Here`s - Investment Property Experts

Transcription

WELCOME TO INVESTMENT PROPERTY
EXPERTS…..
For over 18 years Daniel Butterfield, CEO of Investment Property
Experts (IPX), has offered Real Estate Investors a comprehensive
menu of professional services designed to achieve optimal results
when it comes to single family home investment properties.
IPX provides end-to-end assistance in every facet of the Real
Estate Investment process. From brokerage services & mortgage
bank financing to renovations & property management, right
down to the marketing and eventual sale of the property.
IPX further offers consultation on Personal Finances, Retirement
Planning, assistance in rolling over IRA/401k plans, and creating
checkbook controlled LLC's.
In the Real Estate Investment arena, experience counts, and by
having the right team on your side you can quickly start creating
wealth for you and your family. It is this unique offering of end to
end services provided by professionals who understand real estate
investment strategies in today's market that has made us one of the
most sought out Real Estate Investment services organizations in
Phoenix, Arizona.
Our collective experiences have allowed us to develop a cutting
edge set of market data collection and analysis tools that allows our
team to accurately predict current trends within the Phoenix Real
Estate market, and advise clients accordingly to ensure limited
risks and maximized profits from their investment strategies.
Through this Jump Start Guide to Phoenix Real Estate Investing, we will be sharing with you some
of the same proprietary information we educate our current clients with, in order for you to decide if
investing in the Phoenix Arizona Real Estate market is right for you.
We invite you to contact us at any time so we may answer any questions or, schedule a one on one
consultation to discuss how IPX can further assist you with getting started in your own successful
Real Estate Investment program.
Disclaimer: All information and materials are for educational purposes only. Returns and appreciation rates displayed are estimates
only. All parties are encouraged to consult with their attorneys, accountants, and financial advisors before entering into any type of
investment. All services displayed are OPTIONAL Some of the real estate related services offered by IPX are provided by entities that
are: 1) managed or controlled by or under common control with IPX or 2) Not owned, managed or under common control with IPX.
Clients of IPX may utilize non-affiliated service providers for any professional services offered by IPX or its affiliates
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CEO AND FOUNDER DANIEL BUTTERFIELD
Daniel grew up in Minneapolis/St Paul and started in a career far
removed from real estate. After earning a B.S. in Mechanical
Engineering from the University of Minnesota, he began his career as
a design engineer at NASA’S Johnson Space Center. Later he worked
at Andersen Consulting (now Accenture) where he integrated package
software and redesigned business processes for Fortune 500
companies.
In his early 20s, despite working long hours in the corporate world,
Daniel started investing in real estate. In less than two years, he
bought 17 properties. Having made his first million, he switched
career paths to real estate investing.
Daniel moved to Arizona a decade ago to build Investment Property
Experts, which offers brokerage services, renovation, property
management, financing, accounting services and more. Today, IPX is
the only turn-key, full-service, real estate investment solution provider
in Arizona. Daniel shares his insights on 550AM KFYI every Sunday,
10 a.m. to noon.
In his free time, Daniel enjoys hockey and traveling - but most of all
he and his wife Arcelie enjoy playing with their 5 year old son.
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WHY INVEST IN PHOENIX ARIZONA REAL ESTATE?
The greater Phoenix area's sunny climate, vibrant lifestyle and prospering business community attract
thousands of visitors, new residents and entrepreneurs annually. The nation's sixth-largest city, Phoenix
continues to grow and remains a desirable destination for travelers and dreamers alike.
More than four million people call the Valley of the Sun home, and enjoy its 300 annual days of sunshine,
while another 13 million visit Phoenix each year for its outstanding weather, beautiful landscapes and
southwestern hospitality. A hub of business activity, the Valley boasts global companies such as Avnet,
Republic Services, Freeport McMoran, American Express, US Airways and many more. Residents enjoy
relaxed living and numerous outlets for recreation and entertainment, including some 200 golf courses, pro
and college sports teams, concert venues and museums.
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THE PHOENIX MARKET IS STABILIZING
When real estate is trending in a positive direction, like the current Phoenix market, investors can make a
great deal of money by timing the market with their investment capital. The following summary of
indicators and metrics shows why now is an excellent time in the Phoenix market to retire in the next 5 to
10 years through Real Estate Investing.
• The phoenix metro market has moved back to a sellers' market due to a decline in supply and
because "Boomerang Buyers" want to repurchase homes after experiencing a foreclosure or short sale.
Also, Maricopa County has consistent population growth and one of the lowest unemployment rates in
the nation, bringing an influx of new buyers into this market. In addition, homes are affordable, interest
rates are low, and, as a result, mortgage payments are low. All of these factors will increase demand for
the next three to four years, creating great opportunities for investors.
