Website     About Us     What we do     Investing  Secret     Consulting     Contact Us  

Driscoll Logo  

Driscoll Enterprises Inc.

Investing in You and Your Future!

 

Issue 39 - September 2014
In this issue
Personal Notes
Education Corner - Wholesale Opportunity
Industry News - Great Resources, Texas is HOT
Projects and Opportunities
Laughs and Interesting Stuff
Dear Family and Friends, (by Kevin)  

 

As the weather begins its gradual movement towards the cooler temperatures of fall we have had a very busy September.  No kids to pack off to school like the earlier years in our lives but nevertheless it has been busy.

 

First, I had a consulting gig. Over the years in corporate America I developed a talent for writing proposals to win work with the federal government and sometimes I have an opportunity to help companies with their proposal work.  This one was very intense because of the short time frame to respond, and I put in about 120 hours over an 8 day period.  The good news is it was a very interesting subject dealing with the training and validation of explosive detecting dog teams.  Pretty cool right?

 

Mary Jane started teaching early morning seminary this month. Seminary is a program our Church has where the teenagers 14 -18 meet each school day and receive instruction on one of the four standard works our church uses: Old Testament, New Testament, Book of Mormon, and Doctrine and Covenants with the Pearl of Great Price.  One book each year.

 

In our congregation Seminary starts each day at 5:30 a.m., yes you read correctly 5:30 a.m.  This means Mary Jane is up at 4:00 a.m. to leave the house by 5:00 to prepare to receive these young adults at the Church by 5:30.  Then she comes home a little before 7:00 and prepares for the following days lesson.  It is a very demanding calling and is a labor of love for Mary Jane.

 

On top of all that we have been doing our real estate stuff.

 

Amy is now working her two part-time jobs which is keeping her busy. David has been working several 6 day weeks and Kristina has been working with two families that need extra help. Kristina also took a weekend trip to New York City to participate in a Young Single Adult event with our Church and thoroughly enjoyed herself.

 

As this month closes out we look forward to autumn with the changing of the leaves, apples, corn mazes, and general wonderful weather where your windows can be open.  I love fresh air!

 

Quote of the Month: "What you get by achieving your goals is not as important as what you become by achieving your goals." - Henry David Thoreau.

 

How true this is. I remember how difficult it was to put myself through college and secure the diplomas, especially with a family to support however, that journey changed me in so many ways.  Probably the most important change for me was the development of a strong work ethic.  This trait has served me well throughout my life.

 

So what goals are you pursuing and how do you imagine they will change your life?

 

Enjoy Your Journey,

 

Kevin and Mary Jane

Education Corner

(By Kevin)

 

Wholesale Deal 

 

Last month we took you through our initial analysis of a portfolio of 6 rental homes in South Carolina that will make a dandy buy and hold. 

 

Further due diligence indicates that this portfolio is still a good opportunity with cash flow from day one, however, our plate is pretty full and we aren't positive we can close on time. 

 

So what do you do with a good opportunity that you may not be able to close on?  Just give up and throw in the towel?  Heck no, offer the opportunity to other investors.  This is called wholesaling and that's exactly what we are doing with this cash flowing opportunity.

 

To wholesale a property you first get it under contract to secure it and then perform some due diligence to verify it is a good deal for other investors.  For this portfolio that involved verification of the financials, visiting each house, and additional research to determine potential market rents.

 

When you present the opportunity to your fellow investors it helps to provide a summary of the investment for their review.  Which is what we have done here.  Then if they are interested and qualified then you give them the rest of the information you have.

 

The Chart below summarizes the most recent data including the new negotiated sales price of $275,000 which equates to about $46,000 per home.

 

What we learned since last month's write up was the debt service would likely be around 6% amortized over 25 years rather than the 5% amortized over 30 years we had estimated.  Even with the lower cash flow this portfolio is estimated to generate a total cash flow of $10,448 or about 14.5% cash on cash.  With a 50/50 investor you could each receive ~$5,200 per year with the investor receiving 7.26% cash on cash.

 

We also estimate that over the course of two years the rents should conservatively be able to be raised to where the total cash on cash increases to more than 21%.  This was estimated considering the average rents in the area and other limiting factors.

 

The chart below indicates the projected financial data with our wholesale fee included.

 

As you can see the portfolio is estimated to still generate a total cash flow of more than 13% with the potential to get approximately 20% within a couple of years.  So it should still be considered a good deal by most investors.

 

So just for fun, what would happen if you had enough money sitting around to just pay cash for this portfolio?  In that case, the financials would look like the next chart.

 

Even though there is not debt service the cash on cash return has taken a hit because there is no "leverage" involved with the purchase, however, it is still more than 9% which is a lot better than current savings accounts, money markets, or even CDs are paying.

 

Of course buy and hold isn't the only strategy you can use on a portfolio like this. 

 

You could sell them off one at a time. 

In fact, one current tenant is expecting a lump sum of money coming in soon and has expressed a desire to purchase the house they are in.  The current landlord suggested he would sell it for $60,000 which would be a nice profit over the average cost per home.

Let us know if you are interested.

This portfolio needs to close by October 27th. 

