The Complete Guide to Getting Started

The Complete Guide to Getting Started
Day 1 Finding & Analyzing Deals Day 2 Choosing A Profit Strategy Day 3 Putting It All Together PCF Investments

Day 1 Finding & Analyzing Deals
Creating Wealth with Real Estate Finding Deals Motivated Sellers Where to Find Deals Targeting Sellers Evaluating Discount Property Evaluating Income Property & Cash Flow Financing With No Money Down Conventional Financing

What will it take for you to be wealthy?

Learn The Wealth Formula Learn Types of Income Develop Millionaire Mindset Implement Wealth Formula GET STARTED

“The Wealth Formula” Constant Investment Time For Growth What Yield Will You Learn To Get Wealth Result

“Stage One Investing” Amount Invested $165 Per Month Time Period 25 Years Rate of Return ??????? Financial Goal $1,000,000

Linear Rates $3,800,000!! 25% $1,400 K 20% Money plus Knowledge 535,000 15% 218,000 10% Amount Invested $165 a month 114,000 6% 73,000 3% 49,500 0% Twenty-Five Years

$3,800,000!! 25% 20% $1,400 K Or Residual Rates? 535,000 15% 218,000 10% 6% 114,000 3% 73,000 49,500 0% Twenty-Five Years

Types of Income Linear Residual Time For Money Results For Money Assets For Money

Wealth Characteristics
Day 1 Finding & Analyzing Deals Wealth Characteristics Burning Desire Goal Oriented Decisive In Nature Surrounded By Master Mind Team Specialized Knowledge

Real Estate Flip Buy For $150,000 Sell For $180,000 Profit $30,000

Yield Profit Rate of Return Investment $ 30,000 20% $150,000

Leverage $120,000 from Bank $150,000 Price $30,000 from You $30,000 100% $30,000

Balance Business Linear Income Assets Residual Income

Day 1 - Finding & Analyzing Deals
Day 1 Finding Deals/Motivated Sellers GOALS At the end of this session, you will be able to: Recognize a motivated seller Summarize why sellers become motivated Explain how to target motivated sellers Day 1 - Finding & Analyzing Deals

Finding Deals/Motivated Sellers Types of Motivated Sellers: Price (wholesale) – willing to discount the price to get a quick sale Terms – willing to discount the terms to get a quick sale Day 1 - Finding & Analyzing Deals

Finding Deals/Motivated Sellers Reasons Sellers Become Motivated Personal – affect only the seller Property – attach to the property Economic – relate to general location or the local economy Day 1 - Finding & Analyzing Deals

Finding Deals/Motivated Sellers Reasons Sellers Become Motivated Personal Owner’s location Health Retirement Divorce Financial Job Transfer Tired Landlord Death in the family Poor Management Bad Partnership Day 1 - Finding & Analyzing Deals

Finding Deals/Motivated Sellers Reasons Sellers Become Motivated Property Poor Management Poor Financing Property Condition Obsolescence Day 1 - Finding & Analyzing Deals

Finding Deals/Motivated Sellers Reasons Sellers Become Motivated Economic Local Economic Changes Local Neighborhood Changes Law Changes Zoning, Rent Control, etc. Day 1 - Finding & Analyzing Deals

Finding the Deals/Where to Locate Realtors/MLS Types of sellers Pros Cons Tips Day 1 - Finding & Analyzing Deals

Finding the Deals/Where to Locate Newspapers Types of sellers Pros Cons Tips Day 1 - Finding & Analyzing Deals

Finding the Deals/Where to Locate Legal Newspapers Types of sellers Pros Cons Tips Day 1 - Finding & Analyzing Deals

Finding the Deals/Where to Locate Driving for Dollars Types of sellers Pros Cons Tips Day 1 - Finding & Analyzing Deals

Finding the Deals/Where to Locate Foreclosures Types of Sellers/Foreclosure Process Pros Cons Tips Day 1 - Finding & Analyzing Deals

Finding the Deals/Where to Locate Bird Dogs Types of sellers Pros Cons Tips Day 1 - Finding & Analyzing Deals

Finding the Deals/Where to Locate Courts Types of sellers Pros Cons Tips Day 1 - Finding & Analyzing Deals

Finding the Deals/Where to Locate Bird Dogs/Networking Types of sellers Pros Cons Tips Day 1 - Finding & Analyzing Deals

Finding the Deals/Where to Locate Advertising Flyers Business Cards Newspaper Ads Direct Mail Car Signs Radio & TV Website REIA Groups Expired MLS Yard Signs Day 1 - Finding & Analyzing Deals

Finding the Deals/Where to Locate Advertising Types of sellers Pros Cons Tips Day 1 - Finding & Analyzing Deals

Finding the Deals/How to Target Contacting Sellers Advertising Direct Mail Telemarketing Drive bys/Door knocking Day 1 - Finding & Analyzing Deals