• Phoenix is experiencing a decline in supply, with inventory between 20,000 and 25,000 compared with
35,000 in a normal time. Inventory will continue to be scarce in 2016 and 2017 as buyers who have lost
their homes during the downturn continue to reenter the market.
•
Boomerang buyers will increase demand in phoenix over the next three to four years. Between
2008 and 2011, 40,000 to 60,000 homeowners per year experienced a foreclosure or short sale. After a
foreclosure, people can repurchase a home after seven years; after a short sale, they can repurchase in
three years. That means over the next four years, there's a potential influx of 250,000 buyers because
2015 is the first year they qualify for conventional financing.
• Phoenix housing remains as affordable today as it was 10 years ago. A buyer could purchase a 1,950
square foot home today and pay a monthly mortgage of about $1,086 per month, the same payment a
buyer purchasing in the summer of 2003 would have had. Also, interest rates are expected to remain
relatively low.
• Unemployment in Maricopa county is the lowest in the nation. Of course, employment is a large
factor in both real estate supply and demand. Employed consumers can qualify for loans and employed
homeowners maintain their payments, reducing delinquencies and preventing distressed listings from
raising supply. Arizona has an unemployment rate of 6%, while Phoenix is only about 5%.
• The housing supply shortage will continue and won't be fixed anytime soon, causing real estate values
to increase. Retirees are migrating to Phoenix in greater numbers and, while home development
historically follows population growth closely, home builders have not ramped up enough to meet the
demand. Lagging new home development is a key indicator of an ongoing supply shortage.
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• Foreclosure inventory has been depleted, creating a more balanced market. Phoenix is starting to
experience the positive after-effects of the largest real estate downturn in the history of Arizona, going
back to the Great Depression. As many as 250,000 displaced home owners are anxious to become
property owners once again, creating a huge impact on real estate values.
• Confidence is increasing for homeowners and builders. Along with hard facts, consumer emotions
matter too when it comes to property values. Consumers often base their decision to buy or sell partly
on how they feel about the economy, their neighborhood and their job. The Zillow Housing Confidence
Index shows very positive sentiment towards the Phoenix market.
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RECENT INVESTMENT SCENARIOS WITH IPX...
INVESTOR SCENARIO 1
• In 2011 retired from their job with a retirement account
• Invested into a combination of Deed of Trusts and purchased 4
properties.
• 3 Properties were purchased with their IRA.
• 1 Property was purchased with Conventional Financing for
• $156,050.
• In 2013 the property was sold by the owner for $218,000.
This investor yielded an estimated gross profit from the sale of
$62,000 plus a portion of the rent that did not go towards financing
costs (an estimated $650 per month for 16 months)
INVESTOR SCENARIO 2
• W2 employed professional.
• Interested in an investment program but did not have time to
find, renovate, lease or manage property.
• Purchased 2 investment properties through IPX utilizing these
services. 1 property was purchased for $125,900.
• In 2013 the property was sold to a participating IPX Investor for
$160,000.
This investor yielded an estimated gross profit from the sale of
$34,100 plus a portion of the rent that did not go towards financing
costs. (an estimated $450 per month for 21 months)
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INVESTMENT PROPERTY EXAMPLES
Property Address: 13823 N 34th Avenue
Phoenix, AZ 85053
Investor Sales Price:
Sale Date: 5/5/2014
$178,000
Investor Purchase Price:
Purchase Date 12/2/2010
$117,000
Estimated Gross Rental Income
$45,100
Estimated Profits
Estimated Returns
Estimated Net Profit
$41,989
Estimated Down Payment
$23,400
$35,680
Estimated Total Return
179%
$28,431
Est. Annualized Return
90%
Estimated Gross Profit
(Includes rental income)
$106,100
Estimated Property Expenses
Estimated Debt Service:
Property Address: 4628 W Gail Drive
Chandler, AZ 85226
Sale Date: 10/10/2014
$213,000
Purchase Date 7/31/2012
$142,000
$33,075
Estimated Profits
Estimated Returns
$104,075
$66,430
$28,400
$17,780
234%
$19,865
117%
Disclaimer: All information and materials are for educational purposes only. Returns and appreciation rates displayed are estimates only. Closing costs, financing fees, taxes,
insurance and property management fees have not been included in these examples. All parties are encouraged to consult with their attorneys, accountants, and financial
advisors before entering into any type of investment.
