Commercial Real Estate Investing Seminar Slides from Kyle Malnati – Madison Commercial Properties – Madison & Co. Properties, Denver, CO

If you missed my real estate investment seminar on February 8, 2012, I’ve provided an outline of my notes from my presentation.

Commercial Real Estate Investment Topics:

1. Strategies
2. Benefits
3. Analysis Sample
Real Estate Investment Strategies:
•1. Long-Term Rental: cash flow model
•2A. Flip: Purchase vacant “under” value and re-sell
•2B. Renovate: extensive remodeling and either holding/renting or positioning it for near-term sale

My daily focus is helping clients with Long Term Rentals. I believe as a real estate investor becomes more experienced they keeps all three strategies in mind and use a combination of efforts to maximize returns.

6 Benefits of Real Estate Investment:

Pros:

•Passive Income / Cash Flow
•Retirement Planning
•Tax Advantages
•Diversification
•Financing / “Leverage”
•Inflation Hedge

Cons:

•Requires management and oversight
•Not as liquid as stock market
Real Estate Investment Benefit #1: Passive Income / Cash Flow
•Steady stream of residual income outside of the income from your primary job/career
•Allows you to operate a business “part-time” with long-term leases
Real Estate Investment Benefit #2: Retirement Planning
•Owning investment properties free and clear can provide an on-going monthly income
•The investment property should appreciate over a long-term ownership period
Real Estate Investment Benefit #3: Tax Advantages
Mortgage interest: deduct the interest portion of your mortgage (see IRS.gov website article – http://www.irs.gov/publications/p17/ch23.html#en_US_2011_publink1000173296)
Depreciation deduction: The IRS allows you to take a deduction for that presumed decline in the value of your asset. Depreciation is a non-cash tax shelter deduction. (see IRS.gov website article – http://www.irs.gov/publications/p527/ch02.html)
Tax Deferred Exchange (1031): the IRS allows investors to defer long-term capital gains and depreciation recapture. (see IRS.gov website article – http://www.irs.gov/publications/p550/ch04.html#en_US_2011_publink100010437)
Real Estate Investment Benefit #4: Diversification
•Diversification is a general technique for reducing risk of investment.
•Majority of public associates investing with their 401(k), IRA, or pension
•Mutual funds can’t buy physical property
•Real Estate is a tangible asset
•Real Estate enables you to effect the general performance
Real Estate Investment Benefit #5: Financing / Leverage
•Real estate allows you to take advantage of leverage and finance a large portion your investment.
•Conventional Financing
•Borrowed Funds from IRA or 401(k)
DISCLAIMER – I am a proponent of “conservative” leverage. This presentation isn’t a “no-money down” or “get rich quick” scheme. Its a “get rich SLOW” system that promotes sustainable profitability. The majority of my clients purchase apartment buildings with a 25% to 35% down payment.
Real Estate Investment Benefit #6: Inflation Hedge
•Cost of goods and services will generally be more expensive in the future then they are today
•Commercial real estate owners have double benefit with rent adjustment and eventual sale
•Effect on Retirees
Investment Analysis (SAMPLE) slides will be provided in a later post.
~ Kyle Malnati (Madison Commercial Properties) ~ Madison & Co. Properties, Denver, CO

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