Evaluating Income Property SESSION REVIEW What we covered this session: How to recognize a motivated seller Why sellers become motivated How to target motivated sellers Day 1 - Finding & Analyzing Deals

Evaluating Discount Property GOALS At the end of this session, you will be able to: Summarize key focal points of valuing and analyzing discount property Explain how to use a CMA Perform a discount analysis Day 1 - Finding & Analyzing Deals

Evaluating Discount Property 7 Steps of Evaluation Find the Property Find the comps Estimate Repairs Estimate Costs Evaluate Exit Strategies Estimate Profit Potential Complete Acquisition Sheet Day 1 - Finding & Analyzing Deals

The Complete Guide to Getting Started Evaluating Discount Property Focal Points Location Property Condition Price Financing Seller’s Motivation/Flexibility Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Evaluating Discount Property Comparables (Comps) Address Sq footage Age Bedrooms Baths Gar/Carport Lot Size Construction Price Days on Mkt Extras Distance Subdivision Appraisals Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Evaluating Discount Property Finding Comps Tax Rolls Web Sites MLS/Realtors Driving for Dollars Listing Services Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Evaluating Discount Property Estimating Repairs Initial Self Inspection Measuring Tape Ground Tester Marble Screw Driver Software Licensed Inspector Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Evaluating Discount Property Estimating Costs Buying Costs Holding Costs Closing Costs Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

Evaluating Income Property SESSION REVIEW What we covered this session: Key focal points of valuing and analyzing discount property How to use a CMA/Find Comps How to perform a discount analysis Day 1 - Finding & Analyzing Deals

Evaluating Income Property GOALS At the end of this session, you will be able to: Define key terms of cash flow analysis Explain how to perform a cash flow analysis Recognize pitfalls of cash flow analysis Day 1 - Finding & Analyzing Deals

The Complete Guide to Getting Started Evaluating Discount Property Cash Flow Analysis __________ Projected Gross Income __________ − Vacancy Loss __________ − Collection Loss __________ = Effective Gross Income __________ − Fixed Expenses __________ − Variable Expenses __________ = Net Operating Income __________ − Debt Service __________ = Pre-tax Cash Flow Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Evaluating Discount Property Cash Flow Analysis Projected Gross Income: Monthly rent 12 Vacancy Loss: Accounts for time when property is not rented Effective Gross Income: Amount that remains to pay expenses Fixed Expenses: Any cost not related to occupancy Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Evaluating Discount Property Cash Flow Analysis Variable Expenses: Any additional costs Net Operating Income: Income before any mortgage payments Debt Service: Mortgage payments Pre-Tax Cash Flow: Cash flow before paying taxes Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Evaluating Discount Property Pitfalls of Cash Flow Analysis Overestimation of income Lease price vs. actual rent Undervaluation of vacancies Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Evaluating Discount Property Pitfalls of Expenses Underestimation of fixed and variable expenses Omission of expenses Omission of maintenance expenses Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Evaluating Discount Property Estimating Expenses 20% of effective gross income Three years of tax returns Audited financials Management company reports Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

Evaluating Income Property SESSION REVIEW What we covered this session: Key terms of cash flow analysis How to perform a cash flow analysis How to recognize pitfalls of cash flow analysis Day 1 - Finding & Analyzing Deals

Financing With No Money Down GOALS At the end of this session, you will be able to: Explain factors affecting creative finance 2. Explain the following strategies: a. Seller finance b. Second mortgage c. Wrap around mortgage d. Lease Option e. Subject To 3. Name 15 creative strategies Day 1 - Finding & Analyzing Deals

The Complete Guide to Getting Started Financing With No Money Down Factors Affecting Creative Finance Creative Finance – “a financing arrangement in which maximum share of invested resources comes from other people rather than from yourself” Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Key Terms Balloon Mortgage Short-term, fixed-rate loans with fixed monthly payments Set number of years, followed by one large, final balloon payment (the balloon) for the balance of the principal Usually due at the end of five, seven, or 10 years Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Key Terms Note; Promissory Note A written promise to pay a specific amount of money with interest at a specific rate for a specific period of time Owner Financing Seller accepts a promissory note as part of the purchase price Also called seller financing Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Key Terms Deed A written instrument that, when executed and delivered, conveys title to or an interest in real estate. Mortgage Instrument between lender and borrower. A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien. Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Factors Affecting Creative Finance At what price Using whose financial resources? How soft/hard are the other people? What size of down payment? When is the down payment due? In what form of consideration? What rate of interest? What repayment term? Overhead Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Factors Affecting Creative Finance 1 2 3 4 5 6 7 8 9 10 Total Price Whose $ How soft/Hard is $? How big is down pmt? When is down pmt due? Consideration? Interest rate? Repayment Term? Overhead Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Creative Offers 101 Ultimate Paper Out - Who: - Why: - Considerations: Overhead Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Creative Offers 101 Second Mortgage - Who: - Why: - Considerations: Overhead Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Creative Offers 101 Wrap Around Mortgage - Who: - Why: - Considerations: Overhead Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Creative Offers 101 Lease Option - Who: - Why: - Considerations: Overhead Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Creative Offers 101 Buying “Subject To” - Who: - Why: - Considerations: Overhead Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Creative Offers 101 Buying with “Hard” or “Private” Money - Who: - Why: - Considerations: Overhead Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Thinking “Outside of the Box” Joint ventures/partners Buy low/refinance high HELOC Borrow the broker’s commission Satisfy seller’s needs Deposits, rent credits, tax credits Government Programs Overhead Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Financing With No Money Down Thinking “Outside of the Box” Credit Cards Borrow from friend/relative Refinance Car loan/boat loan Unsecured bank loan Signature loan Credit partners Overhead Day 1 - Finding & Analyzing Deals PCF Investments