INVESTMENT PROPERTY EXAMPLES
Property Address: 410 E Scott Avenue
Gilbert, AZ 85234
Purchase Date: 5/16/2014
$215,00
Sale Date 1/09/2013
$160,00
$18,800
Estimated Profits
Estimated Returns
$73,800
$17,900
$14,790
$41,110
$32,000
128%
64%
Property Address: 4405 N 20th Avenue
Phoenix, AZ 85015
Sales Date: 7/31/15 (projected)
$210,000
Sale Date 08/21/2013
$160,000
$26,400
Estimated Returns
Estimated Profits
$76,400
$12,600
$16,421
$47,379
$32,000
148%
74%
DEED OF TRUST PROPERTY EXAMPLES
7020 W Comet Avenue
Peoria, AZ 85345
Investor Purchase Price
$160,000
Deed of Trust Amount
$115,000
Purchase Date
09/17/14
Maturity Date
08/30/16
Interest Date
9%
Est. Gross Interest Income
$20,700
Estimated Returns
$20,700
18%
Estimated Annualized Return
9%
13425 N 73rd Avenue
Peoria, AZ 85381
$205,000
Deed of Trust Amount
$140,000
Purchase Date
10/16/14
Maturity Date
10/16/16
Interest Date
9%
Est. Gross Interest Income
$25,200
Estimated Returns
$25,200
18%
Estimated Annualized Return
9%
DEED OF TRUST INVESTING
Deed of Trust Investing is where you act like the bank, lending money to an investor that is purchasing
property. The IRS requires a specific type of loan, called a non-recourse loan, for self-directed IRA
owners to purchase investment real estate. This is a secured loan – in this case with the collateral of
the rental property. Not all trust deeds are created equal. At IPX, we’ve designed safeguards into our
program. You’re lending on renovated, occupied investment properties - not distressed, empty
properties. You’re protected since the rental income exceeds the mortgage payment. Plus we reduce
costly management issues with our professional property management. Also, we keep our eye on the
end game with a well-defined exit strategy for our rental property investors. We’ll sell the property at
the right time or help the rental property investor refinance. For additional protection, trust deed
investors can sign up for our Foreclosure Mitigation Program (FMP) where we’re obligated to pay the
borrowers’ mortgage if there is ever a missed monthly payment. Also, we’ll pay any outstanding
interest and principal of the trust deed loan per the terms of the note. IPX provides trust deed
investors with a consistent supply of income. Whether you have $100,000 or $1 million, you earn 9%
annual return on your investment capital. We’re committed to ensuring your investment capital
continues to work for you – so we have options for reinvesting.
Deed of Trust Investor Cheat Sheet
• You loan money to another IPX investor
• These investors typically use their IRA/401K funds as down payment for their property
• IRA/401k investment purchases require a nonrecourse loan so they will not qualify for
conventional financing.
• Typical down payment for a IRA/401(k) property purchase is 30% of purchase price
• 9% annual rate of return
• Typical Investment is $95,000 to $160,000
• 24 month note term
• You have the option to extend the note after 24 months or get paid off
• Interest only paid monthly (interest earned in arrears)
• No closing costs
• Closing documents are prepared by Grand Canyon Title
• Recorded Deed of Trust mailed to your address on record.
• Borrower pays a 3rd party (Grand Canyon Title) to service the loan for the next 24 months
• Payments are collected by servicer and then sent to investor, typically mid-month
• IPX offers a Foreclosure Mitigation Program (FMP) . This program is free of charge. If at
anytime the borrower does not pay the mortgage, IPX will step-in and pay the mortgage on
behalf of the borrower. You as a lender will be paid in full all the interest + principal owed to
you. IPX will take over the property and foreclose on the borrower.
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WHY NOW IS THE PRIME TIME TO RETIRE IN 5 TO 10 YEARS
THROUGH REAL ESTATE INVESTING
LEARN PROVEN STRATEGIES FOR EARNING A SOLID PROFIT AND
RETIRING EARLY
INTRODUCTION
Is this a good time to invest retirement dollars in real
estate? What market indicators can predict how the
market will perform in coming years? What do
experienced real estate investors think? These are
common questions for investors. And they're all
answered in this white paper developed by
Investment Property Experts so investors can feel
informed and confident.
This guide gives you solid information on the
Phoenix real estate market, followed by expert
analysis, real-world success stories and a checklist to
get you started. If you want to earn a much higher
profit than traditional investments and accelerate
your retirement, this is a must read.
These strategies can help you substantially increase
your capital, create yield, and protect your assets. By
using these tools that have been developed and finetuned over 18 years, you can retire earlier than you'd
thought possible.
Real Estate
Investing
Popular with
Millionaires
According to the
Morgan Stanley
Wealth
Management
Investor Pulse Poll,
millionaires see real
estate as the top
alternative asset
class to own in 2014
by a wide margin.
You've worked hard through the years and deserve a
comfortable, secure retirement. Turn the page and
start making that dream a reality.
