How to Present a Deal to Investor Buyer

What you SHOW to the Buyer

Thanks

I will go cancel the one I posted for you. Tammy

buyers with:

STUDENT HOUSING RENTAL UNIT FOR SALE. Cash flow $434 (8% Cap Rate) to $952 (18% Cap Rate) per mo. (See break downs)
*Non-stop flow of tenant candidates. Consistently rented last three (3) years.
*Leased thru July at $925/mo plus tenants pay utilities. If any rehab is done to Kitchen, rent goes up $50/mo per current lease agreement.
* $114,240 Profit after expenses over 10 years
*Located 1.5 blocks W of Dart Auditorium at Lansing Community College
*Property is licensed as a rental
To see full property features and photos, go to:
http://www.postlets.com/repb/8862459
315 W Genesee St. Lansing, MI 48933
5 br, 2 full bth, 1900 Sq ft, built in 1907
ESTIMATED ARV= $75,600
ESTIMATED REHAB if done=$10,000 (Updating could be done to Kitchen $1900, 2 full bths $3800, Interior painting $1900, Carpeting $1900, New plywood on front porch with all weather carpet $500)
Purchase Price $52,500
CASH DEALS ONLY.

Current Operating Income= $925

Current Operating Expenses
Hazard Insurance with Rental coverage: $84/mo
Monthly Maintenance Reserve: $80/mo (Optional)
Monthly Property Management: $93/mo (Optional)
Monthly Non-Homestead Taxes: $234/mo
Monthly Cash Flow= $434 Annual Cash Flow=$5,208
Cap Rate= 8%
Cap Rate based on Annual Cash Flow ($5,208) divided by sum total of Purchase Price ($52,500), Closing Costs (1500), and Rehab ($10,000)

AFTER CURRENT LEASE EXPIRES AND YOU WERE TO LEASE EACH ROOM AT $300/EA PLUS 1/5 UTILITIES:
Operating Income= $1,500

Operating Expenses
Hazard Insurance with Rental coverage: $84/mo
Monthly Maintenance Reserve: $80/mo (Optional)
Monthly Property Management: $150/mo (Optional)
Monthly Non-Homestead Taxes: $234/mo
Monthly Cash Flow= $952 Annual Cash Flow=$11,424
Cap Rate= 18%
Cap Rate based on Annual Cash Flow ($11,424) divided by sum total of Purchase Price ($52,500), Closing Costs (1500), and Rehab ($10,000)

I'll take any feedback......

Thanks for starting this thread Mike

Nice job!

Thanks for the reply

NEXT...

Mike--Great Topic, I am looking forward to Following this thread. I have been trying to figure this part out and I can see I was way off base.

Louis--Thank you for your example. This will help me very much.

I hope to see some other examples.

PROJECT SUMMARY - FLIP
PURCHASE/REHAB ASSUMPTIONS

Purchase Price 50,000.00
Rehab Cost 20,000.00
Total Holding and Closing Costs (not inc. Sale) 3,000.00
Total Financing Costs (not inc Lender Split) -
Total Project Cost Basis 73,000.00
Total Amount Financed -
Total Cash Committed 73,000.00

RESULTS
Projected Resale Price 100,000.00
Projected Cost of Sale 7,000.00
Lender Split of Profits -
Flip Profit 20,000.00
ROI 27.40%

Thanks for posting this Mike. I hope more people will start posting their deals so we can all learn from them.

Hi Mike,

As Always.......you put out a lot of valuable information on this site.....

Thank You My Friend

Regards,
Sharon

when you RUN the numbers and MEET or EXCEED your Buyers criteria with Real numbers, NOT manipulated, it SHOWS them that You have done YOUR homework, You have what They Want, and they should realize this IS a Deal and they would be FOOLISH not to take ACTION and Buy this Deal!!

You can do the same as above, for Buy/Hold Buyers and show the rental rates, costs, and ROI and then, if they don't Know, show them HOW they can recoup their investment $$$$$$ and Repeat the process to do the Next deal YOU have for THEM.