Evaluating Income Property SESSION REVIEW What we covered this session: Factors affecting creative finance 2. Cookie Cutter financing strategies: a. Seller finance b. Second mortgage c. Wrap around mortgage d. Lease Option e. Subject To f. Hard money vs. Private money 3. Alternative ways to finance deals Day 1 - Finding & Analyzing Deals

Conventional Financing GOALS At the end of this session, you will be able to: Explain the difference between hard money lenders and conventional finance 2. Understand basic loan programs 3. Understand property qualifications 4. Understand borrower qualifications Day 1 - Finding & Analyzing Deals

The Complete Guide to Getting Started Conventional Financing Hard Money vs. Conventional LTV (Loan to Value) Interest Points Payment Schedule Repair Money Closing Costs Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Conventional Non - Conforming Loans Fixed Rate Adjustable Rate Balloon/Reset Second Mortgage Equity line of credit Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Fixed Rate Mortgage Description – Constant, fixed payments during the term of the loan Advantages Disadvantages Monthly payments are fixed over the life of the loan Interest rate does not change Protected if rates go up Can refinance if rates go down Higher interest rate Higher mortgage payments Rate does not drop if interest rates improve Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Adjustable Rate Mortgage Description – Lower initial interest rate, interest is adjusted periodically, have defined adjustment periods Advantages Disadvantages Lower initial monthly payment Lower payment over a shorter period of time Rates and payments may go down if rates improve May qualify for higher loan amounts Payments may change over time Potential for high payments if rates go up Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Balloon/Reset Mortgage Description – 30 year amortization and fixed rate loan. Entire balance due at end of specified term Advantages Disadvantages Lower initial monthly payment Lower payment over a shorter period of time Many balloon mortgages offer the option to convert to a new loan after the initial term. Risk of rates being higher at the end of the initial fixed period Risk of foreclosure if you cannot make balloon payment or if you cannot refinance or if you cannot exercise the conversion option Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Second Mortgage Description – A second loan on the equity of the home, carry higher interest rates, shorter terms Advantages Disadvantages Fixed payments Interest may be tax deductible Higher interest rates than on 1st mortgages Harder to refinance your first mortgage Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Equity Line - HELOC Description – Revolving lines of credit that use real estate as collateral Advantages Disadvantages Only borrow what you need Pay interest only on what you borrow Flexible access to funds Interest may be tax deductible Rates can change. The maximum interest rate is normally high. Payments can change Harder to refinance your first mortgage Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Conventional-Conforming Loans Sub-Prime Interest Only Stated Income Power Option Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Sub-Prime Loans Description – Offered to borrowers with poor credit history, may require more down, higher interest Advantages Disadvantages Potential for reestablishing credit if you pay your mortgage on time. When used for debt consolidation, you may be able to reduce your monthly debt payment Higher rates Terms may not be as favorable Harder to get long term fixed loans Loans may have prepayment penalties Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Interest Only Loans Description – Pay interest only for specified period of time, based on 30 year loan Advantages Disadvantages Gives you greater control largest monthly expense Help manage cash flow and tax liability. For set time, can pay only interest Equity in your home still builds Usually no prepayment penalty Payments may change over time Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Stated Income Loans Description – Do not need to prove income or assets. (Stated/verified, stated/no verification) Advantages Disadvantages Don’t need to verify income Faster approval Higher rates Higher down payment Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Property Qualification Loan Parameters Property Type Transaction Type Loan Type Sale Price Desired Loan Amount Appraisal Amount Loan to Value Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

The Complete Guide to Getting Started Conventional Financing Borrower Qualification Loan Parameters Source of Down Payment Credit History Residence History Employment History Income/Debt Ratio Property selection grid Day 1 - Finding & Analyzing Deals PCF Investments

Conventional Financing SESSION REVIEW What we covered this session: Difference between hard money and conventional financing 2. Basic loan programs 3. Property qualifications 4. Borrower qualifications Day 1 - Finding & Analyzing Deals

Getting Started Complete Guide to The Finding & Analyzing Deals
Day 1 Finding & Analyzing Deals Day 2 Choosing A Profit Strategy Day 3 Putting It All Together

The Complete Guide to Getting Started

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The Complete Guide to Getting Started

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