Presentation Transcript

1. Invest In Your Future
2. Disclaimer While every care has been taken to ensure accuracy of this material presented, American Real Estate Investments, its employees or any of its representatives will not bear any responsibility or liability for action taken by any person on the basis of the information presented in this document. The content is for information purposes only. It is recommended that no person make an investment decision until such time as a qualified professional has assessed his or her individual needs, desires and risk profile.
3. What Happened? George Bush “Everyone deserves a piece of the American dream” Lending was made accessible to anyone and everyone Banks took on huge risk Subprime mortgages (Mexican fruit pickers) One day everyone woke up…panic began to set in Banks were left with lump sums of toxic debt
4. Since 2008 Lehman Brothers & Bear Stearns collapse Federal Reserve bank bailouts Gold & Silver continue to appreciate in value 300% Increase in Global Monetary Supply Stock market synthetic recovery (QE1, QE2 & Operation Twist) Housing market finding a bottom
5. “The Perfect Storm”
6. Why US Property? Prices are now at 1979 levels (inflation adjusted)
7. Why US Property? Mortgage rates are at record lows
8. Why US Property? Homes are 39% larger than they were in 1974
9. Why US Property? Price per square foot at record lows
10. Why US Property? Housing Affordability at 20 Year Highs
11. Why U.S. Single Family Homes? Strong Australian Dollar Source: RBA; Thomson Reuters; WM/Reuters 1980 1986 1992 1998 2004 2011
12. Why U.S. Single Family Homes? Australian rental yields at record lows Source: ABS & AMP Capital Investors Data
13. Why U.S. Single Family Homes? US Money Supply has increased by 300% in the past 4 year This money is yet to trickle into the public sector
14. Why U.S. Single Family Homes? Permits to build new houses are 50% up since 2008
15. Why U.S. Single Family Homes? Home builder confidence on the rise
16. Why U.S. Single Family Homes? Rental Yields Higher Than Mortgage Rates
17. The Future “Be greedy when others are fearful, be fearful when others are greedy” – Warren Buffett There has never been a better opportunity to purchase positive cash flow property. Once in a lifetime? Wealth Cycles: Invest at the bottom or the top? 1980’s, 1990’s, 2000’s, (2010’s its happening again) Invest for yield. Capital gains are a bonus but not a sustainable wealth building priority Data is suggesting recovery is in sight Loose monetary policies, will create new asset bubbles, and higher than expected inflation
18. Methodology Key Parameters: Cash Flow & Ability to Compound Returns Evaluate Risk and Long Term Potential Major U.S. Cities (High Entry Prices, Low Cash Flow) Second Tier Cities (Lower Entry Price, Higher Cash Flow) Cash flow is the main objective, however it is imperative to protect our capital for the long term Protect principle from risk of decline Add fundamental value in times of appreciation Middle class neighborhoods
19. Methodology Primary Parameters for Appreciation and Risk Historic property value trends Location Employment Growth Population Growth Cost of Living, Housing Affordability Rental Market Demand Current and Projected Market Conditions
20. 2nd Tier Target Markets Atlanta, Georgia Moderate Cash Flow High Capital Gain Potential Kansas City, Missouri Moderate to High Cash Flow Moderate Capital Gain Potential Indianapolis, Indiana High Cash flow Moderate Capital Gain Potential
21. ATLANTA, GA
22. Methodology Atlanta Top 10 in US Population (increasing year on year) Busiest Airport in the world (volume) Quality of Life (weather, pretty city, vibrant city, great wealth and diverse culture) Home to several Fortune 500 companies (ranked 4th largest city) Diverse Industries Delta Airlines, Coca Cola, Home Depot, United Parcel Service are the cities largest employers
23. Atlanta, GA 3 BED 2 BATH Purchase: $51,000 Annual Rent:$11,100 Insurance: $550 Management: $880 Tax: $1,954 Previous Sale:$155,000 ROI: 14.7%
24. KANSAS CITY, MO
25. Methodology Kansas City Top 20 US cities to survive economic downturn $9 Billion Recent Infrastructure Investment Chosen city for Google fiber optic internet trial Transport, Logistics, Distribution hub of America Super Highway – Canada to Mexico via Kansas City Diverse Industries: Transport, Medical, Universities, Shipping Commodity Trade Hub Increasing Population (5% average increase) U.S. Government, IRS, Hallmark, Sprint, H&R Block are the cities largest employers
