Presenting Real Estate Investment Numbers to J.V. Partners What my slide deck looks like (with a little bit of explanation) ChrisDavies.ca
Jan 24, 2015
Presenting Real Estate Investment Numbers to J.V. Partners
What my slide deck looks like (with a little bit of explanation)
ChrisDavies.ca
Purchase $190,000.00
Down Payment $19,000Legal Fees $ 1,000Reserve Fund $ 4,500Title Insurance $ 1,000Insurance $ 1,000Assessment $ 3,300
Cash to Close $29,800
Purchase $190,000.00
Down Payment $19,000Legal Fees $ 1,000Reserve Fund $ 4,500Title Insurance $ 1,000Insurance $ 1,000Assessment $ 3,300
Cash to Close $29,800Plus
Renovations $25,000(that’s $54,800 in total)
Purchase $190,000.00
Down Payment $19,000Legal Fees $ 1,000Reserve Fund $ 4,500Title Insurance $ 1,000Insurance $ 1,000Assessment $ 3,300
Cash to Close $29,800Plus
Renovations $25,000(that’s $54,800 in total)
Purchase $190,000.00
Down Payment $19,000Legal Fees $ 1,000Reserve Fund $ 4,500Title Insurance $ 1,000Insurance $ 1,000Assessment $ 3,300
Cash to Close $29,800Plus
Renovations $25,000(that’s $54,800 in total)
Purchase $190,000.00Renovations $25,000
Appraised Value After Renovations:
$250,000
A Warning About These Numbers:Renovation Costs are estimates. In reality (Aug/08), the actual cost was $25,323.34. Renovation costs can change rapidly, and $25,000 is an estimate only.
A Warning About These Numbers:The analysis beyond this point is based on a few rules, and is an projection and estimate only. All calculations are simple, rather than compound.
NEVER use these as anything but an estimation, a best guess, or a projection.
Do your own homework!
Cash Flow AnalysisIncome
Rent $1,500.00
ExpensesProperty Mgmt (8%) $ 120.00 Condo Fees $ 255.00 Property Taxes $ 88.00 Vacancy (4%) $ 60.00 Repairs & Maint (4%) $ 60.00 Mortgage (4.5%, I Only) $ 671.71
Total Expense $1,254.71
Net (Monthly): $ 245.29
Total Positive Cash Flow
$2,943.49
$6,587.18
$10,876.07
$15,842.44
$21,520.15
Year 1 Year 2 Year 3 Year 4 Year 5
Annual and Total Positive Cash Flow
Annual TotalYear 1 $2,943.49 $2,943.49
Year 2 $3,643.69 $6,587.18
Year 3 $4,288.90 $10,876.07
Year 4 $4,966.37 $15,842.44
Year 5 $5,677.71 $21,520.15
Appreciation Model: Estimated 5% per Year for Five Years
Value at Purchase $250,000.00
Estimated Value 2013 $312,500.00Mortgage Outstanding $179,122.50
Appreciation $133,377.50Cash Flow $21,520.15
Estimated Gross Profit $154,897.65
Gross Profit $154,897.65
Investment Returned $54,800.00
Net Profit $100,097.65
Split 50/50 $50,048.83
Investment $54,800.00
Estimated Return $50,048.83
Return on Investment 91% (Five Years)18% Per Year
Investment $54,800.00
Cost of Borrowing $13,700$54,800 for five years at 5%.
Investment $54,800.00
So instead of costing you $54,800 in cash, it can actually cost you $13,700.
Investment $54,800$13,700
Investment $54,800$13,700
That’s like getting a real estate investment on sale for 75% off!
You could buy 4 properties for the same amount of cash.
Assuming you can borrow $250,000 (or so) for the down payments, closing costs, and renovations.
And find 4 properties just like this one.
Investment $54,800$13,700
But the real point is:
Investment $54,800$13,700
Estimated Return $50,048.83
Return on Investment 365% (Five Years)73% (Per Year)
Investment $13,700
Estimated Return $50,048.83
Return on Investment 365% (Five Years)73% Per Year
You find me a stock or mutual fund that will do 73% a year on the conservative side.
Investment $13,700
Estimated Return $50,048.83
Return on Investment 365% (Five Years)73% Per Year
This projection uses 5% per year as an estimated increase in property values.
The average in Edmonton since 1962 is 7.91% per year.
Imagine what one year with a 10% increase would do….
Basic Rules of This Presentation:
• This presentation, as well as the calculations, estimations and projections contained within it, have been created for the purpose of communicating the way I present information, and not the information itself.
• Projections are calculated using simple math, and not compounded.
• Every reasonable effort has been made to make accurate calculations. I am not immune to making mistakes when playing with rather large spreadsheets. The numbers and the estimated rates of change are not to be taken as a guarantee or promise of return. All real estate investments are speculative and you MUST do you own due diligence.
• This is not a solicitation. This presentation is only for information purposes, intended to illustrate how I communicate.
• Please see my Legal Disclaimer.
Credits:
From Stock Exchange (click to link)
Taken by me, circa August 2005.
For more real estate investor resources, check out my Real Estate and Property Management Blog