12
ACQUISITION CRITERIA:
1. Min. 3bed/2bath
2. Min. 1100 sq. ft
3. Positive trends in
submarket
4. Targeted areas with
greatest growth
potential
5. Affordability Index is
attractive
6. Absorption Rate is
Strong
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MARKET KNOWLEDGE FROM THE IPX REPORT
IPX in conjunction with The Cromford Report™ has developed an industry leading set of data
analysis tools that allows us to track the history and current status of the greater Phoenix residential
resale market. These tools offer unique insight into the current market as well as its future direction. We
utilize these tools on a daily basis, constantly analyzing the market, so we are able to better advise
clients and help them make strategic decisions to to buy and sell investment properties.
KNOWING YOUR MARKET IS KEY..
We frequently publish a summary of our findings at IPX Wealth Workshops monthly. This information
is only available to IPX Investors, and has proven to be an invaluable asset when it comes to market
insight. The following are several of the key market indicators IPX encourages any investor to focus on
when formalizing a Real Estate Investment strategy, and an example of the type of insightful
information provided that gives any would be investor an edge in the market.
SUPPLY OF HOMES
Supply in the Phoenix Metropolitan area has been short since dipping below normal in the middle of
2015. This shift was not noticed immediately until it became more extreme. At that point, demand was
still moderate and buyers found themselves in stiff competition for existing properties on the market.
Active Listing Counts Maricopa County
14,000 Listings
Normal Inventory Levels Hover around 35,000
There are a number of factors that could cause supply to increase:
• Migration of homeowners relocating to areas outside of Phoenix
• Homeowners selling and moving into an existing household, not purchasing
• Increased new home development
• Higher than normal delinquency rates that lead to bank-owned foreclosure or short sale inventory
• Increase in sellers who must sell immediately due to financial hardship, divorce, unemployment, etc.
Supply alone doesn't dictate future price shifts, but it is a very important indicator to watch. When
a market is in undersupply, and demand is at normal or high levels, prices will increase.
MLS INVENTORY
MLS Inventory indicates how many days it would take to sell all the Active Listings if they were to sell
at the rate implied by Annual Sales and assuming no new listings became active. It equals 365 x Active
Listings / Annual Sales. This indicator can be measured by city or by price range.
85 Days Inventory
The advantage of Days Inventory is that it's less subject to seasonal shifts in both inventory and
sales, unlike the Months of Supply measurement. As a result, shifts on this chart cannot be
explained away as seasonal and it's a more valuable indicator for investment decisions. In a
balanced market, this number should be between 120 and 180 days.
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DELINQUENCIES
The first indicator of a potential increase in foreclosure inventory is Delinquency Rates, followed by
Notices of Trustee Sale, followed by actual Trustee Sales. Delinquency Rate is defined as any home
that is past due 30 days or more on their mortgage.
Mortgage delinquencies in Arizona have fallen well below the historical 5% average and way below
the national average. Fewer delinquencies mean fewer foreclosures and short sales to add to inventory
and put downward pressure on home values. Additionally, low delinquency rates remove the
“declining market” stigma that Phoenix has endured, which allows mortgage underwriters to offer
lending products that have not been available since the crash and ease up slightly on credit
requirements. Arizona is also the state with the biggest percentage drop in delinquencies since its peak
of 16.3% in February 2010.
Currently our delinquency rate in Arizona is 3.5% which is 1.5% below the historical average. In
2016, expect lenders in Arizona to further loosen their guidelines which will make it easier for
consumer buyers and investors to purchase real estate. Loosening guidelines leads to easier lending,
and easier lending leads to more home sales, and more home sales leads to an appreciating real estate
market. This combined with a sellers market denotes a recipe for profits and gains for real estate
investors.
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INTEREST RATE AND MORTGAGE PAYMENTS
Many articles have focused so strongly on annual price appreciation, that mortgage payments have
been overlooked. Mortgage principle and interest payments are as low as they were over 11 years
ago despite the price increases. Take our example below of a 1,950 square foot home, which is the
typical size of a home purchased in the Phoenix Metro area.
Even though the price of a 1950 square foot home has increased over $63,000 (or 31%) since
November 2008, the mortgage payment has only gone up by $18. Nearly 12 years ago, in July
2003 the average payment was only $25 less than today for the same sized property. This level of
affordability combined with so many additional boomerang buyer entering the home market will
continue to drive appreciation in Arizona.
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POPULATION GROWTH
Past history has shown us that new home development follows population growth rather closely.
However, while homebuilders downsized and liquidated with the drop in population growth, they have
not ramped up enough to meet demand from the rebound. This trend is a key indication that our
supply shortage is chronic and will not be solved in the near future.
Based on our current and projected population growth documented by local government and
institutions and the Census Bureau, builders have been utilizing their acquired land to build more
multi-family developments. Within the last 3 years, multi-family permits have already increased to
historically normal levels although new construction permits continue to remain at below normal
levels
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PRICE TRENDS
The long term trend line for real estate prices usually follows an appreciation rate between 3%-5%. The
last balanced market in Greater Phoenix was 2001/2002 and then in 2014, had we followed the
historical trend our price per square foot would lie between $160 and $180 price per square foot. As the
distressed market continues to dissipate, it's reasonable to expect the overall price calculation to enter
the long term historical zone within the next year and level out to the current non-distressed annual
appreciation rate.
