Hey it’s Ted,

Have you really started to take this apartment building investment
stuff seriously yet?

Did you know that, according to the Wall Street Journal, if you
were 65 years old today you would need about 2 million dollars
in investments and savings to retire and live a comfortable middle
class life through retirement?

How close are you to that number? And more importantly what actions
are you taking today to make sure that you reach number?

Do you want to continue working into your 70’s? Unfortunately, that
will be a reality for many, many seniors in the coming decades.

Would you rather spend your retirement years hitting golf balls
in the Bahamas or checking out candy in the drugstore?

I’ll bet that your financial adviser or stock broker is probably
not recommending that you start investing in apartment buildings.

If you ask him why not he will probably say:

1) It’s too risky

2) You have to deal with tenants

3) It’s just not safe

4) You don’t know anything about it

***But the real reason your financial planner won’t recommend
an apartment building investment is because he or she doesn’t
understand them!

The financial planners that I know are great people but
almost none of them have any experience or knowledge in
real estate. They are comfortable recommending stocks, annuities,
bonds, mutual funds and will even sell an REIT if all else fails.

But they have no direct knowledge of how apartment buildings
create long term wealth with relatively little risk.

For example, let’s compare Apples to Oranges. If you own an
apartment building and, god forbid, it is severely damaged by a
storm or other catastrophe, your insurance company will pay for the
building to be rebuilt.

An apartment building investment is NOT guaranteed but it is
insured.

On the other hand, if you own stock in a company that
suddenly has major financial problems, you are not insured against
that loss. Sure, it is rare for a company’s stock to go to zero but
it does happen. It’s much more likely that the company will stay in
business and see a lagging stock price for a long time. This is what
a stock professional would refer to as a great “buy and hold” stock.

Today’s mini lesson will show you exactly how to figure out your
precise investment returns for five years in the future. If you
are truly serious about taking the next step and controlling your
own financial future then order my fully interactive E-course today

“Buy Your First Apartment Building E-Course”

My E-course will take you by the hand and show you step-by-step
precisely how to go from novice to profitable apartment building
investor.

Enjoy the mini-lesson:

The three factors that contribute to the profitability of an
apartment building investment are:

1. Amortization — The payoff of the loan balance over time

2. Appreciation — The increase in real estate value over time

3. Leverage — Controlling a high value investment with
relatively little money

Generally, the first time apartment buyer will approach his new
investment vehicle using an analysis that only takes into
consideration the first one or two years of ownership. This is a
mistake because it doesn’t reflect the fact that apartment
buildings will see a greater rate of return as the time of
ownership increases.

Determining the returns on investment or ROI for the apartment
building should initially include an analysis that at least covers
the first five years of ownership.

Unless the investor plans to quickly improve the property and
quickly sell it for a profit it is much more beneficial and
realistic to do an economic analysis of the property that
encapsulates the first five years of ownership because, as will be
shown, the financial benefits of apartment building ownership
increase exponentially over time.

For a realistic example, we will assume that we are purchasing a
$500,000.00 apartment building.

We are going to mortgage the property with a 25 year, fixed rate
commercial loan at an interest rate of 7.0%.

The mortgage loan amount is $400,000.00.

The Net Operating Income is $47,000.00.

We also are going to figure in about $12,000.00 for closing costs
including appraisals and bank fees.

The annual mortgage payment including principal and interest is
equal to $33,925.44.

Now do some math:

Net Operating Income $47,000.00

– Loan Payments $33,925.44

= Cash Flow $13,074.56

This means that the total cash flow on the property is equal to
$13,074.56. We had a total investment up front of $112,000.00.
Our first year annual cash-on-cash return is equal to exactly 12%.
That’s not too bad for the first year of ANY investment.

Now, let’s look to see what happens after five years. We will
assume that the value of the apartment building, the net operating
income and the expenses have all increased at an average rate of 3%
a year. Over time, 3% is a safe figure to assume.

Here are the raw numbers for year 5

(Present Loan Balance: $479,658.00

Net Operating income: $54,485.88.)

