INFINITY INVESTMENTS REAL ESTATE INVESTING SEMINAR 1 INFINITY INVESTMENTS REAL ESTATE INVESTING SEMINAR

Introduction Steve Peterson Broker/Owner of Infinity Investments 2 Introduction Steve Peterson Broker/Owner of Infinity Investments Infinity Investments was established in November 2009 in Oakland, Ca. Investment/Brokerage Firm Specializing in the Acquisition, Sales and Management of Apartment Buildings 2

Real Estate Investment Product Type Single Family Residential Condos & Townhouses 2-4 Unit Residential Income 5+ Unit Multi-Family Commercial Retail Office Industrial Hospitality

Why Buy Multi-Family Property? Stable cash flow during the holding period High occupancy rates historically & currently Financing is available at attractive rates Economies of scale that SFR’s don’t have Excellent generator and preserver of wealth Prices in the current market have dropped more that 50% from their peak while rents are near where they were at the peak and rising

What Do We Look At Cash Flow NOI Details Price & Cap rate Rent Roll Cash on Cash return 5

Income Rents Other Income = Effective Gross Income Gross Scheduled Rents - Vacancy - Loss to Lease / Concessions Other Income + Laundry + Vending = Effective Gross Income 6

Operating Expenses T axes (Property and Personal Property) I nsurance M anagement (On and Off-Site) M aintenance (Preventative and Emergency) U tilities (Gas/Electric/Water/Sewer) R epairs (Including Make Ready Work) R eserves (Sometimes Required by Lender) 7

Net Operating Income NOI = Income – Operating Expenses Net Income after accounting for all income sources minus all non-debt service expenses. What’s left after you collect rents and pay your bills but before you pay your mortgage. 8

CAPITALIZATION RATE What Is It? The rate of return generated by a real estate investment property based on the annual Net Operating Income that a property generates. Net Operating Income CAP Rate = --------------------- Purchase Price Basically it represents the percentage return you would get from a building if you paid cash and didn’t have a mortgage payment 9

Cap Rate Example $100,000 NOI $1,000,000 Price 10% CAP Rate = The higher the better when you buy The lower the better when you sell $100,000 NOI _________________________ $1,000,000 Price

Other Terms Net Cash flow is simply the cash remaining after all expenses and the mortgage are paid. Cash on Cash Return = Net Cash flow divided by the Total Cash invested (down payment plus closing, etc.) Internal Rate of Return: The total return on the initial investment on an annual basis once the property is sold. 1111

Acquisition Strategies 1212 Acquisition Strategies I. Buy Individually Reo/Short Sale/Distressed Property Note Acquisition (Loan to Own Strategy Wholesaling (Flipping the contract) Buy & Hold for Cash Flow Buy & Flip Buy, Hold & Exchange Contract for Deed, Lease Option, Seller Financing Responsible for financing, down payment, liability 1212

Acquisition Strategies 1313 Acquisition Strategies II. Co-Invest with Partners and Sponsers Spread the risk and the amount of capital needed for down payment. Utilize the Strength of each partner. Usually one person obtains financing. Increases chances for success but requires team work and the ability to make group decisions. 1313