creating strong returns and passive income for investors the trusted name in real estate investing

Creating Strong Returns and Passive Income For Investors

THE TRUSTED NAME IN REAL ESTATE INVESTING

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BEFORE WE BEGIN…

1. Meal after the presentation2. Q&A at the end3. Notes

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BEFORE WE BEGIN…

Multi-Family Real Estate Family Business

Proven Business Model Strong Returns & Passive Income

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BEFORE WE BEGIN…

My goals for this evening:

1. Make your life better2. Educate & attract3. Get to know you better

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BEFORE WE BEGIN…

Real Estate Investors Specialize in Multi-Family (apartments) 51 Properties since 2008 20 Million of Real Estate 750 Units 4 Million in private money

Who Am I?

Jesse Worcester

Joel Worcester Paul Worcester

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WHAT WE’LL COVER

1. Multi-Family Real Estate

2. Family Business

3. Proven Business Model

4. Strong Returns & Passive Income

The next three years are projected to be an ideal market for

We are a

With a

Providing

For our investors.

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Four Asset Classes

Oil & Gas Silver Gold Food

COMMODITIES

PAPER ASSETS

BUSINESS

REAL ESTATE Stocks Mutual Funds Bonds CD’s

Any Industry Restaurant Manufacturing Tech

Single-Family Commercial 1. Multi-Family 2. Office3. Industrial 4. Retail

MULTI-FAMILY REAL ESTATE

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MULTI-FAMILY REAL ESTATE

1. CASH FLOW

10 Reasons We Like Multi-Family Real Estate

• Tenants pay their rent

• Rent pays the mortgage, taxes, insurance,

etc

• The remainder is cash-flow….

• Passive cash-flow

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MULTI-FAMILY REAL ESTATE

2. INHERENT BENEFITS

10 Reasons We Like Multi-Family Real Estate

Loan pay down

Refinance

Depreciation

1031 Exchange

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MULTI-FAMILY REAL ESTATE

3. SECURITY

10 Reasons We Like Multi-Family Real Estate

Insurance(s)

Real asset

Below replacement value

Strict buying criteria + LTV + Cash-flow

Hedge against inflation

“Investors widely consider commercial real estate an asset class that can help offset the impact of inflation over the long term. In fact, that benefit is regularly cited as one of the advantages of adding real estate to a mixed-asset portfolio of investments. “

- David J. Lynn, Ph.D, managing director and head of U.S. research and investment strategy with ING Clarion based in New York.

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MULTI-FAMILY REAL ESTATE

4. CONTROL

10 Reasons We Like Multi-Family Real Estate

Value-adds

Rehab, utilities, occupancy

Cutting costs, raising rent

In-house management

Decision making

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MULTI-FAMILY REAL ESTATE

5. DEMAND

10 Reasons We Like Multi-Family Real Estate

2nd most basic human need

Population growth

Emerging markets

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MULTI-FAMILY REAL ESTATE

6. LEVERAGE

10 Reasons We Like Multi-Family Real Estate

Bank/debt financing

Other investors

Management

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MULTI-FAMILY REAL ESTATE

7. ECONOMIES OF SCALE

10 Reasons We Like Multi-Family Real Estate

Easier management

Less maintenance

More profitable

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MULTI-FAMILY REAL ESTATE

8. LOW VOLATILITY

10 Reasons We Like Multi-Family Real Estate

VS. stocks

Easier to forecast

Less fluctuation (Midwest, Kansas City)

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MULTI-FAMILY REAL ESTATE

9. APPRECIATION

10 Reasons We Like Multi-Family Real Estate

Value-adds

Emerging markets

Inflation

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MULTI-FAMILY REAL ESTATE

10. MARKET TRENDS

10 Reasons We Like Multi-Family Real Estate

Today’s market conditions

The next three years

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MULTI-FAMILY REAL ESTATE

Recession High unemployment Dollar losing value (inflation) Real Estate prices are at historical lows Home ownership at its lowest since 1965

Interest rates at record lows

Today’s Market Conditions

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MULTI-FAMILY REAL ESTATE

What Does This Mean?

OPPORTUNITY!

Today’s Market Conditions

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MULTI-FAMILY REAL ESTATE

“Be Fearful When Everyone Is Greedy, Be Greedy When Everyone

Is Fearful!”

- Warren Buffet.

Today’s Market Conditions

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MULTI-FAMILY REAL ESTATE

61% of all commercial mortgages (1.4 Trillion of debt) are projected to go into default by the year 2012 (congressional report)

What Created this? 2004 – 2006 (real estate boom) Overleveraged mortgages Due in 5-10 years from creation

So now……..

The Next Three Years

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MULTI-FAMILY REAL ESTATEThe Next Three Years

There is an excess of distressed debt projected to hit the market from…

2012 - 2014

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MULTI-FAMILY REAL ESTATEThe Next Three Years

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MULTI-FAMILY REAL ESTATERecap

• Four asset classes• Real estate = passive cash flow

• Next three years• 1.4 trillion commercial debt• Bank owned properties• Undervalued apartments• Inflation…RE is a hedge

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WHAT WE’LL COVER

1. Multi-Family Real Estate

2. Family Business

3. Proven Business Model

4. Strong Returns & Passive Income

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Show U of O (where we grew up) Show mud football photoShow childhood sportsShow dad Pastor/church/family campShow all three on the courtShow championship photoShow small college basketball/educationShow Rich dad poor dad bookShow entrepreneurship: T-shirt business

FAMILY BUSINESSOur Story - Early years

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FAMILY BUSINESSOur Story – Real Estate

• 2004: Began investing in real estate• Started in new construction in Eugene, OR• Saw the benefits of the rental business• Analyzed property all over Oregon• Moved to the Kansas City area for cash-flowing rental property

