Purpose of This Investor Workshop • This presentation is designed for entry-level investors -from curious to qualified. • You are leveraging the The Millionaire Real Estate Investor focusing on the basic points of entering the investor market. • This is lead generation - be prepared to collect information from those who attend and give them an MREI book after they provide full contact info. • Direct the attendees to read at least the first 122 pages, then if they get past the Big Why, read pp. 123-252; then it’s time to meet with you. • FOLLOW UP AND GET THE APPOINTMENT • Present workshop 6-10 times each year. 1
Transcript
Purpose of This Investor Workshop• This presentation is designed for entry-level
investors -from curious to qualified.• You are leveraging the The Millionaire Real
Estate Investor focusing on the basic points of entering the investor market.
• This is lead generation - be prepared to collect information from those who attend and give them an MREI book after they provide full contact info.
• Direct the attendees to read at least the first 122 pages, then if they get past the Big Why, read pp. 123-252; then it’s time to meet with you.
• FOLLOW UP AND GET THE APPOINTMENT• Present workshop 6-10 times each year.
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Promoting the Investor Workshop• Partner with mortgage, insurance, title, home
warranty, inspectors … look for like-mindedness.• Market to your past buyers, SOI, farm, Facebook. • Start at least three weeks in advance. • Use a free MREI book as a preregister draw.
(Partners can pay for the book, or split the cost.) Only those who preregister are guaranteed a book. (Be sure to have a walk-in policy.)
• Reserve your presentation room in advance and be sure to have enough chairs, pens, and presentation packets.
• Call and email all attendees one day before to remind them that you have reserved a spot and a book for them.
• Have water available - maybe chips and/or nuts.
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Preparing the Investor Workshop
•Read The Millionaire Real Estate Investor by Gary Keller with Dave Jenks and Jay Papasan.
• Insert your professional info in slides 6,9, 27,and 38.• Insert your local statistics on slide 15.•Update, if necessary, slide 14 (national statistics).•Change or add your graphics where you prefer.•Feel free to add or take away slides to personalize.•Print ,then delete slides 1-4 and save as “My
Investor Workshop.”•Review new file to be sure it is perfect.
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Presenting the Investor Workshop• Dress professionally, and your partners as well.• Be early - start on time, end on time (one hour max).• Be prepared to stay after for questions, but end on
time.• Have notepads and pens for each attendee (custom if
you can, with your contact info … or partner’s).• Know your material, know your market, have a few
properties on HOT PROPERTY list. Explain the list goes only to those who have committed to working with you by signing a Buyer Rep Agreement.
• Practice the presentation - ask often “Any questions?” “Does this make sense?”
• Have your appointment scheduler ready - ask for the appointments, expect success!!
NoticesWhile Keller Williams Realty, Inc. (KWRI) has taken due care in the preparation of all
course materials, we do not guarantee its accuracy now or in the future. KWRI makes no warranties either expressed or implied with regard to the information and programs presented in the presentation or associated workbook, and reserves the right to make changes from time to time.
This presentation and workbook may contain hypothetical exercises that are designed to characterize typical investor strategies and return on investment, but in no way guarantees specific results or return on investment.
Material excerpted from The Millionaire Real Estate Investor appears courtesy of The McGraw-Hill Companies.
reserved.No part of this publication and its associated materials may be reproduced or
transmitted in any form or by any means without the prior permission of Keller Williams Realty, Inc. Any modification to this material is at the sole discretion of the presenter, and as such KWRI is held harmless for any acts or resulting acts from such alterations or modifications. All Keller Williams Realty agents are encouraged to personalize this material, and to clearly indicate the sources of any additional materials, including any necessary copyright notices.
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Presented by:
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Your Name HereYour Brand Name
Mortgage Presenter’s Name (if presenting)Company Name
Property Management Presenter’s Name (if presenting)Company Name
Real Estate Investor Workshop
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•Why are you here today?
•What has caused you to start thinking about investing in real estate?
•Why am I here?… to share some of my thoughts on money, life, and investing in real estate
Our presentation is drawn largely from The Millionaire Real Estate Investor by Gary Keller
What We Cover in the Investor Workshop
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•The Possibilities▫MythUnderstandings
▫Real Estate Investing Current Statistics
▫Your Big Why
•The Power of Leverage▫Why Real Estate?
