Post on 29-Nov-2014
description
Residential Real Estate
for INVESTORSOrlando Office| (407) 490-2447
California Office| (949) 667-1447
JOINT VENTURE PROGRAM
JOINT VENTURE PROGRAM
This document, nor any other written or verbal communication between HIS Real Estate
Network, LLC, Metro Capital Management, LLC and/or any affiliated persons and/or entities and
myself, is NOT an offer to sell nor a solicitation of an offer to purchase investment securities. The
information supplied relates to possible real estate opportunities for qualified purchasers who
seek to establish an existing substantive relationship with HIS Real Estate Network, LLC, Metro
Capital Management, and/or any of their subsidiaries or partners. Natural persons qualify as
investors by virtue of such pre-existing relationships and by proof of business experience,
income and net worth.
JOINT VENTURE PROGRAM
What are we looking for?
Investors:
Investors with $50k-$700K commitment qualify for our Leveraged Joint Venture Program:
1. The Leveraged JV Program is like a “dating system”. The investing relationship is 1. The Leveraged JV Program is like a “dating system”. The investing relationship is initiated. We use the Leveraged JV Program to prove ourselves to new investors with the ultimate goal of developing a long term investing relationship with investors.
2. Once investors go through the Leveraged JV Program, investors are presented with our long term investing options (i.e. the “marriage system”). These options are designed to maximize investor profits through a diversified investment program over longer period of time.
Leveraged Joint Venture Option for Investor
Investment Criteria
• Distressed Residential Real Estate Assets
• Single Family Residences – One to Four Units
• Southern California – Los Angeles, Orange, San Diego, Ventura, Riverside & San • Southern California – Los Angeles, Orange, San Diego, Ventura, Riverside & San Bernardino Counties.
•Florida- Orange County, Winter Gardens, Windermere, Davenport & Kissimmee.
• Properties available for less than 70% of Fair Market Value
• Properties over 70% Fair Market Value will only be considered when one or more of the following compensating factors apply:
o End buyer lined up
o Hot local market activity
o Days on market is under 15 days
o Minimum rehab required
DISADVANTAGES
Traditional Joint Venture Leveraged Joint Venture
•100% of invested capital at work on one property
• No risk on management team
• Investor more reliant on management
• Investor receives a smaller % profit split
• Investor has a subordinated position at
Joint Venture Options
• No risk on management team
• Investor takes on all risk and liability for purchase and rehab of property
• Generally, no option to leverage capital
•Many investors are not fully aware of risks and may make unwise decisions
• Investor is not on the frontline which causes delays in decision making and lost opportunities
• Investor has a subordinated position at liquidation when compared to Leverage Partner
• Investor has less control of funds
• Asset is NOT free and clear
Joint Venture Options
ADVANTAGES
Traditional Joint Venture Leveraged Joint Venture
• Investor has complete control of the deal
• Investor is in first position when the asset is liquidated
• UP TO- 5:1 increase in purchase power
• Exposure to capital is minimized
• Cash on Cash ROI improvesasset is liquidated
• Investor controls all the funds
• Asset is owned free and clear
• Cash on Cash ROI improves
• Investor has a diversified portfolio
• Improved time efficiency = better inventory
• Expert manager makes most decisions based on local experience
• Management shares majority of the risk by securing 1st Deed of Trust
• Investor’s capital contribution is minimized (Down Payment + Rehab + Leverage) and secured by the R.E.
