June 24-27, 2015
Mandalay Bay Resort & Convention Center | Las Vegas
Think Like an Owner & Perform
Like an Asset Manager
Laynie Miller
Principal, WACE Advisors, CPM, CCIM
June 25, 2015 June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
Speaking the Language
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
Definitions and important concepts
• Cash vs. accrual
• Net Operating Income (NOI)
• Cash flow (CF)
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
Definitions and important concepts
• Cash on Cash Yield (COC)
• Return on Investment (ROI)
• Payback
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
Definitions and important concepts
• Time Value of Money (TVM)
• Discount Rate
• Capitalization Rate (Cap)
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
Definitions and important concepts
• Present Value (PV)
• Net Present Value (NPV)
• Future Value (FV)
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
Definitions and important concepts
• Interest Rate (I)
• Yield
• Internal Rate of Return (IRR)
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
Definitions and important concepts
• Economic Occupancy
• Effective Rate
• Proforma
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
Definitions and important concepts
• Hold Period
• Reversion
• Market Value vs Replacement Cost
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
Remember the Simple Formulas?
• CAP Rate = NOI/Value
• Value = NOI/CAP Rate
• ROI = Profit/Cost
• Payback = Cost/Profit
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
Strategies for investing in Real Estate
• Diversifying their Portfolio
• A stable monthly source of income
• Greater Potential Value Appreciation over time
• Tax Advantages
• Adding Value
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
ROI and Payback
Capital Investment
Expected Earnings or Savings
$8,000
$70
ROI = (earnings*12)/Investment
10.5% = ($70*12)/8000
Payback = Investment/earnings or savings
114.29 mo = $8,000/$60
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
ROI and Payback
Capital Investment
Expected Earnings or Savings
$5,000
$65
ROI = (earnings*12)/Investment
18% = ($65*12)/5000
Payback = Investment/earnings or savings
76.923 mo = $5,000/$65
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
Decision Making
• What is investment strategy?
• What is the Perceived Risk if you hold or sell?
• Is there Capital available to change the
strategy?
• Will the recommendation help meet or exceed
the original goals and objectives for the
property?
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
How YOU can create value
• Increase Net Operating Income (NOI)
• Reducing Needed capital
– Value Add what is the Payback?
What is the Return on Investment
(ROI)?
• Resident Relationships
• Reduce Potential Liabilities
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
The Key to Success - Communicating
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Communicate concisely
Accurate information
Informative narratives
Anticipate questions
Reforecasting
Don’t just state the problem
Do your homework
Market surveys
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas
June 24-27, 2015
Mandalay Bay Resort & Convention Center | Las Vegas
Thank You
Laynie Miller
WACE Advisors
[email protected]
June 24-27, 2015 | Mandalay Bay Resort & Convention Center | Las Vegas