© 2002 Society of Industrial and Office REALTORS® WEALTH BUILDING in the 21 st CENTURY ROBERT J. NAHIGIAN, FRICS, SIOR, CRE SIOR 2006 FALL AUBURNDALE

© 2002 Society of Industrial and Office REALTORS®

WEALTH BUILDINGWEALTH BUILDINGin the 21in the 21stst CENTURY CENTURY

ROBERT J. NAHIGIAN, FRICS, SIOR, CREROBERT J. NAHIGIAN, FRICS, SIOR, CRE SIOR 2006 FALL SIOR 2006 FALL AUBURNDALE REALTY CO. CONFERENCENEWTON, MASS.

INVESTMENT CHOICES

STOCKS REAL ESTATE

BONDS

MUTUAL FUNDS

COMPANIES COMMODITIES

BTSBTSEXISTINGEXISTING

SPECSPEC

REAL ESTATE CYCLESSECULAR

PEAK?? PEAK

BID-ASK SPREADS

“Denial Phase”“YIELD CHASERS”

RECOVERY

BOTTOM

BUY LOW/SELL HIGH


Why Real Estate?

• Why do people invest in real estate?

• TO MAKE MONEY?

• Really?


MILLIONAIRE PROFILEIdentifying the RE Investor

• MILLIONAIRES = $1-10 ML

• AVER. HSHLD NET WORTH = $3.7 MILL

• AVERAGE HSHLD INCOME = $131,000

• MANY BETWEEN = $50-75,000

• Source: Money Fall 2002, Millionaire Next Door/


U.S. AVERAGE MILLIONAIREU.S. AVERAGE MILLIONAIRE

• Aver. Median Hsehld Income Aver. Median Hsehld Income = $ 131,000= $ 131,000

• Aver. Income Aver. Income = $ 247,000= $ 247,000

• Aver. Hsehld Net Worth ’05 Aver. Hsehld Net Worth ’05 = $ 2.2 Million= $ 2.2 Million

• Total Hsehlds Millionaires ’05 Total Hsehlds Millionaires ’05 = 8.9 Million= 8.9 Million

• Total Hsehlds ’05 Millionaires w/o RE = 2.5 MillionTotal Hsehlds ’05 Millionaires w/o RE = 2.5 Million

• Source: Wikipedia.org/Millionaire Next DoorSource: Wikipedia.org/Millionaire Next Door


ALL U.S. NET WORTHCAN THEY INVEST?CAN THEY INVEST?

• Median Income 2004 = $ 44,389

• Aver. US Salary ‘06 = $ 17.00 / Hour

• Net Worth 2004 = $ 100,894

• Aver. Median Hshld Net Worth 2005 = $40,200

• Source: US Census Bureau/CNN Money 8/20/04


BIG HAT, NO CATTLEBIG HAT, NO CATTLE


Wealth BuildingWealth Building

• Biggest Consumption Category

• Income Taxes

• Lifestyle


HOW DID THEY GET HOW DID THEY GET THERE?THERE?



• Income Taxes: 2003

Income FederalEarners Revenues

1% = 34.27%

5% = 54.36%

50% = 96.54%Source: TaxFoundation 2/2/06; IRS 2003



• Lifestyle

Feds 33 38%

State 5.0 –9.0 %Self-Employment 12.4 %Medicare 2.9%Deduction Phaseouts $_??_______

60%/92%


BUILDING WEALTH

• INCOME IS NOT WEALTH

• BEING RICH IS NOT BEING WEALTHY

• CONSUMPTION vs. ACCUMULATION


Investing

• Discretionary Income (Surplus)

• Placing It/ Commodity

• Future Consumption


U.S. MILLIONAIRES ’05 U.S. MILLIONAIRES ’05 INVESTMENTSINVESTMENTS

• Investment Real Estate Investment Real Estate = 46% of mllnres= 46% of mllnres

• Investment Real Estate ’04 = 13% of portfolioInvestment Real Estate ’04 = 13% of portfolio

• Stocks and BondsStocks and Bonds = 70%= 70%

• Mutual FundsMutual Funds = 68%= 68%

• Source: CNN Money 3/29/06/6/9/05Source: CNN Money 3/29/06/6/9/05


ReturnsReturns

Double Your Investment

• 2/10 Rule

• 14 7/8 % compounded


WHAT YOU NEED TO SAVE

• T.ROWE: NEED 15% OF SALARY

• FIDELITY: NEED 14% OF SALARY

• THE OLD 10% MAY NOT WORK

• SOURCE: WALL ST. J 7/1/06


After Tax Household Savings RateAfter Tax Household Savings RateWHICH COUNTRIES CAN INVEST?WHICH COUNTRIES CAN INVEST?

U.S. 2000 = - 1.3% LBYM

U.S. 2005 = - 0.5%

Japan 2004 = 7.7% = $117,000

French 2004 = 16.0%

Your Client: 15-20% = $ 2.24 Tril. 9/06

Source: US New 2/10/03; 3/24/03; MSNBC 1/30/06/Las Vegas Journal 3/2/06


NATIONAL SAVINGS RATE

• US: 2004 13.6% OF GDP

• JAPAN: 2004 25% OF GDP

• CHINA: 2004 50% OF GDP

• Source: Boston Globe 1/30/05


U.S. CONSUMER DEBT

• 2004 U.S. Average Credit Card Debt: $9,312

• Aug. 2006: US Households at Record Debt

• 2006 Consumer Debt = $2.17 Trillion

• Source: Smart Money 9/05MSNBC 8/9/06


U.S. CONSUMER DEBTU.S. CONSUMER DEBT

• June, 2006 = 90,000 Homes Foreclosed

• June, 2006 = 17% higher than June, 2005

• 2006 AMR To Reset = $1. 0 Trillion

• A House = ATM • Source: Investor Business 8/24/06


ENTRANCE STRATEGIESENTRANCE STRATEGIESWHEN INVESTINGWHEN INVESTING

PERSONAL GOALS/OBJECTIVESPERSONAL GOALS/OBJECTIVES RISK THRESHOLDRISK THRESHOLD AGEAGE MARITAL STATUSMARITAL STATUS RETIREMENT ($1,300,000.00)RETIREMENT ($1,300,000.00) TUITION ($200,000 per child)TUITION ($200,000 per child)


THANK YOU

SIOR SIOR

Documents

© 2002 Society of Industrial and Office REALTORS® WEALTH BUILDING in the 21 st CENTURY ROBERT J. NAHIGIAN, FRICS, SIOR, CRE SIOR 2006 FALL AUBURNDALE