US WHY CHOOSE US LET'S TALK! We help the Gainesville community navigate today’s real estate market with ease and expertise. Our team of dedicated experts, award-winning sales processes, and commitment to excellence have made us Gainesville’s fastest-growing real estate group. We can show you what top-tier service looks like and get you the deal you didn’t think was possible. OVER $120,000,000 IN SALES VOLUME OVER 475 HOMES SOLD TOP 5 TEAM IN ALACHUA COUNTY 352-559-2140 themillsgroupkw.com 5310 NW 8th Ave, STE 1, Gainesville, Fl 32605 EVERYTHINGWE TOUCHTURNSTOSold Sold
ABOUT
SERVANT SERVANT LEADERSHIP LEADERSHIP
MPower is doing their part in ensuring their community has an option to own their own power and lock in a low fixed rate that is 100% predictable each month.
EVERYTHING EVERYTHING IINHOUSE NHOUSE
WEALTH WEALTH BUILDING BUILDING
NO SUBCONTRACTING EVER...
When we say we do everything in-house, we mean it.
Financial wealthbuilding strategies has not only been a driving force for Noah and Jonathan's success, it has passed through to their clients, family, and friends.
SEE IF YOUR HOME QUALIFIES TO SAVE YOU MONEY BY MAKING THE SWITCH TO SOLAR WITH MPOWER SOLAR!
P O W E R E D b y G a i n e s v i l l e l o c a l s
Noah Hastay (left) and Jonathan Mills (right) were both born and raised in Gainesville, Florida. They are entrepreneurs, both owning multiple Gainesvillebased businesses that serve a variety of consumer needs.
ProfessionalsProperty Management Est. 1978 HighestReturn onInvestment City+County OrdinanceCompliance Exceptional Communication Landlord &TenantLaw Contactusforyourcomplimentaryconsultation SuzanneMelton|(352)373-7578|Suzanne@rentgainesville.com 4421NW39thAvenueBldg2Ste1Gainesville,Florida
Trusted VENDORS VENDORS
Lenders
Chris Doering Mortgage
3940 NW 16th Blvd. Suite A
Gainesville, FL 32605
352-244-0840
First Federal Bank
4200 SW 34th St. STE A, Gainesville, FL 32608
352-204-4461
Capital City Bank
5200 W Newberry Rd Ste A
Gainesville, FL 32607
352-548-4790
HomeInsurance
Brightway Insurance
9127 SW 52nd Ave D-103
Gainesville, FL 32608
352-519-1900
Schneider & Associates Insurance
285 NW 138th Terr
Newberry, FL 32669
352-333-3775
Darr Schackow Insurance Agency
5200-B W Newberry Rd
Gainesville, FL 32607
352-338-0552
Tower Hill Insurance
7201 NW 11th Place
Gainesville, FL 32605
352-332-8800
PestControl
Arrow Pest Control
5602 NW 13th St
Gainesville, FL 32653
352-373-3642
Brooker Pest Control
4454 SW 41st Blvd
Gainesville, FL 32608
352-378-2433
Florida Pest Control
116 NW 16th Ave
Gainesville, FL 32601
352-618-6550
HomeInspectors
Down Home Inspections
18731 NW US Hwy 441
High Springs, FL 32643
352-514-1925
HomeTeam of Gainesville
352-505-4343
www.hometeam.com/gain esville
Roofing
Custom Roofing
4221-B SE 53rd Ave
Ocala, FL 34480
352-378-2888
HVAC
Honesty AC
25434 SW 2nd Ave
Newberry, FL 32669
352-922-0249
WaterRestoration &CarpetCleaning
Dreyer’s DKI
1911 NW 67th Place #4
Gainesville, FL 32653
352-310-1828
HomeCleaning
The 4 Cleaning Florida, LLC
13690 NW 9th Rd
Newberry, FL 32669
Vianney: 352-213-5910
Daniela: 352-268-0451
LandSurveryors
Exacta Land Surveys
1www.exactaland.com
866-735-1916
Property Management
Union Properties
4421 NW 39th Ave Bldg 2, Ste 1, Gainesville, FL 32606
352-373-7578
1
Presentedby GeneRivers
Over5600homessold
KWUSeniorMasterFaculty
KWNationalTourSpeaker,MREA,MREI,FLIP,ONETHING
WallStreetJournaltop1000inUSformultipleyears
REALTRENDS-among“America’sBestAgents”multipleyears
Real Estate Investor –single family, condos, multi family, office buildings,lotsandland,specventures,treefarm,industrialland
PENNHomesConstructionandInvestments
OperatingPrincipal/Owner7locations-KWMarketCenters
Tallahassee,Jacksonville,OrangeParkandPanamaCityBeach.
Owner,NorthFloridaTitleCompanywith5locations
EditedRealEstateAssistantsbyMonicaReynolds
2
• • • • • • • • • •
TheMillionaireRealEstateInvestor's
PersonalBudgetWorksheet:ExcelVersion
PersonalBudgetIncomeBreakoutExcelVersion
PersonalBalanceSheet:ExcelVersion
Investor'sCriteriaWorksheet
CostofRepairWorksheet:ExcelVersion
BuyandHoldWorksheet:ExcelVersion
BuyandSellWorksheet:ExcelVersion
3
www.KellerInk.com
Worksheets
4 ResidentialRealEstate InvestingBasics ShortTerm LongTerm Buy-Hold Buy–Fix-up,Hold Buy,Build,Hold LongTermFixedLoan Buy-Sell Buy,Fix-up,Sell Cash,Loan,LineofCredit
n. The earned income to finance your lifemissionwithouthavingtowork.