Considering Phoenix was in a balanced market in 2014 and then in March of 2015 proceeded to re-enter
a Sellers market while boomerang buyers continue purchase homes. It is likely that the price per square
foot trend line will catch up to the 2001/2002 market trend in the next 2-3 years. Interest rates remain
low, housing continues to be affordable, delinquency rates are well below normal levels, lending
guidelines are loosening and inventory levels are low while we have growing buyer demand. Investors
are also loosing confidence in the stock market which is causing more investor capital to diversity into
the real estate market.
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PRICE
THE CROMFORD MARKET INDEXTM combines supply and demand trends to forecast future
price responses. Values below 100 indicate a buyer's market, values above 100 indicate a seller's market
and 100 indicates a balanced market.
TURNING POINT
May 2005
Seller’s Market
Annual appreciation
predicted to be positive
Seller’s Market
Buyer’s Market
PRICE IS A TRAILING INDICATOR, meaning that it's the last thing to respond to shifts in supply
and demand. The first thing to respond will be the Cromford Market Index. As long as values are above
110, prices will rise, below 90 prices will fall and between 90 and 110 they will stabilize. Prices will
peak or bottom approximately 6 months after any major crossover of the 100 mark. This is primarily
because of a delay in reporting final sales prices by the Maricopa County Recorder's Office and slow
moving consumer sentiment regarding market shifts.
The overlay above proves this point. The Cromford Market Index peaked in May 2005 and sharply
dropped. However prices continued to rise until peaking 6 months after crossing over into a Buyer's
Market. Investors who saw this shift (which were few) had 7 months to sell their property while prices
were still rising and demand still outweighed supply. Those who didn't see the shift found themselves in
a Buyer's Market at the peak of price, with long marketing times, increased competition, few buyers
and significant seller concessions to sell. Prices started to gradually fall, but what truly caused the
crash was when lending froze. As foreclosure inventory rose exponentially, lending became so strict
that few buyers could qualify to absorb it. This sharp increase in inventory, followed by a sharp
decrease in buyers (especially luxury buyers over $500K), resulted in the price collapse of 2008. The
first-time homebuyer credit acted as a speed bump to this decline, but once it expired both the market
and prices adjusted to where they would've been anyway.
FORECLOSURES
The first big wave of foreclosures was in 2008 and continued through 2011. Starting in 2015 these
Boomerang Buyers started to reenter the market. This renewed buying activity will fuel consistent
growth in coming years.
Wait Year
1
2
3
4
5
6
7
The 7 year waiting period ended in 2015 for 38,000 people that have been foreclosed on in 2008. This
began the first wave of “boomerang buyers” re-entering the market after foreclosure. The next wave of
another 40,000 people will hit our real estate market in 2016 as illustrated by yellow highlighted area
above. This will continue for another 3 years which creates an excellent opportunity for real estate
investors to buy and rent their property as demand continues to push real estate values higher and
higher.
SHORT SALES
A large number of Phoenix area home owners went through short sales starting in 2009 through 2012.
The waiting period to reenter the market is 4 years for conventional financing which means that many
of these buyers will continue to reenter the market in 2016. Because lending guidelines have started to
ease and the market has stabilized, these buyers will find it easier to qualify now than if they were
trying to reenter the market several years ago.
Wait Year
1
2
3
4
The 4 year waiting period ended in 2015 for the 23,000 people who short sold their property in 2011.
This added to the other 38,000 people who also lost their property due to foreclosure in 2008. In
2016, it is expected that another 25,000 potential buyers may reenter the home buying market after
having sold their home via short sale in 2012.
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FINANCING
Financing guidelines have loosened starting in 2015 which has made it easier for buyers to qualify for
financing if they have had a short sale, foreclosure or bankruptcy. In fact, a few interesting guideline
changes include: down payment requirements for conventional financing changed from 10% to 3%. FHA
Mortgage Insurance had been cut by ½ and if you have had a combination foreclosure and bankruptcy you
may now qualify for conventional financing in just 4 years.
CONTRACT RATIO
To determine how hot or cold a market is, look at the number of contracts written in relation to what is
currently active. The Contract Ratio does this by comparing listings under contract with active
listings. This number can fluctuate if there is either a shift in buyer contracts or inventory. A ratio
under 30 represents a cold market, between 30 and 60 represents a warm market, more than 60 is hot
and over 100 is a frenzied market. A strong yet stable market is between 50 to 100, in which the 12month price per square foot trend will continue in the same direction.