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• Started in smaller-unit properties • Transitioned to large Multi-Family in 2009• 750 Units in Missouri• 20 Million in Real Estate• Poised for significant growth in the coming years

FAMILY BUSINESSOur Story – Real Estate

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FAMILY BUSINESS

• Director of Acquisitions • Constantly scouring the market for the best deals• Locates, analyzes, and negotiates• Presents qualified deals to partners

Paul Worcester

Principal Partners

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Joel Worcester• Co-Director of Fundraising • Director of Partner Relations•Facilitates all communication with Partners• Refinance specialist

FAMILY BUSINESSPrincipal Partners

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Jesse Worcester

FAMILY BUSINESS

• Co-Director of fundraising• Director of Marketing• Co-Director of Operations• “Spackle of the business”

Principal Partners

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Doug Worcester

FAMILY BUSINESS

• Pastor of 35 years• Spiritual and ethical leadership• Director of “Oregon Division”• Oversees construction and property management in Oregon

Principal Partners

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Joe Isenberg

FAMILY BUSINESS

• General Manager• GM of largest janitorial company in Lane County for 31 years• Oversees property management company, Worcester Investments• Policies, procedures, efficiency

Principal Partners

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FAMILY BUSINESS

Joel Worcester Jesse WorcesterPaul Worcester

Doug Worcester Joe Isenberg

Meet Our Families

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FAMILY BUSINESSCore Values

• Serve God & our families

• Honesty & integrity

• Help others

• Make someone’s life better

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FAMILY BUSINESSBenefits of Having a Family Business

• Unity

• Understand each-other

• Competition

• Support system

• When giving a presentation, I can tell people that I am my brother’s boss

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WHAT WE’LL COVER

1. Multi-Family Real Estate

2. Family Business

3. Proven Business Model

4. Strong Returns & Passive Income

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PROVEN BUSINESS MODELPhilosophy

• Focus, specialize, master • Apartments in the Kansas City area

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1. Identify a property

2. Offer an opportunity

3. Manage the asset

PROVEN BUSINESS MODEL3 steps

Strict buying criteria

Brokers, owners, reputation

Know the market

Negotiate

Send property package

Know available funds

Build relationships

Fund the deal

Send out profit checks

Improve management

Property takeover

Complete oversight

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PROVEN BUSINESS MODELExample 1:

• 96 Units• December 2009• $1,442,000

The Frederick Apartments

Projected Cash-Flow:

$10,282/month

ACTUAL Cash-Flow:

$14,903/month

Projected Return:

20.19%

ACTUAL Return:

29.25%

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Example 2:

• 107 Units• June 2010• $1,862,000

The Gene Field Apartments

Projected Cash-Flow:

$7,949/month

ACTUAL Cash-Flow:

$9,335/month

Projected Return:

12.00%

ACTUAL Return:

14.06%

PROVEN BUSINESS MODEL

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Example 3:

• 150 Units• November 2010• $3,000,000

The Northcrest Apartments

Projected Cash-Flow:

$9,410/month

ACTUAL Cash-Flow:

$18,525/month

Projected Return:

11.50%

ACTUAL Return:

22.57%

PROVEN BUSINESS MODEL

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Example 4:

• 185 Units• July 2011• $3,750,000/$4,250,000

Maple Estates

Projected Cash-Flow:

$13,932/month

ACTUAL Cash-Flow:

$30,412/month

Projected Return:

10.20%

ACTUAL Return:

20.93%

PROVEN BUSINESS MODEL

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Property Management

• Owner-managed VS third party managed

• 750 units, 25+ employees

• VP/Takeover Specialist : 20 years

experience

• Full service

• PM Software

• High standards

PROVEN BUSINESS MODEL

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WHAT WE’LL COVER

1. Multi-Family Real Estate

2. Family Business

3. Proven Business Model

4. Strong Returns & Passive Income

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STRONG RETURNS & PASSIVE INCOME

B

S

E

I

Passive Income = Goal

• Employee• Hospital• Military

• Self-employed• Private Practice

• Business Owner• Hire other doctors• Ownership

• Investor• Invest in a practice• Passive

Kyosaki Principles

Example: Doctor

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• Wants to be passive• Looking for a higher return/better use of money

• Equity Partners• Want the benefits of owning RE: tax benefits,

appreciation, value-adds, sale)• $250K - $5 Million

• Private lending:• Simple, easy to understand• Flexible terms• $50K – $1 Million

STRONG RETURNS & PASSIVE INCOMETypical Investor

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1. Private Lending

STRONG RETURNS & PASSIVE INCOMETwo Investment Options

• Typical Investment Amount: • $50,000 - $1,000,000• Typical Rate of Return: • 6-12% • Based on amount and duration of the loan

• Set return with a set duration• More conservative • More conservative returns

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2. Equity Partnership

STRONG RETURNS & PASSIVE INCOMETwo Investment Options

• Typical Investment Amount: • $250,000 - $5,000,000• Projected Year 1 Cash on Cash Return: • 8-12% • Projected Annualized Cash on Cash Return:• 18-25%• Benefits of owning real estate: • Tax benefits, loan pay down• Value-ads, rent raises, sale, etc

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STRONG RETURNS & PASSIVE INCOMEApartments: Equity Partnership Returns

High Cash on Cash Return29.25%

Low Cash on Cash Return14.06%

Average Cash on Cash Return21.70%

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WHAT WE’LL COVER

1. Multi-Family Real Estate

2. Family Business

3. Proven Track Record

4. Strong Returns & Passive Income

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CLOSING

1. Multi-Family Real Estate

2. Family Business

3. Proven Track Record

4. Strong Returns & Passive Income

We are a

With a

Providing

For our investors.

The next three years are projected to be an ideal market for