Cash Flow: $20,560.44

ROI at Year 5: 18%

Value of Property: $579,636.04

ROI at Year 5: 14%

Amount of Loan Paid Off (amortization): $29,342.00

ROI at Year 5: 5%

Total Annual Return On Investment at Year 5 = 37%

In year five the NOI has increased from $47,000.00 to $54,485.88.
Our return now has increased from 12% to 18%. But this does not
take into consideration the returns we have gained from
appreciation in the property value and the amount of the loan
payment that has gone to pay off principal. We have gained an
additional $79,636.04 in property equity value due to appreciation
and an additional $29,341.00 in value due to the principal being
paid off on the loan.

Leverage has made this made this tremendous return possible.
Remember, these numbers are based on the fact that the investor is
a controlling a $500,000.00 apartment building with a total
investment of $112,000.00

An investor can perform this math on any apartment building
investment that he or she is investigating to estimate what the
returns will be over the next five years. Using the example above
it should be obvious that even in an economy that is experiencing a
down turn, the intelligent apartment investor can realize great
returns.

If you are truly serious about taking the next step and controlling
your own financial future then order my fully interactive E-course at

“Buy Your First Apartment Building E-Course”

My E-course will take you by the hand and show you step-by-step
precisely how to go from novice to profitable apartment building
investor.

Also, please feel free to email me personally with any questions
you have.

Order the full course here at
“Buy Your First Apartment Building E-Course”

Sincerely,

Ted Karsch
Creator of the “Buy Your First Apartment Building E-Course”

Apartment Investing For Long Term Wealth

Hi there new apartment building investor,

Have you been watching the news lately?

The economic front is looking pretty grim right now. Stocks are
sliding. The feds are intervening but it doesn’t seem like the
falling prices in the residential sector will stop any time soon.

From my experience in investing I have learned that during
downturns like this the intelligent investor can actually position
him or herself to see great returns in the years to come.

But…you have need to look beyond the headlines and base your
investment decisions on reality.

Are you ready for the challenge?

There are hundreds of thousands of people, right now, being
displaced from their homes due to foreclosure.

***And the reality is that people will always need a place to live!.

Where do you think these displaced people are going to live?

***In apartments.

As an apartment building investor you will be in a position to
offer these people a great place to call home while reaping the
financial rewards of your foresight for years to come.

I hope you enjoy this mini-course lesson on buying your first
apartment. And if you are truly serious about getting a first-class
education in apartment building investments then I highly suggest
you order the full E-course “Buy Your First Apartment Building
E-course” by visiting:

“Buy Your First Apartment Building E-Course”

The sooner you begin, the sooner you will be on the way to reaching
your goal of having your own cash flow generating apartment building.

Investing In Apartment Buildings Today

In today’s volatile financial markets the savvy investor needs to
look beyond traditional financial vehicles such as stocks and bonds
to ensure long term capital growth and security. Ownership of a
multi-family apartment building can be a great investment strategy
as part of a larger well diversified portfolio. Unfortunately,
many novice commercial real estate investors have been deterred
from apartment building investment with thoughts of weekends spent
painting or even trying to collect past rent from overdue tenants.
Nothing could be further from the truth. There are some surprising
facts about apartment building investments that will completely
change the way you view this unique investment vehicle.

Warren Buffet once famously said that he prefers to invest in a
market “when there is blood in the street”. In other words, the
investment guru looks for opportunities while others are looking
away. Residential real estate markets across the United States are
in a tail spin. Foreclosure rates are at record highs in many
metropolitan markets. Nobody knows if there is an end in sight or
if more families will be pushed from their homes due to rising
mortgage payments and an economic slowdown. Instead of buying into
a weak residential housing market while prices are still declining,
a strategic investment made in a medium sized apartment building
allows the investor to provide much needed housing, to a potential
base of millions of displaced people.

