Wealth Building Workshop

1. Wealth Building Workshop • Using Real Estate To Develop Your Investment Portfolio

2. ACT NOW AND GROW RICH!,CALL NOW FOR SCHEDULE OR PERSONAL CONSULTATION • Kelley Bredell 866-953-5599 • kelley@homesbykelley.com

3. To achieve “Wealth”, homeownership is at the heart of personal and financial security, and it is foundational to building wealth. • BE on a mission and hear the words of many bestselling author and financial coaches to join the millions of other Americans to buy their first home, a second home or investment property over the next few years.

4. “Homeownership can be the centerpiece of your wealth-building strategy, the key to achieving financial independence.” — David Bach The Automatic Millionaire HomeownerTM Wealth Building We want to begin working together to achieve your personal and financial goals through Homeownership.

5. “…if you buy a handful of homes over the course of your lifetime and rent them to other people, you won’t just be financially secure, you’ll be rich — maybe really rich!” — David Bach The Automatic Millionaire HomeownerTM Not A Tycoon? Not A Problem! Americans are buying additional homes in record numbers. Of 2.8 million purchases in 2004 alone: • Nearly 64% were investment properties • About 36% were second homes • The right experts can help you buy yours! Source: National Association of Realtors 2005 Profile of Second-Home Buyers

6. Real Estate Is An Accompaniment — Not An Alternative — To Other Investing: • Most investment experts advise diversification. • There are no crystal balls to predict market direction. • There are no property appreciation guarantees, but… • The National 20-year average home appreciation has been 3-6% annually It’s up to you to make an educated decision.

7. “It’s not about timing the market. It’s time in the market that’s important.” — David Bach The Automatic Millionaire HomeownerTM It’s About time…Literally! • Interest rates are still historically favorable. • A softer market MAY be more negotiation-friendly. • Think long term — real estate appreciates over time • The “right time” to buy is as soon as you are able.

8. “Everyone wants to make money fast. But if that’s your goal, you’ve come to the wrong place. What we’re talking about here isn’t short-term speculation but long-term commitment.” — David Bach The Automatic Millionaire HomeownerTM Are You Willing — And Able — To Make A Long-term Commitment? • Buying to “flip” can be risky if it becomes necessary to hold onto the property. • Being able to weather a stagnant market or a temporary downturn is key. • Managing through a rental gap is critical. • Experts predict a strong rental market based on rising home purchase costs.* Source: National Association of Realtors 2005 Housing Profile

9. What Kinds Of Properties Will This Workshop Focus On? • A property to rent out full time to: – Families – Working singles – College students – Year-round vacationers • A property to use: – partly as a vacation home – partly as a rental property • A multi-family home where you rent out all units or live in one and rent out the others • A property to renovate, rent and sell when the time is right

10. What Kinds Of Properties Won’t This Workshop Focus On? • Apartment buildings with MORE than four units • Second homes for exclusive use by owner – Still a smart investment – Can be a great retirement strategy – Similar to buying a primary residence – Senior buyers can use a reverse mortgage

11. Think Double Profit Potential Making a real estate investment and covering ongoing costs using other people’s money, sets the stage to: • Build equity as you pay off your mortgage and/or property value appreciates — PROFIT POTENTIAL #1 • Re-sell in the future at a profit — PROFIT POTENTIAL #2

12. Does An Investment Property Fit Into Your Financial Plan? • What is your goal for this property? – Supplement income now – Cover costs for now – A retirement home – A cash return at sale • Does real estate investing complement your other investments or advance your financial goals? • Can you make a monthly contribution to this investment?

13. Are You Ready To Be A Landlord? • It’s not just your investment — it’s your lifestyle! • Are you a hands-on or hands-off owner? • Learn before you leap. • Lean on your team.

14. What Is The “Typical” Rental Property? As long as it’s rentable or sellable (depending on your strategy), you can make money on any type of home: • Seaside cottage to high-rise • Single-family to multiple-unit dwelling • Co-ops and condos …and you’re about to learn how!

15. Where Should You Buy? Location, Location, Location! • Consider your rental pool. • Smaller is easier than larger. • Adjust your standards. • Pick the right locale. • How about a fixer-upper?

16. Where Should You Buy? Location, Location, Location! • Consider your rental pool. • Smaller is easier than larger. • Adjust your standards. • Pick the right locale. • How about a fixer-upper?

17. Where Should You Buy? Location, Location, Location! • Consider your rental pool. • Smaller is easier than larger. • Adjust your standards. • Pick the right locale. • How about a fixer-upper?

18. Where Should You Buy? Location, Location, Location! • Consider your rental pool. • Smaller is easier than larger. • Adjust your standards. • Pick the right locale. • How about a fixer-upper?

19. Where Should You Buy? Location, Location, Location! • Consider your rental pool. • Smaller is easier than larger. • Adjust your standards. • Pick the right locale. • How about a fixer-upper?

20. When Is A Fixer Upper Worth Fixing Up? cost of repairs rental income lost during renovation asking price total = your “real” cost Add: $ 20,000 +$ 6,000 +$140,000 $166,000 If the “real” cost isn’t at least 20% less than the home’s market value, it’s not for you!