DISTRESSED PROPERTY INDEX
Current supply consists primarily of normal sales because there is no longer a large number of lender
owned, short sale or trustee sale properties. So it follows that the distressed index is quite low, indicating
solid projected return on properties.
24
MARKET OUTLOOK
Most investors believe the real estate market is volatile and unpredictable, the fact is, real estate
market cycles are very measureable and predictable. By understanding leading technical indicators an
investor may better understand where the market is going for the next 12 months. Most predicable
market investments yield ultra low annual rate of returns, such as annuities, bonds and CDs. While
investments such as deed of trusts and investment real estate are not only predictable but also yield
much higher double digit returns. While investment real estate in most cases requires a more hands on
approach, deed of trusts are both predictable and yield a great return.
In 2004 we saw the Market Index increase to beyond 125 which indicated we were in a sellers market.
In 2006 we saw the index go below 50 which indicated we were in a buyers market. This indicator is
most valuable when determining to buy or sell investment real estate.
25
MARKET INDEX
The market index has increased in 2015 due to the shortage of inventory and moderate demand. With
interest rates low, demand will continue to grow. Furthermore, many consumers who have lost their
home due to foreclosure or short sale are looking to regain home ownership. The Market Index is much
higher than it was in 2014, as 2014 was known as a balanced market, which isn’t bad, just different.
We can expect to see much higher appreciation in 2015 and 2016 since the Market Index is now at
140. The Market Index is a leading indicator that determines whether or not the real estate market will
appreciate or depreciate in value.
26
MARKET INDEX
By overlaying the 2015 Market Index on top of the 2011 Market Index we can see how the Indexes are
similar. Since both are seller markets, it is likely the real estate market will appreciate similar to how
it did in 2011 and 2012. Do not expect to see the same peak appreciation rates of 30% as we had in
2012 because most
properties purchased in
2011 and 2012 were
2011 Index
severely distressed and
required extensive
2015 Index renovation. In many cases
investors purchased a
property for $120,000,
spent $40,000 on
renovation and then sold
the property for $180,000.
Public records may have
recorded the sale as though
the property appreciated
by 50% but in reality the
investor realized an actual
gain of 17%. In 2016 most
properties sold were not
nearly as distressed as properties sold in 2011 and 2012. By understanding the current real estate cycle,
we may anticipate a certain amount of appreciation in the real estate market. Like 2011 and 2012 (refer
to the left yellow highlighted section below) this year presents real estate investors an unique
opportunity to invest in real estate while experiencing a sellers market (refer to the right yellow
highlighted section below). Since the Market Index is currently at 132 which is much higher than
normal, this is the perfect indicator that communicates the real estate market will continue to appreciate
through 2016.
40%
30%
10%
The dark black line represents the market index. The vertical blue lines
represents percent appreciation
 In 2004 and 2005 we
experienced another
increase in the
market which
resulted in a real
estate crash.
However our current
Market Index is not as
high and with new
financing guidelines
in place, it is not likely
we will experience a
real estate crash in
the near future
DANIEL BUTTERFIELD’S ANALYSIS
In my 17 years of investing, in both up and down markets, I bring my engineering background to
analyze the market. I review even more than the statistics you see in this guide to determine the best
strategy, with the most profit for the least amount of headaches and risk. Luckily, right now in the
greater Phoenix market, it doesn't take an engineering degree to determine if this is a good time to
invest. Indicator after indicator point to the same conclusion – this market has stabilized and will
continue growing steadily for several years.
One of the top reasons for continued growth is that
Boomerang Buyers are looking to repurchase,
increasing demand for the next three
to four years. That means about 250,000 people who
lost their homes due to foreclosure or short sale are
now ready to reenter the housing market. Also,
homes are affordable, interest rates remain at
historic lows, unemployment in Maricopa County
has one of the lowest rates in the nation and
population is consistently growing. This is the
perfect scenario for real estate investors to invest in
single family homes. It's the time when you can earn
significant profit in three to five years to accelerate
your retirement.
These are great conditions to enable you to substantially
increase your investment capital,
create yield, and protect your assets. However, with these
profitable conditions comes plenty of competition. That's
why my team is out daily scouring properties that you, or
even a realtor, might miss. We know how to find good
investment properties, even pre-foreclosures which require
more work than typical properties.
"Before I roll out
investment strategies
to our clients, I put
my own money into
each and every one
of them. Then I test,
analyze, fine-tune
and perfect the
system. That's the
engineer in me.
Only after I've
proven the profit
potential to myself
am I ready to offer
new strategies to our
clients."
-Daniel Butterfield
Based on current market conditions, my investment strategy calls for acquiring single family homes
with positive cash flow. IPX looks for properties with a minimum of three bedrooms, two baths and
1,400 to 2,500 square feet in targeted neighborhoods. We use a variety of indicators to find these
properties which our experience has shown have the highest growth potential.