5 FinancialWealth
6 Why Why Why My Big Why Personal Growth Why Why Why THEBIGWHY Appearson Page81 “IwanttobethebestIcanbe”
LIFESTYLEINVESTMENTSDEBT
HOUSE,CARS,KIDS, VACATIONS,DINING OUT,CLOTHING, MEDICAL/DENTAL, KIDSCOLLEGE, AGEINGPARENTS, SECONDHOME, TITHING,GIFTING
Totalannualearnings
BUSINESS, REALESTATE, STOCKS, BONDS, FUNDS
IRS,STATE& LOCALTAXES. CREDITCARD, MORTGAGE, STUDENT LOANS,ETC
Totalinvestinggoal 2xL 10xL
7 MONETIZEYOURWHY
8 Appearson Page33 THESUCCESSPYRAMIDOF THEMILLIONAIREREALESTATEINVESTOR
Think Receive Acquisition Payoff-Own
GOALS
9
BIGGOALS,BIGMODELS& BIGHABITS
1.Big Goals —
Thespecific,measurabletargetsthat fulfillyourBigWhy.
2.Big Models —
Theprovensystemsandstrategies forreachingyourBigGoals.
3.Big Habits —
Theconsistentactionsandright choicesthatcomefromfollowingBigModels.
10
Appearson Page86
THE POWER OF PROVEN MODELSOVERTRIALANDERROR
Your Highest Level of Achievement
Where You Begin with Action
Based on Proven Models
Your Natural Ceiling of Achievement
Where You Begin with Action Based on Personal Experience
Trial & Error
11
Appearson Page20
BIG GOALS AND BIG MODELS BUILDBIGHABITS
12
N E T W O R T H
$1,000,000Models&Habits
BigHabits Bad Models
BadHabits -$5,000Models -$175,000Models -$250,000Models -$500,000Models $500,000Models $250,000Models $175,000Models $5,000Models & H a b i t s & H a b i t s & H a b i t s & H a b i t s & H a b i t s & H a b i t s & H a b i t s & H a b i t s TIME Appearson Page84
-$1,000,000Models&Habits
Big Models Build
Build
OvercomeYour MythUnderstandings
13
EIGHTMYTHUNDERSTANDINGS
BETWEENYOUANDFINANCIALWEALTH
Three Personal Myths
:IDon’tNeedtoBeanInvestor—MyJobWillTakeCareof MyFinancialWealth
:Yes,YouDoNeedtoBeanInvestor YourJobisNotYour FinancialWealth
:IDon’tNeedorWanttoBeFinanciallyWealthy I’mHappywith WhatIHave
:YouNeedtoOpenYourEyes—YouDoNeedandWanttoBe FinanciallyWealthy
14
Myth Trut h Myth Trut h Myth Trut h
: It Doesn’t Matter If I Want or Need It —I Just Can’t Do It : YouCan’tPredictWhatYouCanorCan’tDoUntilYouTry
1 2 3
EIGHTMYTHUNDERSTANDINGS
Five Investing Myths
:TheBestInvestmentsRequireKnowledgeMostPeopleDon’tHave
:YourBestInvestmentsWillAlwaysBeinAreasYouCanorAlreadyUnderstand
:InvestingisRisky—I’llLoseMyMoney
:Investing,byDefinition,isNotRisky
:SuccessfulInvestorsareAbletoTimetheMarket
:InSuccessfulInvestingtheTimingFindsYou
:AlltheGoodInvestmentsareTaken
:EveryMarkethasItsShareofGoodInvestments
15
1 2 3 4 5 Myth Truth Myth Truth Myth Truth Myth Truth Myth Truth :InvestingisComplicated
BETWEENYOUANDFINANCIALWEALTH
:InvestingisOnlyasComplicatedasYouMakeIt
1.HomeSales-Annual
16
'90 '92 '94 '96 '04 '18 '20 '22 (proj) '98 '00 '02 '06 '08 '10 '12 '14 '16 2022 Sales (Projected) 6.2 5.7 TotalAnnualSingle-FamilyHomeSales(in Millions) 5.4 5.0 4.54.74.64.7 40 3.23.43.53.53.8 2.92.9 6.1 5.9 5.35.55.55.65.35.3 495149 4.44.64.74.34.3 6.0 TotalSales 28.2M TotalSales 28.2M TheNumbersThatDriveUSReaEstate|Vsion2022 Source:NatonaAssociationofREALTORS®
17 2.HomePrices-Annual $94 $222 $166 $224 '90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10'11'12'13'14'15'16'17'18'19'20’21'22 (proj) $347$378 $343 Long-termAverage=4% AnnualMedianHomePrice(inThousands) TheNumbersThatDriveUSReaEstate|Vsion2022 Copyrght©2022“JanuaryExistngHomeSales”NationalAssocatonofREALTORS®
18 Copyright©2022KellerWllamsRealty,Inc Copyright©2022“AffordablityIndex”NatonaAssociationofREALTORS® 5.Affordability '70 '75 '80 '85 '90 '95 '00 '05 '10 '15 '21 Long-termAverage Affordability 3636 31 30 28 2626 22232423222223222322 1920202121192020202021919202020.319201 18 1717 161717 1514 314151515161615161 13 Affordabilitygotslightlyworsein2021duetorisinghomepricesandmortgagerates. TheNumbersThatDriveUSReaEstate|Vsion2022
19
