Phil Levy presented on investing in residential real estate in the Santa Clarita Valley. He outlined that now is an opportune time to invest for cash flow, returns, diversification, tax benefits, and eventual financial independence. Levy advised assembling a professional team including an agent, attorney, accountant, lender, inspector, and property manager. When finding a property, investors should consider the area, appreciation potential, rents, expenses, cap rate, and cash flow. Key terms like net operating income, leverage, and exit strategies were also defined to help evaluate investment opportunities.

1. Santa Clarita ValleyResidential Real Estate BNI Presentation on August 2, 2011 By Phil Levy, REALTOR®, CDPE, CIAS Intero Real Estate Services Lic # 01850664 661.313.4717 phil@jpscvrealty.com

2. Investment Opportunity Present climate is opportune to invest in residential real estate for Cash Flow Relatively high returns on investment Diversification Create generational wealth Tax benefits Leverage Appreciation Ultimate financial independence 8/1/2011 2 BNI Presentation by Phil Levy, Intero Real Estate Services

3. Investor Profile According to a 2009 National Association of Realtors the median investor annual income was $87,200. 8/1/2011 3 BNI Presentation by Phil Levy, Intero Real Estate Services

4. Investing Considerations Assemble a team REALTOR® Quarterback Source of available listings Pencil out the figures Primary source of research and data Negotiator Get the deal closed Helps you identify and coordinates within limits of confidentiality the rest of the team Attorney Accountant/Tax Advisor 8/1/2011 4 BNI Presentation by Phil Levy, Intero Real Estate Services

5. Investing Considerations – Cont Assemble a team – cont Insurance SD IRA Custodian Loan Officer Appraiser Inspector Title Escrow Handyman Contractor Property Manager Cleaning service Landscape Maintenance 8/1/2011 5 BNI Presentation by Phil Levy, Intero Real Estate Services

6. Investment Considerations Cont – Finding the Right Property Area Appreciation Rent Rates Vacancy Rates Net Operating Income Cap Rate Prices Condition Leverage Cash on Cash Return Property Taxes Holding costs 8/1/2011 6 BNI Presentation by Phil Levy, Intero Real Estate Services

7. Investment Considerations Cont Crucial Definitions Net Operating Income Expected rent less operating expenses Excludes debt service = principal plus interest payments Cap Rate – Net Operating Income divided by value of the property. Used to compare alternative acquisitions. Cash Flow – Net Operating Income less debt service. MUST BE POSITIVE Cash on Cash Return – Cash Flow divided by investment. Used to gauge profitability. 8/1/2011 7 BNI Presentation by Phil Levy, Intero Real Estate Services

8. Investment Considerations Cont. Crucial Definitions – cont. Leverage – the amount borrowed divided by value of the property. Overleveraging can cause serious problems if the value drops. Some leverage can magnify returns. Rule of thumb: Stay no higher than 60% to 75%. Cash flow should always project positive even after debt service. 8/1/2011 BNI Presentation by Phil Levy, Intero Real Estate Services 8

9. Real Life Example 8/1/2011 9 BNI Presentation by Phil Levy, Intero Real Estate Services

10. Protecting the Downside Exit Strategy Always buy with the idea that the property will be sold some time in the future Avoid unusual ,“white elephants” Determine in advance triggers and actions to exit Sell Refi Line up supplemental financing Maintain cash reserves – at least 6 months carrying costs. Vetting the tenants 8/1/2011 BNI Presentation by Phil Levy, Intero Real Estate Services 10

11. Conclusion This is an opportune time to invest in residential income property Great returns with upside potential Great referrals are anyone Saving for college and/or retirement Striving for financial independence Wants an independent business Wants to build generational wealth And… wants independent professional advice and analysis on each alternative. 8/1/2011 11 BNI Presentation by Phil Levy, Intero Real Estate Services