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Investor presentation-2012
- 1. Unlocking the Door to a
World of Real Estate Wealth
Presented By: Mark Rusnak
Associate Broker & ABR, CDPE,
CIAS, CLHMS, e-Pro, SRES
@ RE/MAX ® Allegiance
Loehmann’s Plaza
4000 Virginia Beach Blvd # 164
Virginia Beach, VA 23452
757-718-8865
WWW.MarkSold.com
Copyright © 2011 Distressed Property Institute, LLC
- 2. What Will We Cover?
This presentation is designed to inform you of your
options regarding residential real estate
investments. In it, you’ll learn:
1. How real estate compares to other assets for
growth potential.
2. What the benefits of real estate investing are.
3. The truth behind the most common myths of real
estate investing.
4. How you can optimize your investing power
through real estate.
Copyright © 2011 Distressed Property Institute, LLC
- 3. About Me
• Licensed as an Associate Broker in Virginia
• Certified Investor Agent Specialist - CIAS
• Certified Luxury Homes Marketing Specialist, CLHMS
• Seniors Real Estate Specialist, SRES
• Accredited Buyer Representative, ABR
• Internet Marketing “e-Pro”
• Certified Distressed Property Expert, CDPE
• RE/MAX Hall of Fame Member
• Over $75 Million Dollars in Career Sales
• Selling “Hampton Roads” Virginia Since 1990.
• Member in good standings with the National Association of Realtors,
Virginia Association of Realtors & Hampton Roads Realtors
Association, National Association of Residential Property Managers
Copyright © 2011 Distressed Property Institute, LLC
- 4. My Promise to You
I am committed to providing the highest quality
service to you through focus, honesty and
integrity. As a CIAS, I adhere to the following
tenets:
1. I always do what is best for you, and will never let
you close on a bad deal.
2. Real estate should be purchased for cash flow only;
appreciation is a bonus.
3. Real estate investing is a non-emotional event; I
always do the math.
4. You, as an investor, play a vital role in the real estate
market and deserve to be treated accordingly.
Copyright © 2011 Distressed Property Institute, LLC
- 5. My Mission Statement
To provide the highest level of service, known to the
industry for both my clients & customers.
To help ease the stress and anxieties associated with
moving across town or across the country.
To earn the respect & loyalty of every client & Customer
every day through honesty & Integrity.
Therefore earning & maintaining the reputation as...
“The Satisfaction Specialist”
Copyright © 2011 Distressed Property Institute, LLC 6
- 6. Real Estate and
Household Wealth
Copyright © 2011 Distressed Property Institute, LLC
- 7. Where is Household Wealth
Stored?
• $6.3 trillion dollars of household wealth is
in home equity*
• 11.7% of the total wealth in America is in
home equity
• 42% of family assets are real estate
assets**
*Source: The Joint Center for Housing Studies of Harvard University, The State of the Nation’s Housing: 2010, 13-14
**Source: Bucks, Brian K. et al. “Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of
Consumer Finances.” Federal Reserve Bulletin, vol. 95 (February 2009), A28.
Copyright © 2011 Distressed Property Institute, LLC
- 8. Real Estate
vs.