'72 '77 '82 '87 '92 '97 '02 '07 '12 '17 '21 AnnualMortgageRate(%) HistoricalAveragefrom’72-’20 HistoricalAveragefrom90-’20 TheNumbersThatDriveUSReaEstate|Vsion2022 Source:FreddeMac 16.63% 7.8 1 5.9 7 2.96
4.MortgageRates-Annual
20
-Annual '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 Balanced=6months AnnualMonthsSupplyofInventory TheNumbersThatDriveUSReaEstate|Vsion2022 Source:NatonaAssociationofREALTORS® 6.5 4.8 4.54.64.74.74.34.5 10.4 9.4 8.98.8 8.3 5.9 4.95.24.8 4.4 3.9 4 3.9 3.1 2.3
3.Inventory
21 3.Inventory-Monthly Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 3.1 1.9 3.1 2 3.3 2.1 4 2.4 4.6 2.5 3.9 2.5 3.1 2.6 3 2.6 2.7 2.4 2.52.3 2.321 1.91.8 2020 2021 TheNumbersThatDriveUSReaEstate|Vsion2022 Source:NatonaAssociationofREALTORS®
22
shortagesanddriveupprices. Inflationisata40-yearhigh
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 CPI '24 ProjCPI 2% 6.1 % 5.2 % CPI(IncludesEnergyandFood) CoreCPI(ExcludesEnergyandFood) Target=2% 7.04% CoreCPI 5.50% 2.00% TheUSEconomy|Vison2022 Source BEA
5.Inflation-Annual
assupply-chainissuescreate
23 1,279 1,049 769 482 374 321 306 368 430 440 503 562 616 614 685 822 762 650 NewhomesaleshaverecoveredsincetheGreatRecession,buttookahitin2021as constructionslowedduetosupply-chainissues. $241K $393K NewHomeSales 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 MedianNewHomePrice NewSingle-familyHomeSales(inThousands) Long-termAverageHomeSales USEvents|Vison2022 Source:USCensusBureau
24 Copyright©2022KellerWllamsRealty,Inc Source:FederaReserveBankofNewYork USEvents|Vison2022
Studentloansaresimplypartoftheconversationnowforfirst-timebuyers. '05 '06 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 $1.9T $04T $20T $04T $21T $0.5T $21T $06T $19T $0.7T $1.8T $0.8T $1.8T $0.9T $18T $09T $1.9T $1.0T $1.9T $1.1T $2.6T $1.2T $2.7T $1.3T $29T $1.4T $29T $14T $30T $1.5T $3.0T $1.6T $30T $1.6T '07 '08 '09 '10 StudentLoans(in Trillions) AllOtherConsumerDebt(inTrillions;ExcludesMortgage)
8.StudentLoanDebt
25 '13 '14 '15 '16 '17 '18 '19 '20 '21 42%42%42%42% 50% 47% 41% 39%39% 37%38% 36% 35% 34% 33%34% 32%33%33% 31% 40%40% '95 '97 '99 '01 '03 '05 '06 '07 '08 '09 '10 '11 '12 First-timeHomeBuyers 40%
Theleveloffirst-timehomebuyersremainswellbelowthehistoricnorm. NatonalAssocatonofREALTORS®|Vision2022 Source:2021ProfileofHomeBuyersandSelers
First-TimeHomeBuyers
26 AnnualHomeValueIncreasescomparedtoRentIncreases
27 TRUEINVESTORSWIN THEWEALTHBUILDINGGAME N E T W O R T H TIME TrueInvestor IncomeEarner ModestInvestor Appearson Page42
28 Appearson Page43 TrueInvestor IncomeEarner ModestInvestor C A S H F L O W TIME TRUEINVESTORSWIN THECASHFLOWGAME,TOO!
THESEVENWAYSMILLIONAIREREAL ESTATEINVESTORSTHINK
1.Think Powered by a Big Why
2.Think Big Goals, Big Models, and Big Habits
3.Think Money Matters -UL
4.Think Net Worth –RW
5.Think Real Estate –CF
6.Think Value, Opportunity and Deals -MIH
7.Think Action -BS
29
Appearson Page78
REALESTATE-AMOST “ABLE”INVESTMENT
A.Accessible–Anyonecanbuyit
B.Appreciable –Increases in value over time
C.Leverageable –Buy on margin & borrow against equity
D.Rentable –Cash Flow! Cash Flow! Cash Flow!
E. Improvable–Sweatequity
F.Deductible/Depreciable/Deferrable –Great tax benefits
G.Stable–Slowtorise&slowtofall
H.Liveable–Shelterinmorewaysthanone….
30
Appearson Page99
THEPOWEROFLEVERAGEON RATEOFRETURN
Price Paid$150,000
Down Payment$30,000
Appreciation (1 Year at 4%)$156,000.
Gain$6,000.
Rate / Return on Price4%
Rate / Return on Investment20%
($150,000 x 4%)
($6,000 ÷$150,000)
($6,000 ÷$30,000)
31
Appearson Page102
CashonCashROI
PricePaid$100,000
DownPayment$20,000
Appreciation(1Yearat4%)$104,000.
Netpositivecashflow-$200/month$2400/yr
Gain–Appreciation-$4,000.
Gain-CashFlow-$2,400.
TotalGain-$6,400.