This action you take to think outside the box will KEEP your Buyers coming back for MORE!! Learn the STRATEGIES and HOW to put the deal together.

You should have a presentaion for that too, outlining the cost, return, vacancy, depreciation, etc and the results of refi creating an INFINITE return on their investment.

Rinse and Repeat... it's EASY

Post YOUR presentation NOW and show What YOU do and it can HELP EVERYONE here in the DG Family and we can ALL Learn.

"I" would NOT put the same amount in repairs to RENT compared to Flip ,but using the Same numbers as above you can see the results (which would be MORE)

BUY/HOLD

Projected Rehab Period (Months)
3.00
After-Repair Value (ARV) for RENT $100,000
Months to Close on Refi (After Rehab) 3.00
Total Capital Needed $73,000

Cash Required $73,000
Total All in Cost at end of Rehab $73,000
Refi % of Appraisal (ARV) 80%
New Mortgage Rate 6.50%?
# of Amortization Years 20
Refi Discount Points and Misc Costs (%) 3%

Net Operating Income (monthly) $1,110
New Mtge Pmnt (monthly) ($596)
Refi Loan Amount $80,000 = 80%
Cash Out at Refi $77,600
Profit at Refi $4,600
ROI on Downpayment/Cash Inv. 12.60%
Original money tied up after refi $0
Equity Left $20,000
Cash Flow (Monthly, Pre-Tax) $514
Cash-on-Cash (Annual, Pre-Tax) Infinite

Learn about Depreciation and Land Trust

Come on ppl...get YOURS up here!

Come on ppl- whats the problem??

i so would love a one on one chat session with you mike so this would all make sense to me WHY do i not understand this ??? UGHHH!!

Thanks Mike for your suggestion and example you posted Will be helpful and appreciated by all of us. I promise to do the same when I get my first deal. In the meantime, I'm a sponge..absorbing all info I can to help me be the best REI/Wholesaler I can be. Will be watching for more responses to your request. Best of luck to all of you DG.ers in reaching your real estate goals for 2013. Semper Fi D-LO

GREAT STARTER HOME/ FIXER-UPPER/ RENTAL
Purchase Price is $58K.
Needs $8K in cosmetic repairs. Total investment is $66K.
ARV is $87K. (5 Recent comps range from $84K-$91K)
This is a 3 Bed/1.5 Bath /2 Car SFR(Single family residence)
Built in 1955, the house is solid. Covers 1,094 SF. Lot size is 7,000 SF.
Fairly new roof, 7 years old, as is Heat and Air.
Needs paint, upgrades, minor repairs, landscaping, fencing.

Popular neighborhood,has good Schools,Shopping and a great Park.

As a Rental:
Monthly Rent: $ 850, minus expenses:
Insurance $ 59
Taxes $ 110
Prop Mangt. $ 64
Maint/Vacy. $ 64
Net Oper Inc. $ 553 = $6,636 per Year, Cap Rate is 10%.

This is an all cash transaction, and based on these numbers the total investment will be recouped in 10 years.

Thank you Frank!

I'm STILL waiting (like everyone else) for the others to post.

NEXT.......

Hi Mike thanks for sharing, never to young to learn and get better, your awesome, Jim

Cash Deal
Purchase Price $29,000 Price
Down Payment $29,000
Closing Costs $1,000
Deferred Maintenance Requirements $7,000 Estimated Rehab to Rent Cost
Gross Property Acquisition Costs $37,000 Cash Investment

Mortgage $0

Expenses
Principal Note Payment - P&I NA
Tax $49 Based on current tax bill
HOA Fees $0 Current HOA Dues
Utilities
Electricity $0
Water/Sewer/Trash $0
Insurance $50 Estimated Insurance Costs
Vacancies $56 Assumes 8% Vacancy Rate
Maintenance $56 Assumes 8% Maintenance Reserve
Management $70 Assumes 10% Management Costs
Total Monthly Expenses $281
Total Annual Expenses $3,372

