications, work to be done, materials to be used, etc. A well-worded contract will include elements covering clean up upon completion, damages, responsibility for work permits, delays, payment schedule and the total budget costs. Well-written contracts also allow you to accurately evaluate alternative contractors.
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BUYING/INVESTING IN REAL ESTATE #8. Failing to properly check a tenant’s background If you are a landlord renting out a property, you must verify if your prospective tenants have been evicted from a previous property. If so, they probably know how to play “the eviction game” and will play it with you. As a landlord, turnover of tenants represents your major running cost; you may lose one month’s rent each time you prepare the property for the next tenant. If you need to evict a tenant, the process can take up to six months in some provinces and will dry up your cash flow for the unit during that time. Even if you are awarded the arrears by a court, it can be very hard to collect. A more prudent move is to complete an eviction background check on all prospective tenants using an online service. This national service costs between $40-$60, you can insist the client gives you the fee when they apply for the unit. You could even charge a small markup and make a little money together while gaining peace of mind. #9. Punishing bad tenants without rewarding good ones A good tenant is a great asset, and a little consideration goes a long way. Perhaps you can redecorate a room or buy a new carpet for a tenant who has paid rent on time for at least one year. Even purchasing a Thanksgiving turkey or a Christmas basket could be an inexpensive gesture that will encourage a great tenant to stay, thus reducing your expenditures and helping your bottom line. #10. Letting the tenant’s problems affect you Explain all of the ground rules to new tenants: you will provide a safe, clean and well-maintained home for them, and they should
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BUYING/INVESTING IN REAL ESTATE respect you, the property and the neighbours. Rent must be paid on time. The home must be kept clean and neighbours should not be disturbed unnecessarily or at unsocial times. Tenants must promptly pay for any damage they have caused such as a clogged toilet, broken window, etc. If they don’t respect your rules, they should be aware that they risk eviction. Always act promptly and decisively if there is a problem. By adopting a tough but reasonable approach with your tenants, you will avoid many headaches and enjoy the benefits of a positive cash flow. Common Mistakes for Renting & Tenant Buyers Falling For Sob Stories – Many people may visit your home and tell you a sob story. Don’t feel sorry for them and start renting to them. They may be a good con artist, so always check, verify and cross-verify. Not Waiting for Payments to Clear – Never give your tenant buyers the keys before their deposit upfront payment, first month’s rent, and security deposit clears the bank. Either have them bring it to you in cash or a bank draft, rather than a cheque. Renting to Friends & Family – Sometimes this can be fantastic, but, in most cases, it’s not! Not Training Your Tenants – Set the tone right from the very beginning, and train your tenants about the rules of the game. They must always pay on time. Have a booklet prepared for them, if necessary. Failing to Verify Details – Monitor the details of all transactions or have your team ensure all the details are looked after. This includes credit checks, the way the leases are signed
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BUYING/INVESTING IN REAL ESTATE and making sure the property manager is looking after everything. Being Cheap – People often try to save a penny and end up losing a dollar. Again, don’t scrimp. Make sure that you’re marketing properly. Make sure the repair jobs are getting done properly. Not Investing in Real Estate – Perhaps you didn’t even make it through the first one or you got through the first investment, felt comfortable and then stopped. Remember what your parents or grandparents said about their home? What if they had bought just two more houses? Think about yourself in 30 years. Failing to Follow up With Possible Tenants – Let’s assume you have picked the perfect tenant buyer. If you have found another great tenant buyer, find another property for them. Possibly you don’t own a property for the tenant/buyer. How about negotiating a lease option with a seller? They can’t sell their property. You have the perfect tenant buyer. Create a sandwiched lease option that way both you and the seller can benefit. Plus, you now have some forced appreciation. Take a look at lease options and see what you can do. You don’t always have to own the property – you simply have to control the property. Being Greedy – When you’re buying a property, don’t be stepping over the dollars to pick up the dimes. Sometimes, we see investors chiseling away, trying to save $1000 off the
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BUYING/INVESTING IN REAL ESTATE purchase price. What you should be doing is focusing on the value you’re receiving by investing in that property. Ultimately, saving one or two thousand dollars off the purchase price may be an ego boost. But if you let a great opportunity slip away, you may regret it five years down the road. You may look back in five years and think, “Oh my goodness. That $5000, that $10,000, that $2000… What was the real cost to me?” In other words, don’t get too greedy.