RateofReturnonPrice6.4%($6,400÷$100,000)
CashonCashROI32%($6,400÷$20,000)
32
THEIMPACTOFVARIOUS INTERESTRATESOVERTIME
33
Years 1 5 10 20 30 0% 4% 8% 12% 16% 20% $1,200 $6,000 $12,00 0 $24,00 0 $36,00 0 $1,226 $6,652 $14,77 4 $36,80 0 $69,63 6 $1,253 $7,397 $18,417 $59,259 $150,030 $1,281 $8,249 $23,234 $99,915 $352,991 $1,309 $9,225 $29,647 $174,946 $887,048 $1,338 $10,345 $38,236 $316,148 $2,336,080 $100InvestedEveryMonthwith InterestRatesCompoundedMonthly Appearson Page293
3847
OFMONEY 18 % 17 % 16 % 15 % 14 % 13 % 12 % 11 % 10 % 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Healthy Money Safe Money Dead Money Wealthy Money Solid Returns Poor Returns Modest Returns ActiveInvesting& WhereWealthisBuilt INFLATION RATE Appearson Page292
THEFOURCONDITIONS
THEFOUR INVESTMENTPROFILES
35
1 2 INVESTOR 3 SPECULATOR OBSERVER COLLECTOR 4 •Loves the Action •BuysAnything •LovesOpportunity •BuystheRightThing! •LovesIdeas •BuysNothing •Loves Ownership •BuysSomething Appearson Page114
36 S Collector I Investor O Observer S Speculator Action Inactio n Low Risk Low Return No Risk Managed Risk Maximum Return No Return High Risk High Return Action Inactio n THESTRAIGHTANDNARROWPATH OFINVESTING Appearson Page117
37 Net Worth Model LeadGeneration Model Acquisition Model Financial Model Network Model THEFIVEMODELS–KEYAREAS 1 2 3 4 Establish your Criteria Prospect & Market for Real Estate Investment Opportunities Learn the Path of Money Budget for Investments Make Investments & Track Net Worth 5 Understand the Triple Benefits of Real Estate: •Cash Flow •Appreciation •Debt Pay Down •Master Terms for Making Offers and Closing Deals •Buy & Sell •Buy & Hold Network for Knowledge, Leverage and Leads Build your Investment Dream Team • • • • • • • • Appearson Page126
38
39 Net Worth Model 1 •LearnthePathofMoney •BudgetforInvestments •MakeInvestments&TrackNetWorth
40 1 2 3 4 Money Markets Cds Bonds T-bills Human Capital Spend It ___ % Donate It % Stocks Reits Mutual Funds Lend PASSIVE“They Control It” Cash Flow 5 Owner Financing Private Lending Hold It ___ % Invest It % Capital Assets Own ACTIVE“You Control It” Businesse s Real Estate THEPATHOFMONEY Two Kinds of Capital: Four Choices for Cash Flow: Two Basic Investment Choices: Two Basic Positions: Lend Own 4 Lend Own Appearson Page129 FinancialReturns You Work for Money Your Money Works for You
HOWACONSUMERSEES THEIRBUDGET
CONSUMER’S BUDGET
CONSUMER’S PERCEIVEDBUDGET
Confuses Discretionary Spending with Required Spending
Which is why they “just can’t afford to invest….”
Investmen t Spending Incom e Taxes Required Spending Discretionary Spending
41
Appearson Page134
HOWAMILLIONAIREINVESTORSEEAppSearsonPage THEIRBUDGET
Considers Investment Spending to be Required Spending. Which is why they “always have money to invest.”
Investmen t Spending Incom e Taxes Required Spending Discretionary Spending
42
MILLIONAIRE INVESTOR’SBUDGET
MILLIONAIREINVESTOR’S PERCEIVEDBUDGET
43
FIRST,SECONDANDLAST MILLIONAIRE INVESTOR’SBUDGET MILLIONAIRE INVESTOR’S BUDGET PRIORITIES Investmen tSpending Incom e Taxes Required Spending Discretionary Spending TheyInvestPre-Tax TheyInvestPost-Tax TheyInvestAnythingLeftOver Appearson Page136
THE INVESTOR PAYS THEMSELVES
44
Monthly Income (1) (2) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10 ) (11 ) (12 ) (13 ) (14 ) (15 ) Earned Income$ Unearned Income$ Housng %$ Food %$ Automobile %$ Insurance %$ Entertainment %$ Clothing %$ Medcal %$ DebtService %$ School/ChldCare %$ Travel/Vacation %$ Misc %$ $ $ $ $ Tithe %$ Save %$ Invest %$ Tax %$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Budget Analysis Net Spendable Income Less Required Expenses Total Surplus/Deficit Net Spendable Income Expenses Gross Month y Income$ Current Required Total Current Expenses Total Requ red Expenses $ Total D scretionary Expenses Discretionary Appearson Page138
SAMPLEPERSONALBUDGET
45 ASSETS Ret rement Accounts Equity Investments Businesses Private Businesses Public Stocks Bonds Annu ties Tota Equity Investments Cash/Savings Insurance Collectibles Persona Property Real Estate Persona Real Estate Investments Notes Receivable Other Assets TOTAL ASSETS LIABILITIES Car Loans Cred t Card Debt Mortgage Debt School Loans Other Debt TOTAL LIABILITIES NET WORTH ANNUAL CASH FLOW (EARNED) ANNUAL CASH FLOW (UNEARNED) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % $ % % $ % $ % $ % % % % % % % % % % % % % % % % % % % % % % % % SAMPLEPERSONAL BALANCESHEET January 1, January 1 Annual % Current YTD% Last YearThis YearIncreaseTotalIncrease Appearson Page142