26. Kansas City, MO 3 BED 1.5 BATH Purchase: $46,000 Annual Rent:$9,840 Insurance: $550 Management: $800 Tax: $622 Previous Sale:$127,000 ROI: 17.1%
27. INDIANAPOLIS, IN
28. Methodology Indianapolis 12th largest city in U.S. Healthcare, Education, Finance, Tourism & Manufacturing are large economic drivers Moderate Population Growth, predicated 8.5% growth in next decade 2012 Super Bowl Revitalization Ranked 6th best city for Jobs Rental increases of 10% since 2010 Racing Capital of the World, Large NCAA sporting presence
29. Indianapolis, IN 7 BED 2 BATH Purchase: $60,000 Annual Rent:$15,600 Insurance: $600 Management: $1,992 Tax: $622 Previous Sale:$182,000 ROI: 19.1%
30. American Real Estate Investments Leading American ‘Turnkey’ Wholesaler Decades of Real Estate Investment Experience Purchase at Wholesale Prices From the Banks Completely Renovated Homes New Tenant Lease Already in Place Professional on Ground Management 12 Month Property Warranty On Ground Construction Team Building Inspectors Professional Valuation Team
31. 10 Year ForecastAustralian Market- $500,000 Investment
32. 10 Year ForecastU.S.A Market-$500,000 Investment
33. 10 Year ForecastU.S.A Market-$500,000 Investment
34. 10 Year Cash FlowU.S.A vs. Australia
35. 10 Year Cash Flow + Capital GainsU.S.A vs. Australia
36. Investment Model Breakdown *Based on projected 10% Annual Capital Appreciation
37. Understanding Risk - Currency If the Australian Dollar falls back to its long term average of $0.87 cents – your investment and dividends receivable enjoy appreciation in value If the Australian Dollar rises to $1.25 – Your Australian buying power rises, dividends receivable will not be worth as much if converted back to Australia Dollars Minimize your risk by being on the right side of historical averages. Buying power is very strong right now
38. Understanding Risk – Market Value If the US property market halves a further 50% - enjoy 15% dividends while you wait for a recovery (unlikely as we are already seeing positive recovery signs) This is a long term strategy. We are very bullish on the US property market. Prices have stabilized for 2 years now Rent are increasing Recovery signs: Growing Building Permit Applications Home Depot Growing Earnings Phoenix and Kansas City Price Rises Indianapolis and Kansas City 10% Rise in Rent (last 12 months) Is it riskier buying at the top or the bottom of the cycle? Interest Rates at all time lows Renting: The New American Dream Credit History: 5-7 year Recovery, 2013 Lending Will Increase
39. Understanding Risk - Insurance All property will be insured under our trusted comprehensive policy through or trusted underwriting issuer: Affinity Group Management www.affinitygm.com The premiums will be both cost effective and offer total coverage in the event of damage, theft, natural disasters.
40. Understanding Risk - Litigation Affinity Property Insurance Coverage will also cover the responsible entity from any liability associated with tenant disputes and/or litigation. $3 million in liability coverage per property The responsible entity structure is through the form of a Limited Liability Company. Liability is limited through this structure. Spreads the risk: 5 properties per LLC
41. Investment Opportunity Offering investors High Yield income distributions Potential for Capital Growth over the medium to Long Term Safe, Secure & Diversified property portfolio in America
42. Investment Strategy Focus ison high income producing single family homes Properties will have to have a minimum of 15% net rental return Properties will have to be acquired for a maximum of $25 / Square Foot Property acquisition prices must be at least at a 40% discount from the assets highest ever historical sale
43. Key Features Income distributions of between 15-20%, paidmonthly Strong exposure to completely renovated, and tenanted single family homes in three diverse property markets When the market reaches its 2006 highs, today’s acquisitions will enjoy large capital gains Buying at $25 / Square Foot, when replacement cost is $75 / Square Foot
44. Investment Team Joel Macdonald InvestmentManager David Rudaitis Inventory Manager Tracy Weaver TCB Director Ben Walls Acquisitions