21. Make A Vacation Home More Affordable • Stay (somewhat) off the beaten path. • Shop off-season. • Search out special opportunities.

22. “The biggest mistakes I’ve made in real estate haven’t been what I’ve bought — but what I didn’t buy when I had the chance. It’s the offers you don’t make that wind up costing you the most money.” — David Bach The Automatic Millionaire HomeownerTM Is There An Ideal Time To Buy? • Gather the facts from your team of experts. • Do the math. • Make the commitment. • Take the plunge.

23. “Knowing that good mortgage deals are out there isn’t enough. You want to be sure that one of them has your name on it — literally. This means getting a lender to give you an advance commitment for a particular mortgage at a particular rate before you even start looking for a house.” — David Bach The Automatic Millionaire HomeownerTM Priority 1: • Know exactly what you can afford. • Don’t waste time on properties out of your price range. • Be the equivalent of a “cash buyer.” • Expedite the loan approval process.

24. How Much Rent Should You Ask For? Before you set your price: • Talk to your Realtor®. • Read the local newspaper. • Do some “secret shopping.” • Think Ahead.

25. Calculating Your Monthly Cash Flow • Estimated mortgage payment • Property taxes and insurance • Utility costs not paid by the renter • Repairs and maintenance • Advertising/marketing expenses • Potential Realtor and management company fees • Backup fund (5% or more) for vacancy and emergencies When you factor in the 80% income rule, is it within your comfort zone?

26. Example: Optimal Cash Flow Calculation Purchase scenario: Condo Purchase Price Down Payment (equity from primary home) Monthly Rent Potential $125,000 $25,000 $1,000 Monthly PITI (Mortgage-- $600; taxes, insurance --$129)1 Monthly Home Equity Loan payment2 Monthly Maintenance cost Total Monthly costs Estimated costs: $ 766.67 +$ 192.23 +$ 66.67 $1025.57 1 The example assumes a 20% down payment on a loan amount of $100,000 with a 30-year term. The monthly principal and interest payment for this example would be $59.56. The results above assume an estimated $1,700 in additional closing costs and prepaid finance charges. If the down payment is less than 20%, mortgage insurance may be needed and could increase the monthly payment and APR. 2 Assumes an 8.50% APR on a 30-year home equity fixed rate loan.

27. When Does The Investment Begin To Pay for Itself?

28. Caveat Emptor! • Know What You’re Buying: • Get an inspection. • See the seller’s Schedule E. • Check out comps. • Get homeowners association reports and records.

29. “The vast array of available mortgages is a real boon to first-time homebuyers and experienced real estate investors alike.” — David Bach The Automatic Millionaire HomeownerTM The Right Financing Makes All The Difference • Use other people’s money when you can. • Consider using your current home’s equity. • Match your financing to your investment goals. • Think in terms of performance, not just price.

30. The Right Financing Makes All The Difference An educated investor should know about investment property: • Interest rates • Down payments • Loan amounts • Products

31. The Right Financing Makes All The Difference And have you heard about: • Mortgage Express? • Expanded Financing Solutions? • Interest Only ARMs?

32. A Word About The Folks Who Pay The Rent The Federal Fair Housing Act bans discrimination based on race, color, religion, sex, national origin, disability, or familial status. Local and state laws may include additional provisions. What to look for in prospective tenants: • Adequate income • Employment stability • Credit history and references • Time in last residence • Head count

33. Keeping Your Investment In Good Shape • It’s your property value • It’s the law! • Put together a repair crew • Consider a home warranty service • Do-it-yourself vs. a property manager

34. “The impact of that extra month’s payment is so awesome. Depending on your interest rate, you will end up paying off a 30-year mortgage somewhere between five and seven years early, and a 15-year mortgage three years early.” — David Bach The Automatic Millionaire HomeownerTM What Can An Accelerated Ownership Plan Do? • Potentially save you tens of thousands in interest, making your investment an even better value. • Helps you own your investment property sooner, so you can increase your monthly revenue sooner. • Help you — and your renters — budget more effectively.

35. Accelerated Ownership PlanSM Comparison On a $300,000 Mortgage at 5.50% for 30 years (5.637% APR)

36. You Don’t Have To Go Through This Alone First, Build Your Team of Experts Then, Build Your Wealth

37. Your Wealth Building Team • Mortgage Consultant • Realtor • Real Estate Attorney • Financial Advisor

38. Your Wealth Building Team • Mortgage Consultant • Realtor • Real Estate Attorney • Financial Advisor

39. Your Wealth Building Team • Mortgage Consultant • Realtor • Real Estate Attorney • Financial Advisor

40. Your Wealth Building Team • Mortgage Consultant • Realtor • Real Estate Attorney • Financial Advisor/CPA

41. Get Inspired To Buy An Investment Property • Think and grow Rich, now start planning Tell Us Your Story • Develop Your Retirement • Develop Wealth • Help Your Children

42. “Of all the secrets of financial security… nothing beats homeownership. If you do it right — and that’s not hard to do over time — you will ultimately make more money on your home than on any other investment you make.” — David Bach The Automatic Millionaire HomeownerTM Feeling Motivated? So Are We! • Ask questions. • Make comments. • Share your experiences. • Complete The Challenge Survey and Workshop Attendee Questionnaire. • Get a preapproval decision.