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Secret # 5 FINDING MOTIVATED SELLERS As realtors, we can use different filters in our software systems to narrow down individuals who appear to be motivated sellers. The fact that a seller is motivated may be discussed in the terms; perhaps they are facing foreclosure, divorcing or possibly involved in an estate sale. Here are some of the factors experienced realtors consider when they are looking for a motivated seller: Vacant Properties – Vacant properties are not generating income. Days on Market – If you take a look at the average days on the market, look for homes that have been listed for a longer time period. This may indicate a motivated seller. Price Per Square Foot – We examine the price per square foot and use software to analyze that information so we help you find some of the best buys. Expired – Expired listings indicate that the seller didn’t sell their home at the price they wanted, but, obviously, they must have been trying to sell it when it was listed. Keyword Searches – We use keyword searches and filters that come up with different terms that allow us to find motivated sellers. New Listings – We also take a look at hot new listings. Sometimes, the seller and the listing agent both know they need
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FINDING MOTIVATED SELLERS to sell, and they price it right at the very beginning. We don’t want to miss out on those opportunities. Not all brand new listings are overpriced.
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What Realtors Look For in Listings You may wonder what we look for in these listings when we use the software available to us. Here are some elements experienced realtors consider when they search the various real estate listings:
Property Style Well, first we look at the property’s style. Depending on where you’re looking, it may be a single-family, condominium, multifamily, new construction or possibly land for redevelopment. Area - Again, we drill down to find properties available in the area where you are looking. Price Range – Our software searches the price ranges, based on the statistics you provide. All Listings – We search all listings, not listings only from one company, our company, or part of the MLS system. We look at all of them and search out expireds and old sales.
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How to Get the Best Deal Remember, when we’re searching for properties, the idea isn’t to get greedy and look only for the best deal. There will always be good deals.
So, how can you negotiate thousands of dollars off a home? You need to consider all of the following: 1. Seller’s Situation Obtain as much information as possible about the seller’s situation. Pull the title to the property. Talk to neighbors. Conduct some research about past MLS listings. 2. Timing Do the sellers have a deadline when they have to move? Use that deadline to your advantage. By meeting that deadline, you can negotiate thousands of dollars off or achieve better terms. 3. Exit Strategies What are your exit strategies? Why are you really buying this property? Construct the offer so it meets your investment and exit strategy. 4. Non-Accepted Offers You’ve made the offer, included a cover letter, considered the timing, the motivation, the price, but it’s not accepted. Let the seller call you back. Wait a few days. In a slow market,
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flat market or down market, unless the property is wellpriced or well-positioned, the property will likely sit. Let’s say your offer isn’t accepted. Have your realtor go back or simply ask the seller, “You know, I’m just trying to figure out a way to buy your home. What other options do you have?” And then listen. Let the seller figure out a way to sell his/her home sold that will work for both of you. Hint: In your offers, use the condition that makes the offer subject to the approval of your partner. You want to make your offers conditional on terms such as financing, property inspection and buyer’s or lawyer’s approval. You need something called a “weasel” clause which is a way for you to get out of the deal if something goes wrong. 5. Cover Letters When you make an offer, be sure to include a cover letter. In that cover letter, explain why you are offering your specific amount. This is especially true if you’re offering a lower price or what appears to be a substantially lower price. Your realtor can provide support with comparables on another page; possibly the last two-five sales of a condominium, apartment building or house that is very similar and at the price you are offering.
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Begin with: “Dear Mr. Seller, The price I’m offering is $390,000 which you might think is crazy. I understand why you may be thinking this. However, here is where I’m coming from…” Then list why you’re offering your specific price. Make sure to do this. This strategy will calm the seller down, regardless of whether you, your realtor or the listing realtor is presenting the offer. We want to get past emotions. Agree with the seller if your offer is too low. Explain how to see things from their point of view. Then move on and explain the issues and present your case and your point of view. Ultimately, you’re looking for some agreements on these points.
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Secret # 5 BUYING WITH OTHERS /CO-OWNERSHIP A joint venture/co-ownership/equity sharing partnership is ideal for individuals who don’t feel knowledgeable or who lack expertise in the field of real estate. Partnering allows us to pool our expertise and knowledge with individual investors utilizing the synergy of the team. Co-ownership enables you to leverage our expertise and experience to move you forward in with your real estate investing. Why wait until you feel confident enough and knowledgeable enough to purchase your next investment property? You’ll lose valuable time in the market place where your investment could have been earning a monthly income/positive cash flow and other time-equity appreciation. Your role is to provide the down payment and closing costs for the property… We take care of the rest. o The equity appreciation is split after the initial investment is paid back to you o All profits and costs are split as per the agreement o You are on title to the property o Joint Venture Partner agreement secures our interests Why split/share the equity and profits?