The Financial Model
•UnderstandtheTripleBenefitsofRealEstate
•CashFlow
•Appreciation
•DebtPayDown
46
2
47 THEFINANCIALMODELPARTONE: EQUITYBUILDUP + = MARKET VALUE Equity Investment Debt Equity MARKET VALUE Investment Debt Equity MARKET VALUE Investment Debt Equity MARKET VALUE Investment Buy It Right Pay It Down Pay It Off PriceAppreciation DebtPayDown EquityBuildUp Appearson Page146
48
Buy It Right Pay It Down Pay It Off Rent Appreciation DebtPayOff CashFlowGrowth + = RENT Vacancy & Expenses Debt Service Equity RENT Vacancy & Expenses Debt Service Equity Equity RENT Vacancy & Expenses Debt Service Equity RENT Vacancy & Expenses Appearson Page149
THEFINANCIALMODELPARTTWO: CASHFLOWGROWTH
FINANCIALMODEL: YOURTOTALRETURN
49
Example Property: • • • • • $90,000 Rental Purchase in 1988 Discount 20% ($18,000) Purchase Price ($72,000) Down Payment 20% ($14,400) Mortgage Loan Amount 80% ($57,600) TotalEquityBuildUp(1988-2004) TotalNetCashFlow(1988-2004) TotalReturn AnnualCompoundedRateofReturn $128,506 $34,545 $163,051 17.6% $171,840 $18,327 $190,167 18.8% 30-Year Mortgag e 15-Year Mortgag e Appearson Page150
FINANCIALMODEL: YOURTOTALRETURN
Worst Case Example Property:
$100,000 purchase price
•$20,000 down payment
•20 year mortgage
•NOT ONE DIME IN CASH FLOW
•NO APPRECIATION IN 20 YEARS
Appearson
CASH
50
CASH
ON
RATE OF RETURN –8.4%
Page150
51
Marke t Value Total Accumulated Equity Total Accumulated Cash Flow $303,616 $2,574,200 $1,610,735 $500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $0 1985 1990 1995 2000 2005 Appearson Page154
MULTI-YEARFINANCIALMODEL GRAPHICALOVERVIEW: 15PROPERTIESOVER20YEARS
52 The Network Model 3 •Network for Knowledge, Leverage and Leads •BuildYourInvestmentDreamTeam
THEMILLIONAIREREALESTATE INVESTOR’SWORKNETWORK
Title Companies
Landscapers
Lenders Developers
Financial PlannersConsultants Attorneys
Insurance Agents
Concrete Companies
Property Managers
Roofers
Plumbers
Masons
Courthouse Clerks
Appraisers
RealEstate Agents
Partners
MILLIONAIRE REAL ESTATE INVESTOR
INNER CIRCLE SUPPORT CIRCLE SERVICE CIRCLE
Inspectors
Leasing Agents
Investors
Builders
Appliance
Rentals Mentors
AccountantsCleaning Services
Lawn Service
Flooring
Contractors &Carpet
Carpenter
Electrician Painter
Maintenance Technician
53
Appearson Page159
54
INNER CIRCLE MILLIONAIRE REAL ESTATE INVESTOR Consultants Partners Mentors Appearson Page162
WORKNETWORK: YOURINNERCIRCLE
WORKNETWORK: YOURSUPPORTCIRCLE
55
SUPPORT CIRCLE MILLIONAIRE REAL ESTATE INVESTOR Attorneys Property Managers Lenders RealEstate Agents Investors Contractors Accountants Appearson Page163
WORKNETWORK: YOURSERVICECIRCLE
56
SERVICE CIRCLE MILLIONAIRE REAL ESTATE INVESTOR TitleAppraisers Companies Landscapers Developers Financial Planners Insurance Agents Concrete Companies Roofers Plumbers Masons Courthouse Clerks Inspectors Leasing Agents Builders Appliance Rentals Cleaning Services Lawn Service Flooring &Carpet Carpenter Electrician Painter Maintenance Technician Appearson Page164
THEWORKNETWORK DEVELOPMENTMODEL
1. BUILD IT2. MAINTAIN IT
“Before You Need It”
Two Questions to Start
1.Seek
•“Who do you know that I should know?”
2.Qualify
•“What would you do if you were me?
“So You Have It”
Three Ways to Communicate
1 Call Them Every Month
2.Mail Them Something Of Interest Every Month
•Personal Notes
•Gifts Three Times a Year
3.And for Your Inner Circle, Meet Them every Month
•Share Your Plans & Goals
•Review Your Net Worth Worksheet
Appearson Page165
3. ENGAGE IT
“When You Need It”
Fives Rules of Engagement
1.Do Deals
2.Keep Your Word
3.Don’t Talk Bad About Anyone
4.Don’t Short Change Anyone
5.Refer Business to Your Network
The Times of Engagement
1.Inner Circle Each Month
2.Support Circle Each Transaction
3.Service Circle As Needed
57
58 4 Lead Generation Model •EstablishYourCriteria •Prospect&MarketforRealEstate InvestmentOpportunities
59 1 Have Clear Criteria for the Property you want to Invest in 3 Systematically Lead Generate for Properties and People 2 Identify the People who can connect you to Properties that meet your Criteria Separate Suspects from Prospects 4
INVESTMENTPROPERTIES
WHAT WHO WHICH
THELEADGENERATIONMODELFOR
HOW
TwoKindsofCriteria 60 1.Location 2.Type 3.Economic 4.Condition
5.Construction 6.Features 7.Amenities
Have Clear Criteria for the Property you want to Invest in
1)WhatYou’llConsider 2)WhatYou’llBuy
1
WHATAMILOOKINGFOR?