▫Growing Your Net Worth
•The Proven Systems▫What to Buy
▫How to Buy
About Me
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•Licensed REALTOR®•Your credentials
(ABR, CRS, etc.)•Other credentials•I am awesome!
Your Name
The Possibilities
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n. The unearned income to finance your life mission without having to work.
(fĭ-năn shЭl, wĕlth)
The Possibilities
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There are eight MythUnderstandings
between you and financial wealth.
MythUnderstandings
The Possibilities
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Three Personal Myths
Myth: I Don’t Need to Be an Investor—My Job Will Take Care of My Financial Wealth
Truth: Yes, You Do Need to Be an Investor—Your Job is Not Your Financial Wealth
Myth: I Don’t Need or Want to Be Financially Wealthy—I’m Happy with What I Have
Truth: You Need to Open Your Eyes—You Do Need and Want to Be Financially Wealthy
Myth: It Doesn’t Matter If I Want or Need It - I Just Can’t Do It
Truth: You Can’t Predict What You Can or Can’t Do Until You Try
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2
3
MythUnderstandings
The Possibilities
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Five Investing MythsMyth: Investing Is ComplicatedTruth: Investing Is Only as Complicated as You Make It
Myth: The Best Investments Require Knowledge Most People Don’t Have
Truth: Your Best Investments Will Always Be in Areas You Can or Already Understand
Myth: Investing Is Risky—I’ll Lose My MoneyTruth: Investing, by Definition, Is Not Risky
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2
3
4
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Myth: Successful Investors Are Able to Time the MarketTruth: In Successful Investing, the Timing Finds You
Myth: All the Good Investments Are TakenTruth: Every Market Has Its Share of Good Investments
MythUnderstandings
The Possibilities
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National Association of REALTORS® Statistics
1.17% of all 1-4 unit home purchases in 2010 involved an investor as a buyer.
2.68% of all investors buy within 50 miles of their primary residence.
3.Average sales price last year was $96K.
4.63% were Single family houses.
Real Estate Statistics
The Possibilities
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[Your Local] Statistics
1.Statistic 12.Statistic 23.Statistic 3
Real Estate Statistics
The Possibilities
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Discover Your Big
Why!
Appears on
Page 81
Your Big Why
The Possibilities
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1. Big Goals — The specific, measurable targets that fulfill your Big Why
2. Big Models — The proven systems and strategies for reaching your Big Goals
3. Big Habits — The consistent actions and right choices that come from following Big Models
Appears on
Page 86
Your Big Why
The Power of Leverage
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There are unique propositions of investing in real estate in contrast to stocks, mutual funds, and money markets:
1. Real property is an ABLE investment; its value never goes to “zero.”2. Purchasing real property can be leveraged.
Appears on
Page 99
Why Real Estate?
The Power of Leverage
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1. Accessible – Anyone can buy it2. Appreciable – Increases in value over time3. Rentable – Cash flow! Cash flow! Cash flow!
(Making money while you are sleeping)4. Improvable – Sweat equity5. Deductible/Depreciable/Deferrable – Great
tax benefits6. Stable – Slow to rise and slow to fall (most of
the time)7. Livable – Shelter in more ways than one ...
… a Most “Able” Investment
Appears on
Page 99
Why Real Estate?
The Power of Leverage
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Stocks Mutual Funds
Money Market
Investment Property
Start Value $100K $100K $100K $100K
Cost $100K $100K $100K $20K
Carrying Cost
1-4% 1-4% n/a mortgage offset by
rent
Other Costs 0 0 0 10% vacancy
and maintenanc
e
Income/Year 8% 10% 2% 5% appreciatio
n
Other Income
0 0 0 rent
Adjusted ROI
4-7% 6-9% 2% 25%*
Potential Loss
100% 100% 0 40%
* 25% = 5% of $100,000 recalculated for the actual $20K investment
The Power of Leverage
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Leverage: Using other people’s money (banks, mortgage companies, and owner financiers) to make money. Leverage multiplies your profit.
Appreciation and rent are based on total value of property. Return on Investment is calculated by money invested (20% or $20,000)
Here is the calculation, not taking rent into consideration - assuming property went up 5% (if you stick to your model when buying, this is conservative.)
5% of $100,000 = $5,000$5,000 is x% of $20,000 = 25%
To make the same money in a mutual fund yielding 10% with no costs, you would need to have $250,000 cash - I don’t have that, but I do have $20,000!
Why Real Estate?