Some people think the real estate market is volatile. Instead it is measurable and predictable over
the short term.
28
Let's stop and consider for a moment something that none of the indicators say will happen. What if the
market fell? For investors who purchased a good property, renovated it, screened qualified renters, and
have it well managed, there's no need to panic. Rental income continues to offset debt because even in a
down market, rents typically hold up. You may temporarily lose equity, however time is on your side.
Stay cash-flow positive while continuing to assess the market until it's right for you to sell. Or, if you
were an IPX investor during the downturn, you didn't even have those considerations. Thanks to the
Cromford Report and other data, we predicted the crash of 2007 and advised our clients on how best to
manage their investments before real estate values deceased significantly.
This illustrates the beauty of the hold strategy (in contrast to a flipping strategy) that I recommend. It
allows the investor to be successful in a variety of market conditions.
Much of American's wealth has been accumulated through real estate investing – simply by the average
American owning their own home. It's time to take that concept and raise it to another level. Many
Americans are dissatisfied with the current rate of return on traditional stocks and bonds and are turning
to real estate investing. You don't tell a stock broker, "Here's $100,000 – I want you to double it in three
years." But I've seen that happen many times at IPX thanks to leverage (and our expertise!). I've helped
many clients invest in properties and double their money. It's not a guarantee – it's a goal.
I recommend diversifying your portfolio with real estate. As you can see, conditions are ideal to take the
next step.
Join me and my clients on the path to early retirement.
Rule of 72
Albert Einstein loved the power of compound interest and so will you. Here's a
simple way to determine how long it will take to double your investment. Divide
72 by the annual rate of interest your money is earning to figure out how many
years until it will double. For example, if you're earning 9%, you double your
money in eight years. And at 20%, it would only take 3.6 years.
29
REAL LIFE EXAMPLES
The concept of retiring earlier than you'd imagined using conventional or private financing along with
cash flow can be hard to grasp. However, it is possible.
Look at these four properties, purchased by an actual IPX investor. Note how he developed a portfolio
of properties with over $250,000 in equity which currently yields an estimated 14.6% return.
This is one IPX investor's success story – there are thousands of others. So the good news is, by
following the IPX strategies, this success story is repeatable.
30
EXISTING CLIENT PROPERTIES
3601 W. Mescal Street, Phoenix, AZ 85029
Value:
$142,000 – $154,000
$105,000
Purchase Date
12/17/10
Monthly Mortgage
$594.25
$40,842
Estimated Net Profits
Est. Net Profit
$50,644
Est. Down Payment
$21,000
Est. Total Return
241%
68%
$89,842
Estimated Selling Expenses
$14,240
Estimated Debt Service
$24,958
8714 N. 53rd Avenue Phoenix, AZ 85029
Value:
$165,000 – $182,000
$115,000
Purchase Date
10/06/10
Monthly Mortgage
$464
$26,390
Estimated Net Profits
Est. Net Profit
$65,406
Est. Down Payment
$23,000
$93,390
$15,920
Est. Total Return
284%
$12,064
131%
EXISTING CLIENT PROPERTIES
3615 W. Dahlia Drive Phoenix, AZ 85029
Value:
$180,000 – $198,000
$118,000
Purchase Date
04/29/11
Monthly Mortgage
$672
$40,738
Estimated Profits
$120,738
Est. Net Profit
$79,666
$16,880
Est. Down Payment
$23,600
Est. Total Return
338%
$24,192
113%
158 W. Moore Avenue Gilbert, AZ 85233
Value:
$183,00
$138,000
Purchase Date
06/11/09
Monthly Mortgage
$725
$44,660
Estimated Profits
$89,660
Est. Net Profit
$47,604
$15,980
Est. Down Payment
$27,600
Est. Total Return
58%
15%
$26,076
STRATEGY RESULTS
Total Down Payment: $95,200
Total Estimated Closing Costs: $20,000
Total Estimated Investment: $115,200
Total Equity Build
•
Property 1 - $50,644
•
•
•
Total : $243,320
33
2011 Market Cycle vs. 2015 Market Cycle
Most investors that did not invest in the 2011 Phoenix real estate market feel they missed out on their
prime opportunity to acquire a real estate investment portfolio. Some investors procrastinated because
they were sure the real estate market was coming back. Some investors listened to the wrong real estate
professionals and analysts who claimed:
• the real estate market wasn't going to recover until 2015
• the real estate market was going to decline in 2012
• it would takes years to clear out the lender owned inventory
• we were in another real estate bubble
If you would have listened to any of these predictions, you too would have been wrong about the 2011
to 2014 real estate market cycle. In fact the 2011-2014 real estate market cycle ramped up to be one of
the most profitable seller markets since 2004-2006. Lender owned inventory cleared out in 2012 and
real estate values appreciated back to normal levels by 2014. This market cycle featured high inventory
levels and even higher buyer demand from investors taking advantage of low priced cash flowing rental
properties.