Even with a slowing economy and business cutbacks people always
will need a place to live. Demand for rental property has never
been higher. According to a recent United States census,
currently one-third or 36 million of all households in the United
States are renter-occupied. In fact, a full 83% of all households
under age 25 rent and 55% of households between 25 and 35 are
renters. The growing population of senior citizens will also
continue to depend on rental housing as a less expensive and less
burdensome alternative to home ownership.

In contrast to residential homes, many apartment buildings can be
purchased for a price that is well below the replacement cost.
This makes older, well run apartment properties more competitive
with newly constructed properties that must charge higher rents to
cover their mortgage payments. In addition, newly constructed
apartment buildings can bring up the value of existing properties
and increase the value of your investment.

One of the greatest advantages of an investment in an apartment
property is the fact that you will be able to leverage your
investment. Even as the sub prime residential mortgage market is
crumbling, banks are more than eager to lend money on a good
apartment building. Banks will generally lend up to 80% of the
purchase price and in some cases will actually allow the existing
owner to hold up to 10% of the purchase price in the form of an
owner financed second mortgage. This allows the investor to
purchase the property for as little as 10% down. Try getting a
bank to loan you 80% for the purchase of common stocks.

As with any real estate investment, apartment buildings not
withstanding, leverage is one of the primary benefits to ownership.
A bank will supply you with 80% of the purchase price on an
apartment building. For example, if you purchase an $800,000.00
property with a $600,000.00 mortgage and $200,000.00 cash, and the
property increases in value by $24,000.00 after one year, that’s a
3% increase in value but a 12% increase on your $200,000.00
investment.

Don’t forget about cash flow when tallying your potential rates of
return on an apartment building investment. Cash flow is simply
the money left over each month after you pay your operating
expenses and mortgage. You can put that money in an interest
bearing account to increase your overall rate of return or make
improvements on the property to increase its value.

The time is now to add an apartment building to your investment
portfolio so that you may capitalize on the fast changes taking
place in the US economy.

If you are truly serious about getting a first-class education in
apartment building investments then I highly suggest you order the
full E-course “Buying Your First Apartment Building E-course” by
visiting my website here:

“Buy Your First Apartment Building E-Course”

The sooner you begin, the sooner you will be
on the way to reaching your goal of having your own cash flow
generating apartment building.

Also, please feel free to email me personally with any questions
you have.

Order the full course here at
“Buy Your First Apartment Building E-Course”

Sincerely,

Ted Karsch
Creator of the “Buy Your First Apartment Building E-Course”

Buy an Apartment Building — How to Buy an Apartment Building with Intelligence

DSCR and Apartment Building Investments - What is Debt
Service Coverage Ratio?

As a commercial finance consultant I speak with new apartment
building investors on a daily basis whom respond to one of my
flyers or visit my website. Typically, here is how the
conversation unfolds:

Investor: Hello Ted, my name is “first time apartment building
investor” and I am calling because I was visiting your website and
was interested in the loan program you are offering for
multi-family properties.

Me: Great, tell me about the apartment building you are purchasing.

Investor: Well, I found this great 38 unit apartment building in
Austin, Texas. My realtor told me that the gross income from the
property is around $500,000.00 and the taxes are about $15,000.00.
The asking price is $5,000,000.00. I am willing to put down 20% of
my own money and I need a loan right away because the realtor said
there are other serious buyers looking at the property. What do I
need to get a loan on this building?

Me: Have you figured out what the DSCR for the property?

Investor: The what?

Me. The Debt Service Coverage Ratio is the number that banks look
at to determine if the apartment building will pay for the
property’s annual expenses and mortgage payments. DSCR is figured
by dividing the (NOI) by the annual debt service of the property.

…………………………………………………………..
…………………………..

This is where I gently advise my potential client to perform more
due diligence on the property by obtaining the income and expenses
on the property for the past few years so that we can determine
exactly what the net operating income is.

