Empowering the Individual Empowering the Individual Investor Investor

May 17May 17thth 2012 2012

A TRILLION DOLLAR A TRILLION DOLLAR MARKET, MARKET,

$70,000 AT A TIME$70,000 AT A TIME

On Newsstands since 2003On Newsstands since 2003

2008 & 2012

National Real Estate National Real Estate Investors AssociationInvestors Association

33

Other Event

& Client

Publications

2012 Invaluable Investor Study2012 Invaluable Investor Study

Real Trends & Personal Real Estate Investor Magazine thanks sponsors for their support and insight

RentRange.com | Econohomes | HomeVestors of America CFAM ResCap | Professionals Realty USA | Guild Mortgage

NREIA | ARPOLA | NARPM | AAPL | CAR

Vast MarketVast Market• 1.24 million unit sales or 28% of

national unit sales – Single family & up to 4 doors

• Value = >$120* billion segment of >$750 billion

– 4.54 million total units sold (NAR)– 1.24 million investment units (NAR)– 3.3 million general public units of which 1.2

million first time buyers units* Av = $97,560 per investment property

>21,000,00021,000,000 Individually-owned Rental UnitsIndividually-owned Rental Units

21,000,000 @ $97,560 (2011 Average buy) 21,000,000 @ $97,560 (2011 Average buy) = >$2.0 Trillion asset base= >$2.0 Trillion asset base

Tightly Defined MarketTightly Defined Market

• 2011 • Many fewer investors to target• 431,000* investors bought

– vs. >2.4 million general public buyers

• Average 3 units/investor – versus 1.x and not a repeat buyer

(*Number houses per investor may be undercounted)

More Frequent & Intense More Frequent & Intense BuyerBuyer

• Investors purchase transactions represent more business per individual than regular buyers/sellers for a host of services

• Over 7 years* period investors will do 21 transactions, regular buyers/sellers only 3.4.

*typical time before changing home for general public

Owner : Renter RatioOwner : Renter Ratio

• 63-64 : 36% = Owner:Renter • Homeownership down from 69% at

peak to 64% in 2011. – 64% - 65% = 30 year norm, meaning 5

million people will be moving from owner-occupied to rental homes

– Revision (4% of 117 million households)

• Help investors build cash flow now from rentals - eye to sell as market recovers

Demographic Trends Demographic Trends Suggest Fewer HomeownersSuggest Fewer Homeowners

• Fewer & later household development; falling # marriages w/kids?

• Real income continues to decline – similar to 1999 & falling?

• Future jobs - mostly in service sectors = lower wages?

• Don’t confuse “desire” for homeownership = still strong

Investor = Rental Owner*Investor = Rental Owner*

• More Renter Investors vs. Resale Investors

• 83% vs. 17% resale/flip• Driven by weak current resales

– 65% of Rental Investors plan to sell in future to capture appreciation & cash flow value

– Good Renters vs. Bad Neighborhoods

ProfitProfit

Process& Effort

Process& Effort

Real Estate Investor Evolution: Real Estate Investor Evolution: Progress to Success & ProfitProgress to Success & Profit

Begin Buy first property1. 2.

3. 4.

- Research- Seminar Study- Books & Tapes- Mentors or Coaching- Prepare for participation

- Hands on – DIY- Education - Find- Acquire - Improve- Manage – Trade- Single property - risk - Small profit- Direct administration

RE portfolio- Hands on – managed- Education- Transactional- Risk spread - more assets- Growing profit- Direct Administration

RE based portfolio

50% attrition

20% attrition 10% attrition

- Hands off – managed- Trading Relationship- Multiple properties or assets = lower risk- Growing profit- Analysis/reports/monitored

Pure Investo

r

“Magic Quadrant”

50% attrition50% attrition © 2004 - 2012 Personal Real Estate Investor Magazine

Increasing Margin (- time & costs) Increasing Margin (- time & costs)

Emphasis Performance (property)

Your spread

© NEXZUS Publishing Group

Position Limits Profit?Position Limits Profit?Position Limits Profit?Position Limits Profit?

Portfolio - Real Estate Portfolio - Real Estate Management Cycle Management Cycle

© 2010 NEXZUS Publishing Group

“Ahead of the Headline”

• Hedge Funds – buying castles not commodities?

• Non-traded vs. traded assets– trading efficiency?

• Case Shiller flaws• Sample Location = Top 20/2 Reg/National• Sample size• Time & Value Normalization• Mark-to-model vs. Mark-to-Market• Media dependent • Consumer Confidence

Lay of the LandLay of the LandLay of the LandLay of the Land

• International Investors• Domestic

• RE/MAX & Real Property Management • Equity Trust• Associations

– National Real Estate Investors Association – American Rental Property Owners & Landlords– National Association of Residential Ppty Mgrs

• Investor Provider Leadership Summit

• Professionals Realty Group

2012 Trends2012 Trends**

•This is the personal opinion and not a position that has any HomeVestors® endorsement

• How institutional investors will screw up this round too……..

• Fee rules– 2/20% Money Management– 8%/100% Property Management– Expected vs. Real Returns– Late to the market

A TRILLION DOLLAR A TRILLION DOLLAR MARKET - MARKET -

$70,000 AT A TIME$70,000 AT A TIME

Who believes in youWho believes in you

And believes real estate And believes real estate investors investors

Collaborate = Value

• Parties – The Home Depot– Application expertise – reno – rent-up– Nitro Mobile Solutions – Syndication partners (National Real

Estate Investors Association, etc

• Goals– Extend benefits to investors,

landlords & owners– Add reach & value to vendor side

1.

2.

3.

4.

Collaborate = Value

• Goals Value Convenience Best Price Beta Version Mobile communications Skinned for syndication partners

• Future disciplines Defined• Automatically X-populate related investor apps

• Future feature sets scoped

• Defining/agree Synd. partners

EXISTING & UNDER-ADVISED - $300 BILLION

MARKET*

Single family residential as intentional investment

>$1 Trillion in assets/4 years

* The 2008 Invaluable Investor Study & National Assn of Realtors

“Protecting principal is no longer goal of an investment advisor.

“It is to protect client purchasing power and lifestyle.”

“The only way to do this is substantial allocations in inflation indexed assets -meaning real estate.”

Nick Murray

Advisor’s Advisor

• You are the key to this market– A Unique Society– Right of center capitalists – Unlock Entrepreneurship– Unleashing American Ethic– Major businesses believe in you

$70,000 AT A TIME $70,000 AT A TIME IN A TRILLION DOLLAR IN A TRILLION DOLLAR

MARKET MARKET

The American CenturyThe American Century

•Largest economic expansion in history

• Euro, Yuan & BRICs Zone issues?• Why? They are not America!

•Massive housing shortage• Domestic growth• Immigration explosion• Asset wealth repatriation or import

You are in the You are in the Right Business & Right Business & Right Country!Right Country!

Thank youWww.PersonalRealEstateInvestorMag.com