Real Estate Due

Diligence…For 2014!Chris Clothier ~ chris@memphisinvest.com ~ 901-751-7191

A little disclaimer language…

• I am not a financial planner

• This presentation is not financial advice

• It would be foolish to make an investment decision based solely on this presentation

Real Estate Is Not National…

Hyper - LocalZip-Code

NeighborhoodStreet

Real Estate Has Always Been About

Things…3

Real Estate Has Always Been About

LOCATION

LOCATIONLOCATI

ON

GOALS!But It’s REALLY About…

ECONOMICS!TEAM!

GOALS…

Identify Your Why….

GOALS…

Confirmation Bias

Loss Aversion Herd Behavior

We are Not Rational…

Gamblers Fallacy

Anchoring

ECONOMICS!

Industry Jobs Outlook

ECONOMICS!

ECONOMICS!What Matters Most?

• Population Growth – MSA & City• Key Industries • Major Employers• Job Growth – New Job Openings• Affordability Index• What is on the horizon…..

• GDP growth: 2.4 percent• Real 2011 GDP: $234 Billion• Population change: +.9 percent • Outpacing National Average in Employment Growth• The GDP of Tennessee grew $4.1 billion in large part to leading

the nation in industries including transportation and durable goods manufacturing as well as health care and wholesale and retail trade.

Tennessee

• 17th largest MSA in the U.S. with 1.7 M People.• One of U.S.’s Most Affordable Cities (2.2x income)• Population change: +.05 percent • “North America’s Logistics Center”• Fastest growing Bio-Medical center in Southeast• 2nd Largest Bio-Medical Manufacturing Center in U.S.• 6 Fortune 500 Company International Headquarters

Memphis

• GDP growth: 3.3 percent• Real 2011 GDP: $1.149908 trillion (2nd highest)• Population change: +1.67 percent (The highest)• Pct. increase in employment: 2.1 percent (3rd highest)• Unemployment Rate dropped to 7.9%• The GDP of Texas grew in 2011 an impressive $36.8 billion,

more than the real GDP of five states. Healthy growth in industries including mining and manufacturing contributed almost 41% GDP growth in 2011.

TEXAS

• 6th Largest City Economy in U.S.• 14th Largest City GDP in the World! • Excellent Affordability Index(2.7x income)• Population change: +2.8 percent • 43% of High-Tech Jobs in Texas in “Silicon Prairie”• 13 Privately Held Billion Dollar Companies• 19 Fortune 500 Company World Headquarters

Dallas/Ft. Worth

ECONOMICS!• Building Permits

• Cost of Housing vs. Rental Rates• Rental Demand – Avg. Days to Rent• Percentage of Renters• Investor Activity

ECONOMICS!Where to Gather Data?

• Google• « Insert City » Business Journal• Chamber of Commerce• Local bloggers business & city life• Bigger Pockets!

PRICE Is What You PAY

$15,000 1,665 Sq. Ft.

3 Bed / 2 BathFenced Back Yard With Lots of Room

to Run!

$9 Sq ft

PRICE Is What You PAY

$15,000 Purchase Price / $9 Sq ft

Online Research!!!

2 Blocks From The Water!!!

VALUE Is What You GET!

167 Days On Market

Lower 9th WardNew Orleans, LA

TEAM!

TEAM!Key Components For Your Team• Understand Investors• Experience Level/Age• Business Oriented• Verifiable Results• Accountability!

TEAM!Key Questions to Ask…

• Are You an Investor?• How many investors do you work with?• Do you own the properties you sell?• How long have you been in the business?• What has been your biggest mistake as an

investor?

TEAM!Key Questions to Ask…

• Do you own all facets of the operation?• Do they offer guarantees?• Do you defer maintenance?• How many properties do you manage?

TEAM!Key Questions to Ask…

• What is your average vacancy rate?• What is the cost of an average repair bill

after move-out?• What are your management fees?• What is your average # of months

occupancy?

TEAM!Key Questions to Ask…

• What programs do you have in place to keep tenants happy?

• Will you call me every month with an update on my portfolio?

GOALS!When You’ve Determined…

ECONOMICS!TEAM!

What to Look for…

Must Be A “Normal”

Neighborhood

Economic Opportunity

Location

Return On My Investment

WHAT I LOOK FOR:

My Advice For Building A Portfolio

• Be CLEAR about your Goals for Investing! (What is your WHY?)• Develop a PLAN… and stick to it!• Passive Investing requires picking

the best long-term MARKET & TEAM.

Headaches

Why Invest Out of Area?

0

CONTACT US WHEN YOU ARE READY TO MOVE FORWARD!

Chris Clothier ~ chris@memphisinvest.com ~ 901-751-7191