Here is how the property financials break down:

Gross Rents $500,000

Annual Gross Revenue $500,000

Minus 5% Vacancy Rate $25,000

Actual Gross Income $475,000

Real Estate Taxes $7,500

Insurance $2,500

Maintenance $2,500

Exterminator Service $2,500

Up Keep $2,500

Utilities $2,500

Off Site Management Fee 5% $25,000

Replacement Reserves

$200 Per Unit X 38 Units $7,500

Total Expenses For Operation $52,500

(NOI) Net Operating Income $422,500.00

The net income on this property includes all of the property
expenses except for the monthly debt payments or “debt
service”. The “debt service” is simply the principal and interest
payment on the mortgage paid over a one year period of time.

Loan Amount: $4,000,000

Interest Rate: 7%

30 Year Term

Debt Service = $319,345.20

To figure out the DSCR, divide the NOI ($422,500.00) by the Debt
Service ($319,345.20).

NOI $422,500.00/ Debt Service $319,345.20 = DSCR of 1.32

With a 20% buyer down payment this building has a DSCR of 1.32.
This basically means that the building’s income will cover all of
annual expenses including the loan payments while still showing a
profit. Banks
are eager to lend money on a property like this. A DSCR number of
1.0 would indicate that the building is breaking even and a DSCR
lower than 1.0 means that the building is losing money. Commercial
lenders require that an apartment building have a DSCR of 1.2 or
higher.

Armed with this information, the diligent investor is one step
ahead of the herd. Preparing an accurate loan package is an
essential ingredient to your success as an apartment building
investor and calculating the DSCR early on in the process will save
you a lot of time and headaches.

Order the full course here at
“Buy Your First Apartment Building E-Course”

The Zen monks in Japan have a saying: “if you see the Bhuda in the
road, kill him.” There are a lot of so called “Gurus” or self
proclaimed real estate “Bhudas” in the real estate investment
education business . You have seen their late night infomercials.
These “Gurus” offer you outrageous promises of how easy it is to
get into this business. I am not one of those real estate
celebrities. I am just a normal guy. I don’t drive a Ferrari or
take a helicopter to my Manhattan roof top office to meet with
Donald Trump. And, if I ever become that successful in this
business I probably won’t have time to write these courses anymore.

While designing my course, which is an ongoing education for me
also, I have researched all of the available information about
purchasing, managing, financing and selling apartment buildings.
I also have relied upon my years of experience buying and selling
commercial real estate of all kinds. I have put everything I
learned in an easy to understand course.

Check out what you receive and learn with the full course here:

“Buy Your First Apartment Building E-Course”

My goal is simple. I want to provide you, the beginning apartment
building investor with all of the tools and all of the knowledge
you will need to begin investing in apartment buildings.

I’m not like those other guys. I drive a Pontiac not a Ferarri,. I
don’t have glossy brochures or fancy shmancy websites. What does
any of that have to do with serious real estate investing?

What I do have is REAL and USEFUL information.

If you use my course information correctly, and work hard, I know
you will be successful. If that means buying a sports car –
please, by all means enjoy yourself. Personally, I got involved in
real estate investing to give myself more free time to enjoy life
and not be tied down to a 9 to 5 job.

What I have done is try to separate the junk and hype from the REAL
INFORMATION.

Order the full course here at my website:

“Buy Your First Apartment Building E-Course”

Sincerely,

Ted Karsch
Creator of the “Buy Your First Apartment Building E-Course”

Hello New Apartment Building Investment Student,

The first skill you need to possess as an apartment building
investor is the ability to distinguish between a smart
apartment building purchase and one that will lose money.
The first step in this process involves determining the value of
the building and what rate of return you will see on your
money.

Your first lesson will teach you exactly how to determine an
apartment building’s investment value using the CAP rate.

If you are truly serious about getting started in the
lucrative business of apartment building investments then I suggest
that you order my full course today by visiting my website at

“Buy Your First Apartment Building E-Course”

Just scroll down to the bottom of the page and click order now.

Remember, the full, in-depth, course is only $79.95.

Determining the Value of an Apartment Building Investment
Using Cap Rates

Determining the value of an apartment building investment is one
of the greatest difficulties that many new commercial real estate
investors face. Most people who invest in apartments have some
experience investing in other types of real estate, typically
residential homes or duplexes and triplexes.