61
IN
Great Lot Great Country Great City Great Neighborhood Great Street Appearson Page179
ZEROING
ON A GREATLOCATION
62
Hassle Cash Flow Liquidity Appreciation Low-End Propertie s Average Properties High-End Propertie s Low High Medium Great Deals Good Deals Appearson Page182
BEINTHEMIDDLEOF THEMARKET
MILLIONAIREREALESTATEINVESTOR’S CRITERIAWORKSHEET(1OF2)
63
Country State/Province Taxes RentalsLaws Weather County/Parrish City/Town Taxes Services Neighborhood SchoolDistrict Crime Transportation Shopping/Recreati on Street Traffic Size Lot Zoning AdjoiningLots LotSize Trees Privacy Landscaping Orientation/View
1) LOCATION
SingleFamily Home Condo TownHome MobileHome ZeroLot/Garden SmallMultiFamily Duplex Fourplex LargeMultifamily/Commercial Land/Lot New/Preconstruction Resale Urban Suburban Exurban Rural Resort/Vacation Farm/Ranch ECONOMIC PriceRange From$ To$ Discount
CashFlow$
Mo
2) TYPE
%
/
Appreciation %/Yr
Appearson Page184
MILLIONAIREREALESTATEINVESTOR’S CRITERIAWORKSHEET(1OF2)
4)
CONDITION6) Needs No
Repair
NeedsMinorCosmetic Needs
MajorCosmetic Needs
Structural NeedsDemolition
5)
CONSTRUCTION
Roof Walls(Exterior)
Foundation
Plumbing
Water/Waste
Wiring
Insulation
Heating/AC
FEATURES7)
Age/YearBuilt
Bed
Baths
Living Dining
Stories
SquareFeet
Ceilings ft.
Parking/Garage
Kitchen
Closets/Storage
Appliances(Gas/Electric)
FloorPlan(Open,In-law)
Patio/Deck
Basement
Attic Lighting
Walls(Interior)
LaundryRoom
Appearson
Page184
AMENITIES
Office
Play/ExerciseRoom
SecuritySystem
Furniture/Furnishings
SprinklerSystem
Workshop/Studio In-Law
Suite Fireplace(s)
Pool
HotTub
CeilingFans
WindowTreatments
SatelliteDish
Internet(Broadband)
Sidewalk
Energy Efficient Features
Other: ___________
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WHOCANHELPMEFINDIT?
2 Identify the People who can connect you to Properties that meet your Criteria
1.Owners
MLSListings
REOPre-Foreclosures
•Bankruptcy
•Eviction
•REOTrustees
•Divorce
Resources Advocates
Network (Referrers) Intermediaries (Gatekeepers) • • • • • • • • • • FSBOs
CourthouseClerks
AdministrativeAssistants InformationProviders
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2. (Sellers)
Expireds
Attorneys
3.Leads
Builders/Developers BankOfficers LoanOfficers
•Probate
• • • • • • • • • • Absentees Landlords Wholesalers OwnersinanArea
CoreAdvocates
Accountants
HUDOfficials
HOWWILLIFINDTHEPROPERTYOR PEOPLECONNECTEDTOIT?
3 Systematically Lead Generate for Properties and People
1.Prospecting (Seek)
Telephone•Research
Face-to-Face•Newspaper
Walking/DrivingArea•PublicPostings
InvestmentClubs/Events(HUD,Foreclosure,etc.)
CommunityEvents•MultipleListingsService
CourthouseProceedings•Internet
•Probate•BusinessPublications
•Foreclosure•PaidInvestorProspect
•Estate/TaxSalesListings
•Bankruptcy/Evictions
•Divorce
2.Marketing (Attract)
BusinessCards•NewspaperAds
DirectMail•MagazineAds
Internet/Email•Signs
Flyers•Billboards
TargetedLetters
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• • • • • • • • • • •
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Networking Real Estate Agents/MLS Driving/Walking Newspaper & Ads Foreclosure Listings For Sale By Owners Internet/Database Research Targeted Marketing Other 10% 9% 7% 4% 3% 2% 5% 32% 28% Appearson Page198
How Millionaire Real Estate InvestorsFindOpportunity
THEFIVELAWSOFLEAD GENERATION
1)Never compromise
—You’reonlylookingforproperties that meet your Criteria and motivated sellers who will meet your Terms.
2)Be a shopper not a buyer
—It’sbettertomissagoodone thanbuyabadone.
3)Timing matters
—Bethefirstorlastpersontomakeanoffer.
4)It’s a numbers game
—Thequalityisinthequantity.
—Protectyourtimeand
5)Be organized and systematic yourmoney.
