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Realty411 - America's Favorite Real Estate Investing Magazine!


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Based in Santa Barbara and Los Angeles, Calif., Realty411 publishes online and print magazines, e-newsletters and handles marketing communications for companies interested in reaching investors. Enjoy …

Based in Santa Barbara and Los Angeles, Calif., Realty411 publishes online and print magazines, e-newsletters and handles marketing communications for companies interested in reaching investors. Enjoy reading tips and valuable information that can help you in creating long-lasting wealth for you and your family. Real estate is our game, let's play.

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  • 1. Realty411 Print • Online • | Vol. 4 • No. 3 A Resource Guide for Investors WhiteRock Capital, Inc Discover why this growing California investment firm also buys in Arizona Photo: John DeCindis
  • 2. Chris & Ruth Property Flipping ExpertsShare their Secrets on how to rehab and flip properties for Big Profits in this great Foreclosure Market in the Southern California Area. BEFORE AFTER Upcoming Property Tour Event Check our website for Calendar of Events in Southern California Only. Free! Receive Chris & Ruth’s “Property Analyzer” and guide to “How To Start Your Flipping Business”562-304-7787 or log on to:
  • 3. Realty411 Wealth Real Estate The Complete Solution for Real Estate Investors TM FOUNDER WEB MASTER Linda Pliagas ADVERTISING PRESIDENT Nicolas Weinstock Nikolaos K. Pliagas Yes, it is possible to: EDITORIAL STAFF EVENTS & EXPOS Bonnie Laslo Isaac Newark III Lawrence Ruano CALIFORNIA DISTRIBUTION Earn 10-18% in Your IRA! Stephanie Mojica COPY EDITOR Professional Distribution Solutions 1.877.418.6500 Earn 18-35% with Income Property! Chris Wrenn NATIONAL DISTRIBUTION Isaac Newark III KJ Banks: 805.377.6328 PHOTOGRAPHER John DeCindis SUBSCRIPTIONS/INFO: Platinum Properties Investor Network, Inc. helps 310.499.9545 COLUMNISTS people achieve The American Dream of financial Dave Lindahl Jason Hartman freedom by purchasing income property in prudent Randy Hughes markets nationwide. Jason’s Complete Solution for PRODUCTION Join Our VIP Social Network: Augusto Meneses Real Estate Investors™ is a comprehensive system providing real estate investors with education, Questions? 805.693.1497 or 310.499.9545 research, resources and technology to deal with all Realty411 / reWealth magazine is published quarterly in Santa Barbara County. © Copyright 2012. areas of their income property investment needs. All Rights Reserved. Reproduction without permission is strictly prohibited. The opinions expressed by writers and columnists are not endorsed by the publishers. DISCLOSURE: Publishers are not responsible for performing due diligence on the opportunities offered by advertisers. Before investing in real estate, seek the advisement of a trusted financial Featured Properties adviser, attorney or tax consultant. Real estate investing is risky and could result in loss of capital. PRINTED IN THE USA. GOD BLESS AMERICA Connect to our virtual network ~ online 24/7/365 ATLANTA Projected ROI 33% Cash Flow Join us on Today! $2,456 Join us on Today! The FUTURE of DALLAS Join us on Today! TheThe Future of Real Estate Projected ROI The FUTURE of 35% Industry The Real Estate The Real Estate Cash Flow Industry Industry FREE EXPOSURE FOR YOURSELF AND YOUR LISTINGS $5,294 REAL BUYERS • REAL SELLERS • REAL ESTATE FREE EXPOSURE FOR YOURSELF AND YOUR LISTINGS FREE EXPOSURE FOR YOUR LISTINGS! MEMPHIS Projected ROI 29% Cash Flow $3,101 • Global Online Real Estate Marketplace •Global Online GlobalEstateAuctions Live Bidding Marketplace Real Live Bidding Auctions Online Real Estate Marketplace •Listing Style PropertyStyleProperty Offerings Listing Style Property Offerings Live Bidding Auctions BEST of ALL BEST of ALL See terms of service at: Listing Offerings •Fully FunctionalFully Functional Social Networkto Network Fully Functional SocialDesigned to Get Social Network Designed Get IT’S 100% IT’S 100% •Exposure for Real EstateforProfessionals Designed to Get Exposure for FREE! FREE! Exposure Real Estate Professionals Real Estatebid on assets FREE to post listings FREE to post listings Professionals FREE to • FREE toFREE to become a listed service provider and market post listings FREE to bid on assets • FREE toyourself toon assets FREE to become a listedpotential clients! and market bid service provider yourself to potential clients!money off of advertising so our users We make our FREE topay nothing ever! a so our users •We make our money off of advertisinglisted service become Podcast pay nothing ever! & market to potential clients! provider Vol4No.2.indd 2 3/17/2012 2:43:50 AM Vol4No.2.indd 2 3/17/2012 2:43:50 PAGE 3 • 2012
  • 4. “I changed one thing one timeand left the ‘rat race’ forever.I can show you how I did it, Matt Theriault Real Estate Investor Founder of and Host of the Epic Real Estate Investing Podcast on iTunes
