cell: 916-412-7141 fax: 916-660-1790 dc venture properties, inc. 8690 woodrock way, granite bay ca...
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Cell: 916-412-7141Fax: 916-660-1790
www.dcventureproperties.com
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
First Time Sacramento Area Investors
Welcome to the First Time Sacramento Area Investor presentation prepared by DC Venture Properties, Inc., a full-service real estate company providing sales, financing and property management services.
Experienced Investors
Will appreciate our efficiency in finding, rehabilitating and managing properties for maximum financial
benefit.
Seasoned investors should click here to go directly to market/financial data.
First Time Investors
Get the guidance and support you need to reduce risk and make your first investment experience a pleasant and profitable one.
Cell: 916-412-7141Fax: 916-660-1790
www.dcventureproperties.com
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
Investment Strategy
While there are many variations in real estate investment strategies, they generally fit into one of the three main approaches to residential property investing in California.
Appreciation Model
Income/Cash flow Model
Mixed Investment Model
These investment strategies have all been very successful in California’s rapidly growing real estate market. Historically, success was virtually guaranteed due to the high annual appreciation rates experienced over the last several decades. However, times have changed, and investors can no longer count on high appreciation rates to achieve their ROI goals.
Cell: 916-412-7141Fax: 916-660-1790
www.dcventureproperties.com
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
Investment Strategy – Appreciation Model
The Appreciation Model has certainly been one of the most popular among California investors. In fact, many California homeowners can be described as informal investors since they have often stretched their buying power to maximize the benefits of high annual appreciation rates. This strategy is characterized as follows:
Buy property in desirable, high appreciation growth areas
Minimize negative cash flow to the extent possible
Hold property until investor’s ROI target is achieved
While this strategy may still be successful, investors will have to hold property for much longer in order to achieve their goals. Local real estate markets will not improve until the economy and jobs numbers improve.
Cell: 916-412-7141Fax: 916-660-1790
www.dcventureproperties.com
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
Investment Strategy – Income/Cash Flow Model
The Income/Cash Flow Model refers to generating a monthly return (income) on an investment. Cash Flow investors generally prefer multi-family properties, where the economies of scale and acquisition cost per rental unit make it more profitable. These types of property are usually valued on a multiple of earnings, not on the appreciation of properties in the surrounding areas. This strategy is characterized as follows:
Buy multi-family properties, with low cost per unit
Maximize positive cash flow to achieve investor’s ROI target
Hold as long-term investment
These properties will benefit from the increasing pool of renters resulting from mortgage defaults and a 4% to 5% increase in rental fees in 2012.
Cell: 916-412-7141Fax: 916-660-1790
www.dcventureproperties.com
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
Investment Strategy – Mixed Investment Model
The Mixed Investment Model is about getting the benefits of appreciation and a regular positive cash flow. Unlike multi-family properties that are priced based on earning capacity, single family properties will appreciate on the basis of desirability and demand for housing as the economy improves. With low acquisition costs resulting from the dramatic drop in values for most properties, investors can now achieve high single or low double digit ROI’s. This strategy is characterized as follows:
Buy distressed single family properties in low cost areas
Maximize positive cash flow to achieve investor’s cash flow target
Hold property until investor’s ROI target is achieved
These properties represent the target market recommended by DCVP.
Inventory Composition
Non_REO/Non-Short Sale
25%
REO25%
Short Sale50%
Ave Monthly Inventory = 2385
Ave Monthly Units Sold = 1072
Ave Unit Price ($000) = 126
Ave DOM (cumulative) = 120
Ave Months of Inventory = 2.2
Cell: 916-412-7141Fax: 916-660-1790
www.dcventureproperties.com
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
Market Overview
Sacramento County was hit hard by the 2008 real estate market collapse. Some areas have seen property values drop by 50%, 60% and even 70%. The best opportunity for investors is the segment of this market made up of single family units (SFR’s) priced under $200k. This segment averages 2385 units of monthly inventory, and is dominated by distressed properties as shown in the Inventory Composition chart below.
REO Ave Monthly Inventory = 661 Ave Unit Price ($000) = 116 Ave DOM (cumulative) = 60
Non-REO/Non-Short Sale Ave Monthly Inventory = 671 Ave Unit Price ($000) = 138 Ave DOM (cumulative) = 60
Short Sale Ave Monthly Inventory = 1331 Ave Unit Price ($000) = 132 Ave DOM (cumulative) = 120
Cell: 916-412-7141Fax: 916-660-1790
www.dcventureproperties.com
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
Market Overview (Cont’d)
The data below provides additional details describing the three main categories of properties that make up the under $200k single family unit (SFR) market segment. SFR Inventory <$200k
0
200
400
600
800
1000
1200
1400
MAY JUN JUL AUG SEP OCT
Calendar Year 2011
Un
its
Ava
ilab
le
Non-REO/Non-Short Sale REO Short Sale
Cell: 916-412-7141Fax: 916-660-1752
www.dcventureproperties.com
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
Target Market
DCVP’s target market is a subset of the under $200k single family unit (SFR) inventory available in Sacramento county.