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1.QualifyallSuspects
2.FocusonlyonProspects
69 WHICHPROPERTIESARETHE REALOPPORTUNITIES? 4 Separate Suspects from Prospects
THEFLOWOFYOURLEAD GENERATIONMODEL
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Separate Suspects from Prospects Knowyour Criteria Prospect& Marketfor Leads YourWork& LeadsNetworks IdentifyPeople whocan connectyou withProperty Appearson Page219
71 3 1 30 10 Buy Offers Look At Consider THELAWOFNUMBERS Appearson Page216
72 5 The Acquisition Model •MasterTermsforMakingOffers& ClosingDeals •Buy&Sell •Buy&Hold
73 THEACQUISITIONMODELOFTHE MILLIONAIREREALESTATEINVESTOR V o l u m e V o l u m e CASH CASH FLOW & EQUITY P r o f i t M a r g i n P r o f i t M a r g i n
Cash-Building
Wealth-Building Platform Buy & Sell Control & Assign Buy, Improve & Sell Find & Refer Buy & Hold Buy, Improve & Hold Lease Option 4 3 2 1 3 2 1 Appearson Page222
Your
Platform Your
BUY, IMPROVE & SELL FORMAXIMUMRETURN
74
Initia l Profit UNDERIMPROVED Minimum Return PRIME IMPROVEMENTS Maximum Return OVERIMPROVED Net Los s Net Profit CostofImprovements Appearson Page232
TermsWorksheet:Buy&Sell
75 FindersFee Inspec ion CosngCosts To alCostofPurchase Afte RepairVaue(ARV) FastSelFactor FastAfterRepairVaue(FARV) Discount/Proft 1Cos ofPurchase(COP 2Cos ofRepar(COR) 3CarryingCosts(CC) 4Cos ofSae(COS) PurchasePrce Amoun Financed TotalInves men AgentCommissons HomeWarranty TteInsurance&Fees BuyerCosingCosts To alCostofSaes Taxes Fees/Insurance Utltes/Services DebtServce PropertyUpkeep To alCar yngCos CosmetcMinor CosmetcMaor S ruc ura Fxtures/Appiances Landscaping ContngencyFac or To alCostofRepar = = = $ + $ + $ = $ + $ + $ + $ + $ = $ $ $ $ $ $ $ $ $ $ $ $ + $ + $ + $ + $ $ = $ + $ + $ + $ + $ + $ + $ = $ 000 12500 80000 92500 75000 35000 30000 90000 12000 242000 6,75000 48500 1,12500 2,00000 10,36000 320000 000 180000 125000 20000 64500 709500 125,0000 0 12,50000 1125000 0 33,75000 92500 709500 2,42000 10,36000 57,95000 3000000 27,95000 10% 10% 30% –––––––1 2 3 4 TermsWorksheet Cos o SaleSub-Worksheet CarryingCos sSub-Worksheet CostofReparSub-Worksheet CostofPurchaseSub-Worksheet
O p e r a t i n g T e r m s P u r c h a s e T e r m s
TermWorksheet:Buy&Sell
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AfterRepairValue(ARV) FastSellFactor FastAfterRepairValue(FARV) Discount/Profit 1CostofPurchase(COP) 2CostofRepair(COR) 3CarryingCosts(CC) 4CostofSale(COS) PurchasePrice AmountFinanced TotalInvestment = = = $ $ $ $ $ $ $ $ $ $ $ 125,0000 0 12,500.00 112,500.0 0 33,75000 925.00 7,095.00 2,420.00 10,36000 57,95000 30,000.00 27,950.00 10% 30% –––––––TermsWorksheet P u r c h a s e T e r m s
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1 2 CostofRepairSub-Worksheet CostofPurchaseSub-Worksheet Finder'sFee Inspection ClosingCosts TotalCostofPurchase CosmeticMinor CosmeticMajor Structural Fixtures/Appliances Landscaping ContingencyFactor TotalCostofRepair + $ + $ + $ + $ + $ + $ = $ $ + $ + $ = $ 0.00 125.00 80000 92500 3,200.00 0.00 1,80000 1,250.00 200.00 64500 7,09500 10% O p e r a t i n g T e r m s
TermWorksheet:Buy&Sell
TermWorksheet:Buy&Sell
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3 4 CostofSaleSub-Worksheet CarryingCostsSub-Worksheet AgentCommissions HomeWarranty TitleInsurance&Fees BuyerClosingCosts TotalCostofSales Taxes Fees/Insurance Utilities/Services DebtService PropertyUpkeep TotalCarryingCost + $ + $ + $ + $ = $ + $ + $ + $ + $ + $ = $ 750.00 35000 300.00 900.00 12000 2,42000 6,750.00 485.00 1,12500 2,000.00 10,36000 O p e r a t i n g T e r m s
79 THEBUY&HOLDQUADRANT 1 3 2 Appreciation NoCashFlow NoAppreciation NoCashFlow Appreciation& CashFlow NoAppreciation CashFlow (WEALTH-BUILDING PLATFORM) CASH FLOW 4 A P P R E C I A T I O N Appearson Page234
TermsWorksheet:Buy&Hold