The issue that new investors face is the fact that apartment
buildings are valued by
different methods than residential real estate. In fact, it is
usually quite easy to find the fair value of residential estate
using a comparative sales approach. The comparative sales approach
simply uses the existing sales prices of similar residential
properties in that particular area and determines value based on
an average sales price of comparable properties. This should be
very straight forward. However, commercial real estate investors
and appraisers use a variety of appraisal methods to determine the
fair market value of an apartment building. These new methods
should not deter the new investor because once they are understood
they actually will help tremendously to locate the best
building for acquisition.

The first unfamiliar term that a new apartment building buyer
will encounter is the capitalization rate or CAP rate for short.
As the new investor is searching for an apartment building his
realtor will supply him the CAP rate of the property. The CAP
rate is a measure of the income produced by an apartment building
divided by the cost of the building.

For example: if an apartment building is purchased for the price
of $1,000,000.00 and the property produced an annual net operating
income of $100,000.00 the CAP rate of the property is 10%.
(Net operating income is gross rents minus expenses.)

Net Operating Income: $100,000.00

Purchase Price: $1,000,000.00

CAP rate = 10%

An investor can also use the CAP rate to determine the maximum
price he can pay for a property when he knows what the net
operating
income is.

For example, if the investor is looking at an apartment building
that is seeing a net operating income of $150,000.00 and he wants
to see a CAP rate of 11% he can determine the maximum purchase price
as follows:

Net Operating Income: $150,000.00

CAP Rate: 11%

Maximum purchase price: $1,363.636.00

This simple formula to devise the capitalization rate of an
apartment building is limited however. The simple CAP rate assumes
that the investor will be purchasing the property for cash and does
not take into account the financing terms that will affect the
investor’s rate of return on the building. In other words the
simple CAP rate is good number to use when comparing apartment
buildings as potential investments but a little bit more analysis
is necessary to determine exactly what the true rate of return will
be on a particular building when using financing to purchase the
property.

The goal for the individual investor is to determine what the
property is worth to him or her. In other words, the investor
should only be concerned with paying a price for the property that
allows him to realize his sought after rate of return. The best
way that I have found to determine the investment value of an
apartment building is to use the “Band of Equity Investment Method”.

The “Band of Equity Investment Method” of determining value will
tell you the maximum price that you can pay for your apartment
building and still realize the rate of return that you are looking
for. The greatest advantage of this valuation formula is that it
takes into consideration the terms of financing that the investor
is using to purchase the property. Thankfully, this method is not
that complicated and it merely requires that you know some
financial information about the property and the terms of the
financing that you will be using.

Here is how the “Band of Equity Investment Method” is figured:

Mortgage: Loan To Value of Mortgage X Mortgage Constant

= _____________________

Property: Down Payment on Property (as a percentage)

X

Desired Rate of Return

= _____________________

Mortgage: 80% (.80) X 7.99% (.0799)

= .06

Equity: 20% (.20) X 11% (.11)

= .02

.08

Cap Rate

= 8.0%

With this new “derived” CAP rate you can now determine your maximum
purchase price for any apartment building and ensure that you will
be realizing at least an 11% rate of return on your
investment. For example, you are out looking at 14 unit apartment
building with your realtor and he tells you that the net operating
is $150,000.00. You know that your bank will give you a 30 year
loan at an interest rate of 7.99%. You know that you need to see
at least an 11% return on your investment. You simply divide
$150,000.00 by your derived CAP rate of 8% and you get the price
of $1.875000. You know that you can purchase the building with a
20% down payment and a 30 year loan at 7.99% and still realize a
net return of 11% on your investment.

If you are truly serious about getting started in the
lucrative business of apartment building investments then I suggest
that you order my full course today by visiting my website at

“Buy Your First Apartment Building E-Course”

Just scroll down to the bottom of the page and click order now.
Remember, the cost for the full, in-depth, course is only $79.95.