Short Sale properties are not suitable opportunities for investors due to their time consuming processes and unpredictable results.
Instead we recommend REO and Non-Short Sale properties.
There are ample inventories of both REO’s and Non-Short Sale properties available on a consistent basis.
The default rates are expected to remain high, and as a result REO’s will continue to replenish inventories.
0
100
200300
400
500600
Uni
ts A
vaila
ble
1 to 60K 61K to 120K 121K to 180K
Price Range
Target Market Inventory $1k to $60k
Ave Monthly Inventory = 70 Ave Unit Price ($000) = 48 Ave DOM (cumulative) = 65
$61k to $120k Ave Monthly Inventory = 421 Ave Unit Price ($000) = 94 Ave DOM (cumulative) = 88
$121k to $180k Ave Monthly Inventory = 514 Ave Unit Price ($000) = 152 Ave DOM (cumulative) = 74
Cell: 916-412-7141Fax: 916-660-1752
www.dcventureproperties.com
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
Target Market (Cont’d)
A snapshot of the mid-November target market inventory is shown below. These statistics may vary slightly in future months, but we do not expect major changes in inventories until after 2012.
Cell: 916-412-7141Fax: 916-660-1752
www.dcventureproperties.com
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
Investment Analysis
The simplified financial analysis below provides an indication of the cash flow investors can expect based on their investment preferences such as property price range and cash vs. financed acquisitions.
DESCRIPTION CASH FIN 70% CASH FIN 70% CASH FIN 70%
Purchase Price 48,000 48,000 94,000 94,000 152,000 152,000Closing Costs 558 3,285 673 3,852 817 4,566Down Payment 0 14,400 0 28,200 0 45,600Property Rehabilitation Costs 12,500 12,500 12,500 12,500 12,500 12,500 Total Acquisition Costs 61,058 30,185 107,173 44,552 165,317 62,666
Monthly Rental Rate 929 929 1,100 1,100 1,249 1,249Gross Scheduled Income (MRR x 12) 11,148 11,148 13,200 13,200 14,988 14,988Adjustment for Vacancy Rate (4.5%) (502) (502) (594) (594) (674) (674) Operating Revenues 10,646 10,646 12,606 12,606 14,314 14,314
Property Taxes (1.25%) 600 600 1,175 1,175 1,900 1,900Property Insurance 530 530 560 560 600 600Repairs and Maintenance 600 600 600 600 600 600Lawn/Garden Maintenance Service 720 720 720 720 720 720Property Management 1,116 1,116 1,200 1,200 1,200 1,200 Total Operating Expenses 3,566 3,566 4,255 4,255 5,020 5,020
5-1 Conf ARM @ 3.375% 0 1,782 0 3,491 0 5,640
Cash Flow from Operations 7,080 5,298 8,351 4,860 9,294 3,654Cap Rate/ROI % 11.6% 17.6% 7.8% 10.9% 5.6% 5.8%
Rental Vacancy Rate = 4.5%
Typical Monthly Rent 2 Bedroom = $ 929
Typical Monthly Rent 3 Bedroom = $1249
Lawn/Garden Maintenance Service = $60 (cut, trim & sweep twice monthly)
DCVP Property Management Fees = 10% (of gross monthly rent up to $100/unit)
Local Property Tax Rate = 1.25% (most areas in Sacramento County)
Cell: 916-412-7141Fax: 916-660-1752
www.dcventureproperties.com
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
Rental Market Statistics
All statistics presented are averages based on data collected from cities across the County of Sacramento (where appropriate), or based on specific knowledge of service costs. It should be noted that actual costs may vary by area based on property conditions, location and prevailing rates.
DC Venture Properties, Inc. is located in Granite Bay, and operates as an independent real estate company with no affiliations -- since 2005.
DRE License # 01422673
NMLS Identification # 275706
Professional Associations:National Association of Realtors
California Association of Realtors
Placer County Association of Realtors
National Short Sale Council
DC Venture Properties, Inc.8690 Woodrock Way, Granite Bay CA 95746
Cell: 916-412-7141Fax: 916-660-1752
www.dcventureproperties.com
Professional Designations:
Company Profile