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BUYING WITH OTHERS: CO-OWNERSHIP Personal observations tell us that beginning in real estate can be like this ‌
It doesn’t have to be an overwhelming, emotional, time consuming process!
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BUYING WITH OTHERS: CO-OWNERSHIP Here is what real estate investment looks like from the perspective of our partners‌. EQUITY SHARING/CO-OWNERSHIP MODEL Execution of our proven Real Estate System Location score card
Offer to buy worksheet
Property Analyzer
Investment Package
Provide initial capital
On-Going Market Data & Research
Receive cash flow from property
Presentations By Top Economists
Monthly Investor Workshops
Receive on-going Market updates
Initial capital returned
Remaining profits split 50/50
You enjoy long term wealth through strong fundamental real estate investments
Licensed Data From Top Sources
Field Trips
Real Estate Investment Network
Local Real Estate MLS Data
Local Economic Development Offices
Due diligence system
New Property Checklist
Property Management Handbook
Landlord checklist (screening)
Bookkeeping
Market Intelligence Wealth Street Properties Market Update Reports
Wealth Street Properties Monthly Newsletter
Real Estate Dashboard
3rd Party Reports
Sell Property
Pay Partner Initial Investment
Remaining Profits split 50/50
Investment decisions made based on economic fundamentals
The reason our JV partnerships are shared (after initial capital is paid back) is so that value from each party is combined to achieve a win/win partnership. As a JV partner, you provide the initial capital. Through our experience and expertise, we provide the follow-through on the time, effort and systems necessary for both parties to succeed in creating long-
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BUYING WITH OTHERS: CO-OWNERSHIP term wealth. Like a true partnership, we don’t make money until you make money, and profits or any unforeseen losses are split/shared. The Process Preparing for the Joint Venture Initial Contact x Complete questionnaire x Present investor package – evaluate client needs x Expression of interest or intent signed by investor x Explain Joint Venture Agreement/Co-Ownership (including legal) x Customize JV agreement or USA (Unanimous Shareholders Agreement) x Provide investor financial information to specified mortgage broker x Filter property, due diligence, systems and techniques x Introduce investor to particular investment and explain ROI x Agree upon investment term x Sign Joint Venture Agreement or Unanimous Shareholders Agreement x Add properties to the agreement x Select final properties and estimate renovations x Verbal agreement to proceed with purchase is agreed between parties x Write offer on property
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BUYING WITH OTHERS: CO-OWNERSHIP x x x x x x x x x x x x x x x x x
Negotiate terms of offer through realtor Vendor accepts offer Mortgage financing applied for during condition removal period Professional services inspect and appraise the property Property management company brought onboard Organize property insurance Accounting mechanism implemented for JVA or newly formed corporation Set up bank accounts for JVA or corporation Possession of property Complete renovations to appropriate standards for quality tenant base and resale at term end Property management firm completes tenant search and screening process Tenant moves into quality home Mortgage payments begin and equity continues to rise Send pictures and property pro-forma to JV partner Monthly or quarterly expense sent to JV partner if requested Annual or semi-annual investment status report sent out Accountant prepares annual statement for JV or corporation for both parties
Optional Extras x Refinance during term and process to reinvest is enacted x Additional properties purchased Term End x Sale of properties x Initial investment provided back to investor x All proceeds split and sent out x Joint venture or corporation dissolved
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You Provide Down payment, closing costs and mortgage qualification.
In a JV Partnership, the only upfront costs are the down payment and minor closing costs. All the work is done for you by your JV partner-the real estate specialists and their team. Each month we are reimbursed a maximum of 20% of the cash flow for management fees. No additional payment is taken until the property is sold, increases in value and a profit is made.
Win/Win Situation x
Leverage time, knowledge expertise, contacts and education for investment capital
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Asset is owned by all co-owners
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Benefits of getting involved in Joint Venture/Equity Sharing System
Services We Provide: x
Property Search & Analysis
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Due Diligence
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Writing & Presenting Offers
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BUYING WITH OTHERS: CO-OWNERSHIP x
Working with Realtors
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Working with Contractors to Complete Upgrades and Repairs
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Securing Financing
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Working with Real Estate Specific Lawyers
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Securing Professional Property Management
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Monitor Management and Tenant/Buyers over The Ownership Period
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Maintain the Property and Budget Expenses
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Relay Property Information to Accountants and CoOwners
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Send out Property Reports and Tax Returns
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Mentorship and Coaching
“You can have everything you want in life, if you just help enough other people get what they want.� Zig Ziglar
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