  • 5. 8 contents How Real Estate Performs During Inflation 9 Editor’s Letter: It’s EASY to Build Wealth 10 The BIG Property Grab by Dave Lindahl 13 3 Profit Centers to Create Cash Flow 14 Build Wealth Starting with Only $100,000 15 Who’s on the Radio? It’s the Real Estate Guys 16 Jason Hartman’s Financial Freedom Report 18 The Real Estate Scoop in Hollywood 19 LA Clubs Host TOP Real Estate Leaders 20 A Solid Foundation with Whiterock Capital 24 Tom Wilson’s Tale of Two Turnkeys 26 Spotlight on Ohio with Missy McCall Hammonds 28 Why the Industry Seriously Dropped the Ball 30 Tips from Shortsale Masters Bill & Dwan Twyford 32 The Lady Landlords take San Diego by Storm 33 Matt Theriault Helps Readers Conquer Fear 34 The Property Flip Pros Share their Insight 36 Cash Flow In the Carolinas with Alex & Kevin 38 How to Market Your Self Storage Facility 39 Insight from America’s Land Trust Expert 40 401(K) Investing with Accuplan Benefits Services 42 Belize: A Tropical Paradise with a Strong ROI 43 Inside a Note Deal with Tony Martinez 44 Why Arizona Real Estate Leads in Appreciation 46 Mathew Owens, CPA gives 10 Keys for Success 48 Community Buying Group Saves Investors Money 50 Chris Dannenfeldt Shares his Rehab Wisdom 56 Norada Real Estate Helps Investors Profit 58 Seller Financing Options in Indianapolis 59 Market Spotlight: Kansas City, MO 62 Should You Fix and Flip or Buy and Hold? IRCA-LA is Changing Its Name! We are the only Westside Club offering FREE ADMISSION Meetings are on the First Tuesday of every Month Download Back Issues for FREE!! LEARN MORE AT: PAGE 7 • 2012
  • 6. I n this article we’re going to take a Rental property owners, especially those ever, real estate has just gone through a look at how real estate performs in with fixed interest rate mortgages, receive major deflationary period while other com- various macroeconomic climates. higher rental income while their biggest modities such as gold, silver and oil have If you’re following the news expense stays fixed. Thus their cash flow had major upswings. So real estate has less and the actions of not only the US increases. room to fall and less risk than other com- government but most of the major One important note here. In times of modities. governments in the world, then it is very high inflation, properties with shorter But here’s the kicker, cash flow real es- reasonable, maybe even a foregone conclu- rental periods generally perform better tate has a huge advantage over other assets sion, that we are headed for massive infla- so residential rental property with 6 to 12 during deflation: the cash flow! tion in the not too distant future. If things month leases are a good bet. Commercial Even if the value of a rental property get even more out of control we could even rental properties such as office complexes drops during a period of deflation, the rent experience hyperinflation. On the other and shopping centers, which often have 5 checks still give you a return on investment How Real Estate Performs in Times of Inflation & Deflation hand, a case can be made that we’re head- to 10 year leases can actually see cash flow each month. Other investments do not. ing for massive deflation, just like in the go down as expenses such as utilities, in- Plus, it’s easy to find renters during defla- Great Depression. surance, maintenance, etc., increase while tion because banks don’t have the money It is out of the scope of this article to go rents are flat. to lend for mortgages. People can’t buy into details on the factors leading to these How is appreciation affected by periods homes, so they have to rent. If you expect a two scenarios. However, if you are a real of inflation? During times of high infla- period of deflation, your real estate invest- estate investor, or are considering investing tion, the cost of the raw materials needed ment will perform best with longer lease in real estate, then it is important to under- for new construction increases, which also periods so increase your lease durations as stand how real estate investments perform directly affects overall property prices. As much as possible. in each of these two scenarios. the costs of materials, labor, and legal rise, In summary, you can see that residential What happens in periods of high infla- prices of existing properties are positively rental properties do very well in times of tion? The purchasing power of the dollar impacted. inflation and they have advantages over declines. As a result, creditors are getting But what if we’re headed for another other investments in paid back in dollars that are worth less then Great Depression? We certainly hope that times of deflation. they lent out and as a result they raise inter- is not the case, but let’s take a look at how est rates. Creditors like interest rates to be a real estate performs in deflationary times. Lori Greymont few percentage points above inflation. If residential real estate performs well in P.S. – Our team of So let’s use some numbers as examples. inflationary times then you might expect experienced real If inflation hits 12%, then interest rates that it would not perform well as an invest- estate professionals could easily go up to 15 to 20% so creditors ment in times of deflation but as we’ll see can help you create can make money. But at 15% the cost of a that is not the case. a customized investment plan and find mortgage skyrockets and most people can’t In times of deflation, there isn’t much properties in the best rental markets in the afford to buy a home. This happened in the money available to buy anything. This country that fit your plan. ’70s and many other times in history. lack of money creates a lack of demand, As fewer people qualify for mortgages, and the lack of demand forces prices down To reach Summit Assets Group, please call: rental demand increases and rents go up. and that includes real estate prices. How- PAGE 8 • 2012