Industry News  

(by Kevin

 

Great Resources:

 

Want to know what is going on with Self-storage facilities, Senior Housing, Apartments, and Retail Properties?  Well Marcus and Millichap have some wonderful resources available to help with these questions.  The following link will take you to Marcus and Millichap's Research Report site.

 

http://www.marcusmillichap.com/research/researchreports 

 

Texas is HOT!

 

Daniel Carter from Windmill Investments reports that Texas is hot and he isn't talking about the temperature.  He talking about the pro-business environment that is creating jobs and thus demand for housing and commercial real estate.

 

"According to the August issue of Texas Economic Outlook from Wells Fargo, the Texas economy has outperformed the U.S for 8 years in a row and continues to do so. Non-farm payroll gains in the state have been consistently higher than the national average for over a decade. Although Texas is known for its oil and gas boom, 11 other industries are also growing rapidly, providing diversified growth. With low labor costs and rapid growth across all industries, employers are expanding payrolls."

 

Given the surge in payroll, it is no surprise that Texas is experiencing a population boom and the follow-on demand for housing and commercial real estate space.  Texas was number 1 in net domestic migration in 2013. 

 

With a lower cost of living, a pro-business environment, and room to grow is it any wonder that Texas is a favorite place for commercial real estate investors to spend their money?

 

Texas A&M suggests that by 2050:

  • Texas' population will grow by 120 percent.
  • 50 percent of that increase will be from people moving from other states.
  • The labor pool, those from 18 to 64, will more than double.

Is this a great place to invest or what? 

Projects and Opportunities 
  • Looking to wholesale a portfolio of 6 homes: see Educational Corner section of this newsletter.  Call or email us for more details. Contact information below.

  • 8% - 20%+ ROI: We are continuing to locate used mobile homes, set them up in one of our Manufacture Housing Communities, and sell/rent them.  If you have between $15,000 and $20,000 you want working harder for you then this could be the right opportunity for you.

We will do all the work and can manage the home for you totally turn key or you can place one of your homes in our community and manage it yourself.  We are very flexible with these opportunities.  

 

We only do 3 of these per month so let us know your interest as soon as possible so we can more fully explain the  process and get your name on the list.

 

Did you know that you can invest in real estate from your IRA or other retirement account?  You can also use your stock portfolio to invest without ever selling your stock? (Think leverage, leverage, leverage!).  These investment secrets aren't well known but they are perfectly legal.  Contact us and/or click on this Investment Secret link to learn more. 

Laughs and Interesting Stuff 

(Kevin and Mary Jane) 

 

Camper's Second Opinion

 

Two campers are hiking in the woods when one is bitten on the rear end by a rattlesnake.

 

"I'll go into town for a doctor," the other says.

 

He runs ten miles to a small town and finds the only doctor delivering a baby.

 

"I can't leave," the doctor says. "But here's what to do. Take a knife, cut a little X where the bite is, suck out the poison and spit it on the ground."

 

The guy runs back to his friend, who is in agony.

 

"What did the doctor say?" the victim cries.

 

"He says you're gonna die."

 

 

Nasty Parrot

 

Fred bought himself a parrot and after a few weeks the parrot started to talk.

 

The good news was Fred's parrot was very bright, the bad news was he had a horrible attitude. 

 

The parrot would criticize everything especially Fred's girlfriend, Mazy.

When Mazy would come into the room the parrot would always have something negative to say.  For instance one day Mazy came in wearing a new outfit and Fred's parrot asked if she'd been shopping at Goodwill.

 

As you might guess this type of behavior was putting a strain on Fred and Mazy's relationship.  Fred tried all the remedies the pet store owners suggested but nothing worked.

 

Finally one day just before Mazy came over, Fred told his parrot he had had enough and the parrot wasn't going to mess with Mazy anymore. And to teach him a lesson, Fred shoved his parrot into the freezer.

 

Well when Mazy arrived she noticed the parrot wasn't anywhere to be found and asked Fred where the parrot was.  Fred responded he had put him in the freezer.  Mazy, being the sweet person she was, insisted he let the parrot out right now, which Fred did.

 

To her surprise the parrot was very polite with "yes mam" and "no mam".  What a change had come over this bird.

 

When Fred left the room Mazy asked the parrot why the sudden change.  The parrot responded with,

 

"Are you kidding?  Did you see what he did to that chicken?"

 

 

Vitamin D

 

Sally the office manager pulls out a bottle of pills and Vera, the blond receptionist, asks, "What's that?"

 

Sally, "Vitamin D".

 

Vera, "Why do you take that?"

 

Sally, "Because we live in Ohio, and we never see the sun."

 

Vera, "Hey, I didn't know they make a vitamin that gives you a tan? Live and learn, Live and learn". 

 

-----------------------------------------------------------------------------------  
Keep On Smiling!

(so people will wonder what your up to AND its contagious) 

 

We are always willing to share information with you so please feel free to contact us

 

Driscoll Enterprises Inc. 332 West Lee Hwy., Suite 200, Warrenton, VA 20186

703-398-1188 or 800-887-0001

[email protected]

Join Our Mailing List