The Power of Leverage - The Money Matrix
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Consumption
Cash
Cash Flow
Capital
Consumption
Capital
Financial wealth is built on CAPITAL and CASH FLOW
Shadow wealth is built on CONSUMPTION and CASH Cash Flow
Cash
Big Hat, No Cattle
Appears on
Page 89
MONEY WORKSMONEY WORKSfor you!for you!
YOU WORKYOU WORKfor money!for money!
Growing Your Net Worth
The Power of Leverage Financial Model Part 1 - Equity Buildup
24Appears on
Page 146
EquityEquity
InvestmentInvestment
DebtDebt
MARKETVALUE
EquityEquity
InvestmentInvestmentDebtDebt
MARKETVALUE
EquityEquity
InvestmentInvestment
MARKETVALUE
EquityEquity
InvestmentInvestment
DebtDebt
MARKETVALUE
Price AppreciationDebt PaydownEquity Buildup
Price AppreciationDebt PaydownEquity Buildup
+=
Buy It Right Pay It Down Pay It Off
Growing Your Net Worth
The Power of Leverage Financial Model Part 2 - Cash Flow Growth
25Appears on
Page 149
Rent AppreciationDebt PayoffCash Flow Growth
Rent AppreciationDebt PayoffCash Flow Growth
+=
Buy It Right Pay It Down Pay It Off
RENT
Vacancy andExpenses
Vacancy andExpenses
Cash FlowCash FlowVacancy and
ExpensesVacancy and
Expenses
Debt ServiceDebt Service
RENT
Cash FlowCash Flow
RENT
Vacancy andExpenses
Vacancy andExpenses
Debt ServiceDebt Service
Cash FlowCash Flow
RENT
Vacancy andExpenses
Vacancy andExpenses
Debt ServiceDebt Service
Cash FlowCash Flow
Growing Your Net Worth
The Power of Leverage
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1. Return on Investment – Less “out of pocket” for more “into pocket!”
2. Tax write-offs3. Grow net worth through equity4. College education savings
and many more reasons ...
There is no better method of investing your money!
Why do people invest in real estate?
Growing Your Net Worth
The Power of Leverage
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1. Operating Expenses - Management, leasing, etc.2. Mortgage Interest3. Financing Costs - Points paid on the loan 4. Misc. Closing Costs - Fees connected with
obtaining the loan5. Depreciation - Structural value of property6. Capital Improvements - New roof, siding, etc.7. Personal Property - Furniture, lawn mower, etc.8. Maintenance Expenses - toilets, paint, yard care
Tax Write-Offs*
Growing Your Net Worth
*Consult with a CPA, or tax specialist prior to investing.
A Real Estate Investment Success Story
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•Your Story Here
The Proven Systems
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Condominium1 unit
Single Family Home
1 unit
Duplex2 units
Fourplex 4 units
What to Buy
Each of these common types of properties are considered residential from a lending perspective.
The Proven Systems
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PROS•Lower purchase price than a home in area•Maintenance included•More amenitiesCONS•High HOA fees, less cash flow•Only own a percentage of the land. (Shared liabilities.)•Less appreciation (typically)
Condominium – 1 Unit
What to Buy
The Proven Systems
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Single Family Home – 1 Unit
PROS•Easiest to resell•Typically surrounded by owner occupants•More appreciationCONS•Only 1 unit to generate income•100% loss when vacant
The Proven Systems
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Duplex – 2 Units
PROS•Typically close to, or in, single- family home neighborhoods•Less risk than fourplex•More cash flow than single-family homesCONS•Lower appreciation•Usually surrounded by many other rental units
What to Buy
The Proven Systems
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Fourplex – 4Units
PROS•Generates high cash flow•Minimizes financial impact from vacancy•Economies of scaleCONS•More upkeep/tenant damage•Less appreciation•Tenant conflicts
What to Buy
The Proven Systems
34Appears on
Page 111
MakeDeals
KnowValue
FindOpportunity
How to Buy
The Proven Systems
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How to Buy
Mortgages
•30 year vs. 15 year
•20% down or more?
•Qualifying issues
•Your first property - what to expect
•Your next property - what to expect
The Proven Systems
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Property Management Companyvs.
Self-Management
The Proven Systems
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Next Steps …1. Read The Millionaire Real
Estate Investor.2. Talk to a mortgage
professional.3. Talk to a financial professional.4. Let’s get together!