  • 7. It’s HARD to Make a Living The Complete Solution for Real Estate Investors TM But it’s EASY So you love real estate... but you hate management?to Build Wealth Passive Income 12.25% by Linda Pliagas, founder/publisher First Trust Deeds I n Los Angeles, a com- mute is unbearable. In fact, INRIX®, a lead- We have access to very unique "insider" ing international pro- private lending opportunities. You’ve never vider of traffic information, seen hard money lending like this before. If reports that the City of An- you have $100,000 or more to invest and you gels is the second most con- want conservative, diversified, quick-turn, gested city in the nation. non-pooled investments that repay in about Many Angelenos drive three hours per day just to four to six months contact us for details. Our work. I thought that was bad private lending program is simple and proven. Linda with Dmitriy Fomichenko until I discovered people who of at an event. The simplicity of our private lending program commute into California ev- is unmatched. Visit ery week from other states, salaries. When I discovered or call 480-788-7823 today. only to see their families on how much journalists made, weekends. (I sat on a plane I was shocked and greatly next to a bicoastal commuter disappointed. Let’s just say Listen to The Creating Wealth Show, once.) The sacrifices made it’s a career that you defi- Jasons Highly Acclaimed Investor Podcast: by individuals just to make a nitely have to be passionate basic living (food, clothing, about because media salaries shelter) for themselves and tend to be modest. Having CW 274 - their loved ones is mind bog- loved magazines since I was Fiscal Hangover & Global gling. I know what it’s like a child, I decided to enter the Change with Keith Fitz-Gerald to drive hours every day to profession and watch my pen- punch a clock; it’s tough! nies so that I could invest as Even if you love your much money as possible in CW 273 - profession, commuting for something that I knew was a The Decline of the EuroZone hours, putting up with office sure thing: Real Estate. with Alasdair MacLeod politics and trying to please You see, because I studied demanding bosses can be the mechanics of money on overwhelming. It can also my own, I knew that most CW 269 - be very stressful. Plus, with millionaires made their wealth SWOT Analysis of Income Property, an economy like this, wages through real estate. I under- Facebook IPO & Case Study and salaries are just not very stood vital concepts about generous. Companies seem the time-value of money and to be using the “bad econ- how location and apprecia- omy” as an excuse for poor tion could easily skyrocket a See terms of service at: pay, lack of benefits, and person’s net worth. company perks. But the hardest part I When I was a college thought was getting started. student majoring in journal- So my husband and I worked ism, I was not taught about hard to accumulate the funds Podcast business or finances at all, in fact, nobody ever discussed Continued on pg. PAGE 9 • 2012
  • 8. The BIG by David Lindahl www.REMentor.comProperty GRAB!!T hree years from now you could be living in a water-front property, sleeping in on Monday mornings,doing only the things you want to do andexcitedly walking to the mailbox everyday my first real estate fortune, and the economy is lined up perfectly to have the same thing happen again. I remember when I first started teaching, at the time I owned just under 1,500 units. Peopleready to gather that days set of cash flow would say, “Oh, that Dave Lindahl is so suc-checks the Postman dropped off . cessful because he bought at the right time”…. It’s those cash flow checks that allow which was partly to live this life of leisure and it never In the seven years that I’ve been teach-stops to amaze you how they have gotten ing other investors these methods, I haveas high as they are and they keep increas- accumulated an additional 5,800 units…ing!! but the naysayers do not acknowledge …Or…you could wake up on Monday that, they just focused on the fact that Imorning three years from now, living the started out in the right place at the rightsame life your living now… and if that’s time. Which was true.OK with you, that’s OK with me. But if But now everyone has the chanceyou want to change your life in any way, to “be in the right place and buy at thethat change will probably require money… right time” and here is why...And here’s the deal.