Other Assets
Copyright © 2011 Distressed Property Institute, LLC
- 9. Bonds and Certificates of Deposit
Bonds and CDs typically have low rates of
return
Copyright © 2011 Distressed Property Institute, LLC
Copyright © 2011 Distressed Property Institute, LLC
- 10. Mutual Funds
• Often underperform the market
• Average 3.66% 10-year return (2000-
2010)*
• Managed by someone else
• Dividends reinvested, not paid to investor
*Source: http://screen.morningstar.com/FundSearch/FundRank.html
Copyright © 2011 Distressed Property Institute, LLC
- 11. Real Estate
Real estate has lost value 4 years in the
past 41 years
Source: HUD Historical Data: www.census.gov/indicator/www.newsreconst.pdf
Copyright © 2012 Distressed Property Institute, LLC
Copyright © 2012 Distressed Property Institute, LLC
- 12. S&P 500
S&P 500 has lost value 13 years in the
past 41 years
Source: S&P 500 data: http://moneycentral.msn.com/stock_quote?symbol=$inx
Copyright © 2012 Distressed Property Institute, LLC
Copyright © 2012 Distressed Property Institute, LLC
- 13. Stocks
Stocks in S&P 500 have averaged a 1.82%
dividend yield since 2000
Source: S&P 500 data: http://moneycentral.msn.com/stock_quote?symbol=$inx
Copyright © 2011 Distressed Property Institute, LLC
Copyright © 2011 Distressed Property Institute, LLC
- 14. Real Estate
Appreciation of 20.4% since 2000 despite
negative economic factors
Source: HUD Historical Data: www.census.gov/indicator/www.newsreconst.pdf
Copyright © 2012 Distressed Property Institute, LLC
Copyright © 2012 Distressed Property Institute, LLC
- 15. Real Estate vs. Stocks
$100,000 invested in real estate in 2000 would have
generated $77,755 of cash flow by 2010
Source: HUD Historical Data: www.census.gov/indicator/www.newsreconst.pdf
http://moneycentral.msn.com/stock_quote?symbol=$inx
Copyright © 2012 Distressed Property Institute, LLC
Copyright © 2012 Distressed Property Institute, LLC
- 16. The Benefits of
Real Estate
Copyright © 2011 Distressed Property Institute, LLC
- 17. Cash Flow Can Be A Steady &
Significant Stream of Income
• Most stocks don’t provide cash flow
• Cash flow increases over the years
• Cash flow is liquid and can be reinvested
Copyright © 2011 Distressed Property Institute, LLC
Copyright © 2011 Distressed Property Institute, LLC
- 18. Appreciation
• Appreciation should always be considered
a bonus
• Yearly home appreciation averaged more
than 5% over past 40 years
• You can help property appreciate
(improvements)
• Home appreciation less volatile than the
stock market
Copyright © 2011 Distressed Property Institute, LLC
- 19. Appreciation
Source: HUD Historical Data: www.census.gov/indicator/www.newsreconst.pdf
Copyright © 2011 Distressed Property Institute, LLC
Copyright © 2011 Distressed Property Institute, LLC
- 20. Leverage
Most investments don’t offer leveraged
buying power
Copyright © 2011 Distressed Property Institute, LLC
Copyright © 2011 Distressed Property Institute, LLC
- 21. Leveraged Real Estate Purchases Have
Increased Buying Power
•Earn returns with other people’s money
•Leverage is a key way to increase returns
•Leverage is largely unique to real estate
Copyright © 2011 Distressed Property Institute, LLC
Copyright © 2011 Distressed Property Institute, LLC
- 22. Tax Benefits
• Depreciation allows yearly deductions on
improvements to the property
• 1031 exchanges defer capital gains taxes
• Investing with Self Directed IRA’s
Copyright © 2011 Distressed Property Institute, LLC
- 23. Investors Can Deduct the Following
Items Related to Rental Property:
• Advertising • Local Transportation
• Cleaning & Maintenance Expenses
• Commissions • Long distance travel
• Depreciation • Losses
• Employees, Contractors, N • Professional Services
on-Employed Staff • Repairs
• Insurance • Utilities
• Interest
• Legal Fees
Copyright © 2011 Distressed Property Institute, LLC
- 24. Investors Can Depreciate Property as
Tax Deferred
Improvements Subject to Depreciation
Source: IRS Publication 527: Residential Rental Property, 5. (www.irs.gov/pub/irs-pdf/p527.pdf0
Copyright © 2011 Distressed Property Institute, LLC
Copyright © 2011 Distressed Property Institute, LLC
- 25. How Depreciation Works
1) Purchase a property worth $100,000.
$85,000 worth is attributed to the
improvement (house).
2) The basis for depreciation is $85,000.
3) Calculate the first year’s depreciation based
on the month of purchase.
4) Every year afterwards (until 27.5
years), deduct 3.636% from the basis.
5) Every year, deduct $3,090.60 in taxes.
Copyright © 2011 Distressed Property Institute, LLC
- 26. Leveraging Your Retirement
• Most Americans have less than $25,000 in
savings
• You can use a Self-Directed IRA
(Individual Retirement Account) to
purchase real estate
• Your IRA grows tax-deferred
• You can choose a standard, Roth, or SEP
Self-Directed IRA
Copyright © 2011 Distressed Property Institute, LLC
- 27. Real Estate
Investing Myths
& Reality
Copyright © 2011 Distressed Property Institute, LLC
- 28. Myth: Real Estate Investing Is for
the Wealthy
Reality: You don’t have to be rich to invest
in real estate. In fact here are some telling
stats:
• 2011 median income for investors was
$86,100
• 39% made less than $75,000
• 58% made less than $100,000
Copyright © 2011 Distressed Property Institute, LLC
- 29. Source: 2012 NAR Investment and Vacation Home Buyers Survey, 6.