Financing was more of a challenge however many investors purchased their assets with cash to
eliminate appraisal and financing challenges. Many investors regretted their procrastination when it
came to investing in the local phoenix real estate market often wishing they had a second chance to take
advantage of another sellers market.
Now comes your second chance!
As we entered 2014 the Phoenix real estate market became balanced and for the most part normal until
March of 2015. At this time the real estate market index started its steady increase from 105 to 148
which caused the phoenix real estate market to go into another sellers market which caused Phoenix
real estate to appreciate again. This time the market is appreciating for different reasons. We have ultra
low inventory levels and moderate demand from consumer buyers that have lost their home due to
foreclosures or short sales. This organic demand is better then the artificial investor demand created in
2011 and 2012. The 2015 market demand is more predictable and is causing bigger jumps in real estate
values than the previous market cycles which is creating more profitable investment opportunities than
what was available in 2011.
34
Below are analysis on 3 different real estate portfolios that compare the 2011-2014 real estate market
cycle with the 2015 real estate market cycle
The example above illustrates the purchase of 6 investment properties around the beginning of 2011. In
this example, we have seen values double over the course of the last 5 years. This investor purchased
their properties with all cash, no financing. If this investor would have purchased these properties with
30% down, 70% ltv financing their estimated annual rate of return would have been 73%.
The years 2010 and 2011 represented the bottom of the real estate market. However during this time
Phoenix had excess inventory on the market and the primary demand were investors purchasing this
excess inventory.
35
The example above illustrates the purchase of 13 investment properties around the beginning of 2011.
In this example, we have seen values nearly double over the course of the last 5 years. This investor
purchased their properties with all cash, no financing. If this investor would have purchased these
properties with 30% down, 70% ltv financing their estimated annual rate of return would have been
60%.
Although the real estate market appreciated in value over the course of the last 5 years value jumps
were limited. Appraisers that valued properties on conventional financing purchases often ignored
certain high comparables and used lender owned or short sale comparables to keep values in check.
Appraisers were more conservative during this time because they were unsure about how fast the
Phoenix real estate market was going to recover.
36
The example above illustrates the purchase of 7 investment properties around the beginning of 2015. In
this example, we have seen values increase by $325,000 over the course of the last 6 months. This
investor purchased their properties financing, 30% down, 70% ltv. Their estimated annual rate of return
is 173%.
Our analysis indicates the 2015 – 2018 Phoenix real estate market cycle will yield higher profits than
the 2011 Phoenix real estate market cycle. As we take a closer look at the 2 market cycles we see that
real estate values are jumping in value due to low inventory levels and growing consumer demand from
people who have lost their home due to a foreclosure or short sale and now they would like to regain
home ownership. Their waiting period is over and they can now qualify for conventional financing.
This is causing 250,000 potential home owners re-enter the market over the next 3-4 years which is has
created another sellers market which will be more profitable and more predictable than the 2011 sellers
market. The bottom line: its not too late to capture the upside of this real estate market.
37
ACTION STEPS
10 STEP CHECKLIST
1. Do your homework on the market
If you've read this guide, you can check that box!
2. Choose a professional team
Real estate is not a solo enterprise. Hire the most experienced agents, financiers, closers, property
managers and others who offer you superior customer service.
3. Determine your criteria
Are you looking for monthly income? Or to increase your net worth? Or maybe both? Figure out
the timeline and goals which work for you.
4. Make investment capital available
You can roll over a traditional IRA or 401k into a self-directed or "checkbook controlled" IRA
LLC (Limited Liability Company) to use as investment capital. IPX offers a complimentary roll
over service (with small filing fees).
5. Acquire property
IPX recommends specific criteria when acquiring property to ensure a good foundation for profit.
6. Renovate
Do you recoup renovation dollars back faster in the kitchen or bath? And what's behind the walls
that may need to be fixed? Select an experienced team so your renovation dollars are spent wisely.
7. Lease and manage
Hire an experienced property management team to ensure your property is well taken care of.
Proper screening eliminates most tenant problems.
8. Continue to assess conditions
Stay current on what's happening with your property and the market. If a tenant's lease expires,
compare your returns if you lease again or sell. IPX acts as your advisor at every step along the
way.
9. Sell
Sell at the right time and enjoy your earnings.
10. Repeat!
38
Now it’s time to take the next step…
Schedule a “One-on-One Consultation”
CEO/Owner
Daniel Butterfield
Call Now 602-254-6244
39
40

Here`s - Investment Property Experts

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