80 PurchasePrce MarketValue(MV) Ne Opera ingIncome FindersFee Inspec ion CosngCosts TotalCos ofPurchase Dscoun /P oft 30-YearMortgage 30-YearMortgageRate 30-YearPrncpe&Inte es 15-YearMortgageRa e 15-YearMortgageRate 15-YearPrncpe&Inte es GrossRen a Income Vacancy Ne Ren a Income Expenses PropertyManagemen LeasngCos s(Annual/12 Man enance(Annua Rese ve/12 Utltes Prope tyTaxes Insurance Othe Amoun Financed DownPayment 1Costo Pu chase(COP 2Costo Repai COR) Tota Investment 3NetOperatngIncome(NOI) 4P incple&Interest CashFowMonthy Annual Cosme icMno CosmetcMajo S ructura Fxtures/Applances Landscapng ContngencyFactor TotalCos ofRepar $ – $ = $ – $ = $ + $ + $ = $ – $ – $ = $ $ + $ + $ = $ + $ + $ + $ + $ + $ + $ = $ –$ –$ = $ –$ –$ –$ –$ –$ –$ –$ = $ $ $ 000 12500 80000 92500 320000 000 180000 1 25000 20000 64500 7 09500 1 00000 6000 94000 000 1667 2000 000 25000 7500 1500 56333 12500000 2500000 10000000 8000000 2000000 92500 7 09500 2802000 56333 55554 779 697% 55554 743% 71772 = 08% 20% 20% 10% 38% 0200 % 0300 % $9352 ofMV of MV of MV 3766 7 6,45000 1 2 3 4 Terms Worksheet Cost of Repair Sub-Worksheet Cost of Purchase Sub-Worksheet Pr nc p e & Interest Sub-Worksheet Net Operating Income Sub-Worksheet
O p e r a t i n g T e r m s P u r c h a s e T e r m s
81 PurchasePrice MarketValue(MV) Discount/Profit AmountFinanced DownPayment 1CostofPurchase(COP) 2CostofRepair(COR) TotalInvestment 3NetOperatingIncome(NOI) 4Principle&Interest CashFlowMonthly/Annual = = = $ $ $ $ $ $ $ $ $ $ $ 125,000.0 0 25,000.00 100,0000 0 80,00000 20,000.00 92500 7,09500 28,020.00 563.33 555.54 7.79 = 20% 20% $93.52 = + + ––––TermsWorksheet P u r c h a s e T e r m s
TermWorksheet:Buy&Hold
82
TotalCostofPurchase Finder'sFee Inspection ClosingCosts CosmeticMinor CosmeticMajor Structural Fixtures/Appliances Landscaping ContingencyFactor TotalCostofRepair $ + $ + $ = $ + $ + $ + $ + $ + $ + $ = $ 0.00 12500 80000 925.00 3,200.00 0.00 1,800.00 1,250.00 200.00 64500 7,095.00 10% 6,45000 1 2 CostofRepairSub-Worksheet CostofPurchaseSub-Worksheet O p e r a t i n g T e r m s
TermWorksheet:Buy&Hold
83 3 4 Principle&InterestSub-Worksheet NetOperatingIncomeSub-Worksheet NetOperatingIncome 30-YearMortgage 30-YearMortgageRate 30-YearPrinciple&Interest 15-YearMortgageRate 15-YearMortgageRate 15-YearPrinciple&Interest GrossRentalIncome Vacancy NetRentalIncome Expenses PropertyManagement LeasingCosts(Annual/12) Maintenance(AnnualReserve/12) Utilities PropertyTaxes Insurance Other = = $ $ $ $ $ $ $ $ $ $ $ $ $ 6.97% 555.54 743% 71772 0.00 16.67 20.00 0.00 250.00 75.00 15.00 56333 1,00000 6000 940.00 38% 0.8% 0.200 % 0.300 % ofMV of MV of MV 376.6 7 –––––––––O p e r a t i n g T e r m s
TermWorksheet:Buy&Hold
84 CHOOSINGASTRATEGY Buy & Live Get Perspective Understand Value Buy & Sell Buy & Hold 1 2 3 NoMoney NeedMoney HaveMoney Appearson Page248
85 TheSTACK PGIPotentialGrossIncome-VC Vacancy&Collections+OIOther Income = EGI Effective Gross Income -OE OperatingExpenses =NOINetOperatingIncome-DS DebtService =CFBTCashFlowBeforeTax-T Tax =CFATCashFlowAfterTax
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91 Prospect Inspect Properties Understand& PathMoney BigWhy BigGoals BuildNetwork DefineCriteria EvaluateResults Engage Network MakeOffers& NegotiateTerms AcquireDeals BecomeAnInvestor Build&WorkDatabase Leads Market Interview Sellers LearnReal EstateMarket
Acquire Knowledge & Focus Generate Leads Convert Suspects To Prospects Buy Real Estate Get Motivated Gain Insight
PUT IT ALL TOGETHER
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Every Week (1-2 Hours) Every Week (2-4 Hours) Every Month (2-4 Hours) Ongoing (as needed) 1. 2. • • 1 . 2 . 3. LeadGeneratefor •SellersandRealEstate •WorkandLeadsNetwork Review •PersonalBudget •NetWorthWorksheet SeeRealEstate UpdateYourDatabase MeetwithInnerCircle EvaluateHoldings •ImproveCashFlow •ImproveValue •ImproveEquityPositions UpdateFinancials •PersonalBudget •NetWorthWooksheet 1 . 2 . 3 . 4 . 5 . MakeOffers DoDeals DotheWork •Improve&FLIP •Improve&HOLD •Rent •Manage •Maintain Engage Work Network Study&Learn Appearson Page348
TIMEBLOCKTOSUCCESS!!
93 1 Meditate&Pray 5 ReviewBudget& NetWorthSheet 3 Hug,Kiss&Laugh 2 Exercise&Eat 6 LeadGenerate& SeeRealEstate 4 Plan&Calendar SpiritualEnergy EmotionalEnergy InvestmentEnergy MentalEnergy PhysicalEnergy WealthBuildingEnergy THE MILLIONAIRE REAL ESTATE INVESTORENERGYPLAN Appearson Page350
THEFOURFINANCIAL SEASONSOFYOURLIFE
You Share What You’ve Earned & What You’ve Learned
You Work to Learn
You Work to Earn
You Protect What You’ve Earned
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Education
Accumulation
Protection
Distribution
Wealth
Wealth
Wealth
Wealth
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Appearson