Gross Income
Monthly Rental Income $700
Gross Annual Income $8,400
Net Income
Monthly Net Income $419
Annual Net Income $5,028
Monthly Net Excluding Reserves $531 Assuming No Vacancy or Maintenance Exp
Annual Net Income Excluding Reserves $6,372 Assuming No Vac/Maintenance Exp

Profitability Metrics
Debt Service Coverage Ratio N/A
Cash on Cash Return 13.59%
IRR 26.52%
IRR at 10.00% over 3 years - sale price 150% of cost
Cap Rate 13.59% Annual return on investment before debt service

Income Proforma Income
Unit 1 700
Unit 2
Unit 3
Unit 4
Total $700

Assumptions
Down Payment 100.0%
Closing Costs $1,000.00
Primary Mortgage Interest Rate NA
Primary Mortgage Term NA
Secondary Mortgage Interest Rate NA
Secondary Mortgage Term NA
Annual Taxes $590
Annual Insurance $600 Estimate of Insurance Premium
Annual HOA Fees $0 Current HOA Fees
Annual Utilities $0 Owner-Paid Utilities
Property Management 10.00% Property Management Fees
Vacancy Reserve 8.00% Vacancy Rate
Maintenance Reserve 8.00% Maintenance Expenses

There were "no" comps available for this surrounding area. However i called around and looked in public records and what not what the houses that were appraised at this year. here is information that i think is valuable.

I also got the lock box codes to these homes. I will send what i wrote down all in a nutshell. LOCK BOX CODE # is.....(then i gave him the #) PLEASE TEXT ME WHEN YOU GO LOOK AT IT, SO I CAN TEXT FRED THAT YOU ARE GOING TO LOOK AT IT. I gave my drivers license id to let you and whomever in He knows you are going to possibly look at it, just let me/him know when

I gave the whole address.....
314 W Apache St
85003
FSBO $28,000.00
Estimated ARV for property is assessed at +/- $96,527.00
2bed/1bath/879sqft/year built 1941

Current Owner, says "low cost fixer-upper" "full kitchen remodel, however outside is good and roof is good".

Last sale was Warranty Deed Documentation # 69812 dated 1/24/2011

Neighboring properties were appraised at +/- est ARV value ranging....
310 w apache/580sqft home/est appraised value $96,856.00
306 w apache/3bed/2bath/1192sqft/est appraised value $42,798.00
318 w apache/2bed/1bath/427sqft /est appraised value $66,571.00
322 w apache/2bed/1bath/588sqft/est value $78,227.00
329 w mohave st/2bed/1bath/950sqft/est value $104,704.00

Tax information
assessed total value $11,100.00
land 2,200.00
improvement value 8,900.00
assessment year 2013
taxable amount 1,100.00
property tax 225.46
tax area 11300
tax year 2012
delinquent year 2011

Because i live far away, i dont know how my investor is going to rehab the place. He can either go cheap or expensive. So i did NOT put the rehab costs in. He is a builder himself and so i talked to him and said, you go check it out and if its a good deal, then cool....if you want to put more into it and it makes it a "not good deal" then ill keep finding them with a big enough spread.

I gave him the choices to figure that rehab cost out and his profit in return.

Plus i am only bird-dogging for him right now until i get my own mula to actually put it into contract this will be my first official deal (other than my house i bought and my moms house i sold...making 2 deals thus far) in my investing biz

Im waiting to hear back of what he thinks of the properties..... if its a go...YAY...if not...i keep moving forward!!

NEVER GIVE UP!!!!
"its not how many times you fall down that counts, its how many times you stand back up!!!"

Good work never give up keep moving to the next one and next one.

keep 'em coming!

I KNOW everyone appreciates it.

pm me with email addy due to NOT being ALLOWED to show it here.

.........