Real Scenario: $200K Purchase Price
Purchase: @ 70% FMV
Leverage: @ 65% ARV
Capital Required
TRADITIONAL JV. Buyer HUD LEVERAGE JV. Buyer HUD
Purchase Debits Credits
Purchase Price $200,000.00
Initial Deposit $2,000.00
Purchase Debits Credits
Purchase Price $200,000.00
Initial Deposit $2,000.00
New Deed of Trust $185,575.00
Title Charges $1,500.00
Recording Charges $100.00
Escrow Charges $1,000.00
Other Misc. Charges $400.00
Total Closing Cost $3,000.00
Balance due at closing $201,000.00 $201,000.00
Totals Acquisition COST $203,000.00 $203,000.00
New Deed of Trust $185,575.00
Title Charges $1,500.00
Recording + Misc. Charges $500.00
Escrow Charges $1,000.00
New Loan Charges
Loan Origination Fee $925.00
Discount Fee $6,475.00
Underwriting Fee $1,500.00
Total Investor due at closing $26,325.00
Totals Acquisition COST $211,900.00 $211,900.00
Purchase: @ 70% FMV
Leverage: @ 65% ARV
Resale Net
TRADITIONAL JV. Buyer HUD LEVERAGE JV. Buyer HUD
Resale Debits Credits
Resale Price $285,500.00
Resale Debits Credits
Resale Price $285,500.00
Title Charges $1,400.00
Real Scenario: $200K Purchase Price
Title Charges $1,400.00
Recording Charges $100.00
Escrow Charges $900.00
R. E. Commissions (5% of Resale)
$14,275.00
Credit to Buyer’s Closing Cost s (2% of Resale)
$5,710.00
Total closing cost $22,385.00 $285,000.00
Total Resale NET $263,115.00 $263,115.00
Title Charges $1,400.00
Recording Charges $100.00
Escrow Charges $900.00
R.E. Commissions (5% of Resale)
$14,275.00
Credit to Buyers’ Closing Costs (2% of Resale)
$5,710.00
Total closing cost $22,385.00 $285,000.00
Total Resale NET $263,115.00 $263,115.00
Investors’ Net Profit on Investment
Traditional J.V. Leverage J.V.
Totals Acquisition cost $203,000.00 Totals Acquisition cost $211,900.00
Total Resale net $263,115.00 Total Resale net $263,115.00
Total Revenue (acquisition – resale)
$60,115.00
Total Construction Cost (7.0% of purchase price)
$14,000.00
Net Profit $46,115.00
Total Revenue (acquisition – resale)
$51,215.00
Total Construction Cost (7.0% of purchase price)
$14,000.00
Debt Service (90 days) $6,158.49
Net Profit $31,056.49
Investor/Management Split from Net Profit
Traditional J.V. Leverage J.V.
Net Profit $46,115.00
Investor Split 40%
Net Profit $31,056.49
Investor Split 25%Investor Split 40% Investor Split 25%
Investor’s Share $18,446.00
Investor’s Cash out of Pocket
$217,000.00Investor’s Cash out of
Pocket $46,483.49
Investor ROI % 8.50% Investor ROI % 16.70%
Investor Share $7,764.13
Investor’s Net Profit on Investment
Traditional J.V. Leverage J.V.
Investor’s Capital secured by real estate
$203,000.00
Investor’s Capital unsecured by R.E.
$14,000.00
Capital secured by management 1st DOT
$185,575.00
Investors capital secured w/ 2nd DOT
$46,483.49unsecured by R.E.
$14,000.00secured w/ 2nd DOT
$46,483.49
Investor’s Total Commitment
$217,000.00
Investments per Investor Committed Capital
1Investments per Investor
Committed CapitalApprox. 5*
Potential Investor Profit with Committed Capital
$18,446.00Potential Investor Profit with Committed Capital
$38,820.64
Cash on cash ROI 8.50% Cash on cash ROI 16.70%
Investor’s Total Commitment
$200,000.00
* Up to 5 residential assets. The average ratio in California is 3 to 4 properties to every $200,000 committed.
Our California Office
1035 S. Grand Ave 3rd floor, Los Angeles, CA 90015
Residential Headquarters
Our Florida Office
14 E Washington Street 6th floor, Orlando, FL 32801
Commercial Headquarters
Current Deal Example
Current Commercial Asset
Non Performing Note Purchase Price #1: $4,900,000.00
Current Commercial Asset Value #1: $12,000,000
Current Deal Example A
Before
PhotosPhotos
Current Deal Example A
After
Photos
Current Deal Example B
Before
PhotosPhotos
PHASE 1 of Asset Analysis (Current Deal Example B)
Our Phase 1 Analysis enables us to take a close look at comps, days on the market, supply vs. demand and much more.
PHASE 1 of Asset Analysis (Current Deal Example B)
Our Phase 1 Analysis also enables us to be aggressive with our price reductions while maintaining profitability in the event that the
asset does not move in a timely manner. This systematic approach helps us to eliminate emotion, move the inventory as quickly as
possible and keep the model profitable.
Current Deal Example B
After
Photos