Copyright © 2012 Distressed Property Institute, LLC
Copyright © 2012 Distressed Property Institute, LLC
- 30. What the Average Investor Really
Looks Like
Source: 2012 NAR Investment and Vacation Home Buyers Survey, 6.
Copyright © 2012 Distressed Property Institute, LLC
Copyright © 2012 Distressed Property Institute, LLC
- 31. Myth: Real Estate Is Too
Expensive
Reality: The median investment property
price in 2011 was $100,000.
There are different ways to invest in real
estate including:
• Leveraging
• Self-Directed IRAs
Copyright © 2011 Distressed Property Institute, LLC
- 32. Myth: Real Estate Is Too
Expensive
Reality: Real estate always has great deals
through:
• Short sales
• REO properties
• Distressed Sellers / Properties
Copyright © 2011 Distressed Property Institute, LLC
- 33. Myth: Real Estate Investments
Are Mostly Resort Properties
Reality: Only 8% are resort properties. Most
investment properties are
rural, suburban, or in small towns.
Copyright © 2011 Distressed Property Institute, LLC
- 34. What the Average Investment
Property Really Looks Like
Source: 2012 NAR Investment and Vacation Home Buyers Survey, 6.
Copyright © 2012 Distressed Property Institute, LLC
Copyright © 2012 Distressed Property Institute, LLC
- 35. Optimizing Your
Investment
Copyright © 2011 Distressed Property Institute, LLC
- 36. How will you pay for college?
Copyright © 2011 Distressed Property Institute, LLC
Copyright © 2011 Distressed Property Institute, LLC
- 38. Building Real Estate Wealth with
Leverage: The 5 x 5 Model
• Start: Invest $25,000 in a $100,000
property (25% down).
• Finish: By year 30, equity = $2,175,743
(not including cumulative cash flow).
Copyright © 2011 Distressed Property Institute, LLC
- 39. 5 x 5: The Steps
1) Year 5: equity = $52,628. Re-leverage into a
$210,512 property.
2) Year 10: equity = $110,789. Re-leverage into a
$443,156 property.
3) Year 15: equity = $233,224. Re-leverage into a
$932,896 property.
4) Year 20: equity = $490,966. Re-leverage into a
$1,963,864 property.
5) Year 25: equity = $1,033,545. Re-leverage into
a $4,134,180 property.
Copyright © 2011 Distressed Property Institute, LLC
- 40. 5 x 5 Model
Copyright © 2012 Distressed Property Institute, LLC
Copyright © 2012 Distressed Property Institute, LLC
- 41. My Client-First Philosophy
There are many qualities and skills that go into being an excellent real estate
professional - integrity, in-depth community and market knowledge, marketing savvy,
effective negotiation skills and a high-quality professional network, all of which are
hallmarks of how I work.
That said, in my experience as a Virginia Beach real estate professional, I've also found
that providing the very best service is essentially about putting my clients first. This
means keeping myself accessible, being a good listener as well as a good communicator,
and responding quickly to your needs.
This "client first" philosophy has always been my approach and it requires me to
continually improve my skills and ways of doing business. In addition, I've found that
the latest technologies are enabling me to do everything I've always done, only much
more quickly and efficiently. They've also helped me to extend the range of services I
provide to my clients.
Please remember that I am not an Attorney, Accountant, CPA, Mortgage Broker, SEC
licensed securities broker, just an experienced Real Estate Investor & Broker. So when
you decide to let me help you with your Real Estate Investment Portfolio, please contact
me.
Copyright © 2011 Distressed Property Institute
- 42. Thank You!
Mark A Rusnak
Associate Broker & ABR, CDPE,
CIAS, CLHMS, e-Pro, SRES
@ RE/MAX ® Allegiance
Loehmann’s Plaza
4000 Virginia Beach Blvd # 164
Virginia Beach, VA 23452
757-718-8865
WWW.MarkSold.com
Copyright © 2011 Distressed Property Institute
Editor's Notes
- OBJECTIVES THAT BENEFIT YOU