…you have about two Over the last few years the economyand a half years to stake your claim and has been devastated by this recession. Aget your share of a lot of wealth that’s lot of people lost a lot of jobs, a lot of un-about to be created during this big property savvy investors have lost a lot of properties,grab. and a lot of banks have lost a lot of money! What the heck am I talking about? I’m Because of this, as everyone well knows, thetalking about the multi-family real estate banks virtually stopped lending. Not only formarket. If you will do for the next three buying investment properties but especiallyyears what most people won’t do, you will for the new construction of those investmentbe able to do for the rest of your life, what properties.most people can’t. Because of this, there has been almost no I’m not talking about becoming a new multi-family properties built in the lastlandlord! God no!! Leave that to the quali- four years.fied management companies who love to OK so why is now such a good time tohandle tenants, trash and toilets. I’m talk- be buying? Well, there is this group calleding about investing in multi-family proper- “Echo Boomers”, they are the babies ofties while the prices and cash flows are at the Baby Boomers, there are over 74 mil-historic lows and watching your wealth lion of them and they just started hittingand cash flow skyrocket as the economy the age of 18 last year.gets better. Why is this important? Because they How do I know this is going to hap- have just started coming into thepen? It happened to me, this is how I made renting age, it is estimated it will
  • 9. take 10 to 12 years for the Echo Boomers to go through the marketplace, just like there were 14 years of Baby Boom- ers. So now we are in a situation where there has been no new supply added to the marketplace but a heck of a lot of demand. It’s going to take the construction industry at least a couple of years to catch up! So you start buying apartment buildings today at today’s lower rents and lower occupancies (remember when buy- ing cash-flowing properties, we ALWAYS buy based on current cash flow), you buy using conservative formulas and you buy with at least a 10% cash on cash return. With cash flowing properties, we ALWAYS buy based on current cash flow), you buy using conservative formulas and you buy with at least a 10% cash on cash return. Which means your properties cash flow now. Then you hold on to these properties, let the manage- ment companies collect the rent, deal with tenants, and deal with the maintenance and repairs. You oversee the numbers and cash checks. As you accumulate more….you cash more checks. Your primary job as an investor is to get into more cash flow- ing deals. And right now is one of the best times to do this because the rest of the population still thinks real estate sucks because that’s all you hear in the news. There is not much competition. As you start moving forward, the market starts to change. We start coming out of this recession, more Echo Boomers enter the market, rents begin to rise, which makes values rise and this makes YOUR monthly checks rise and YOUR equity (your wealth) rise. This continues for a couple of years and all of a sudden, we are into an economic recovery, housing prices and multi-family prices start to rise substantially and the news media starts talking about the “comeback” of real estate and by this time….you are unplugged and living the life of N ATIONAL R EAL E STATE leisure….you are rich. I NSURANCE G ROUP , LLC If you wait until that point to start investing, it’s to late! At that point, prices have risen much higher than they were today and there are many more people competing with you to get those deals! Now is the time to stake your claim, now is the time to secure your future… is the big “Property Grab”. Go out and grab as much as you can and in two and a half years write me and tell me how much better your life is! About the Author: Dave Lindahl is a national investor who owns over 7,000 apartment units. He is also the principle owner of, a real estate investing education company. He can be reached at PAGE 11 • 2012
  • 10. 1 2 R O U N D S The West’s Top Ranked Real Estate Investor’s Club Black Belt Investors, The West’s Top Ranked Resource For Successful Cash and Wealth Building 3 Reality Based Education, Training & Coaching to Keep You in Tip Top Shape 3 Exciting Diversified Topics That Revolve Around Real Estate and Business Opportunities 3 Networking to Help Build Your Team & Sharpen Your Skills 3 A Connection to Keep You Engaged and Motivated 3 Discounts From Local and National Businesses to Help Increase Your Margins 3 Support From Black Belt Investors to Assist You 5 Days a Week 3 All This Information at Our Club Meetings and More! (951) 280-1900Black Belt Investors is a full-time professional network offeringits members education, networking, business referrals, consult-ing and exciting cash and wealth building opportunities. FREE 2Whether you’re a white belt investor just getting started or ablack belt investor looking for new resources, we can assist you webinars and reaching your goals.Corona/Norco, Riverside County – Meet the 2nd Wednesday of the MonthDowney, Los Angeles County – Meet the 2nd Thursday of the MonthVisit Black Belt Investors at:
  • 11. 3 Profit Centers by Isaac Newkirk IIIS ensei Gilliland is one of those indi- viduals who, whether at work or at play, gives it everything he has. Andwhen the CEO of Black Belt Investors to Create(BBI) is not indulging his passion for themartial arts or fishing in the Rocky Moun-tains, he’s helping his investor partners re- Cashflow in 2013alize lifelong dreams offinancial independence. anywhere from three to six risk and will need to wait a few months toHis company BBI is a months. The landlord is in it collect his check.”full service firm involved for the long haul.” Remember that Sensei gets paid in ain flipping, creative fi- Sensei trains and coaches few weeks while the rehabber is waitingnancing, lending and real estate entrepreneurs until the property sells to cash in, a periodrentals. Sensei’s mantra and, when asked his opin- during which Sensei could be moving onfor the coming year is: ion, he’ll let you know that to other deals. “I can put more deals into“There are opportuni- he considers wholesaling the pipeline than rehabbers can. I’m a re-ties in the marketplace Sensei Gilliland, Francisco the foundation of the suc- habber also, so I know that I can typicallythat can create income and Sensei’s son, Carson cessful real estate operator. manage about three rehabs at any one time.streams by short-term “So if I’m an investor who Whereas, as a wholesaler – which is not asinvestments, which don’t require the risk really wanted to get into real estate, and I labor intensive – I can put many, manyof most investment deals.” He cites three don’t have a hundred grand to buy it and more deals into the pipeline. Ultimately,specific areas in which this can be accom- fix it, we can build our cash base through I’m going to end up making more moneyplished: wholesaling, rehabbing, and cre- wholesaling because it doesn’t require any than a rehabber. Remember the Costco ref-ative financing. cash or credit. If you can picture a pyra- erence... It’s all about selling quality prod- It all begins with the wholesaler, ac- mid, you start building with the foundation ucts at a discount to move the inventory incording to Sensei, whom he defines as and that’s wholesaling (learning to find the bulk.”“The go-to-guy who finds and flips fantas- deals and create cash). Then we graduate Sensei also believes that real estatetic deals [for the investor] that are priced to rehabbing or purchasing at auctions or wholesalers have another major advan-significantly below market value. Consider doing some sort of creative financing like tage: the capability of accepting virtuallya Costco warehouse versus a Macy’s. You lease options or seller financing and ulti- every deal that comes along while the re-can get similar products at both stores, but mately becoming a landlord. The problem habber suffers certain constraints. “Rehab-Macy’s will charge you at full retail. I like with most people is they like to start on the bers have a certain criteria of what kindsto think of my company as Costco... We third or fourth level and they can’t because of properties they want to buy. If the prop-buy cheap, we sell cheap, and we are the they don’t have the cash, credit and/or the erty doesn’t fall within their guidelines,suppliers of great quality real estate deals experience.” they tend to pass on the deal. I don’t careto other investors and home buyers.” Just as people have personalities, Sensei if the property is turnkey, if it’s marginal The vast majority of real estate inves- believes that properties (and deals) have or burned down to the foundation. What’s2013tors are landlords and rehabbers and, since personalities as well. The most successful important to me is the price I’m getting it1995, Sensei has been involved in both deals match the personality of the property for and what it’s worth on the after repairareas. “Rehabbers that flip are in it for the to the personality of the investor. “Maybe value side. So price cures all for the whole-short term (immediate income), and land- the rehabber that buys the property is clear saler and, once I get it under contract, I canlords are looking to hold for the long term to make $20,000 off of his flip, but as a sell it to another investor whose criteria(for residual income, tax benefits and eq- wholesaler he probably made $8,000. Now it may fit or keep it for myself. This wayuity). As a wholesaler, our job is to find a the difference between the wholesaler and I’m able to create a dual income stream,great deal, bind it under contract and sell the rehabber is that I didn’t put any money one through wholesaling and one throughthe contract to either an investor or end into the deal, I didn’t have to close on the rehabbing.”user (home buyer). My job is to sell that deal through escrow or title, I didn’t have to In his seminars, Sensei will advise youcontract and get paid in 21 days or less.” suffer the rehab expense or incur the hold- that most investors only know two ways to Typically, Sensei doesn’t wait until the ing cost, and I don’t have to put my hands invest in real estate: buying and holding aend of escrow to get paid like most people together as its sits on the market and hope rental or buying and repairing the He adds: “For the rehabber, he is going and pray that it sells. So I made $8,000 in He takes considerable pride in the fact thatto get paid after he buys it, fixes it, goes 21 days or less without the risks, whereas Black Belt Investors offers its clients op-through escrow and flips it. That’ll take the rehabber is willing to take on all the Continued on pg. PAGE 13 • 2012
  • 12. How to Become a Millionaire (Starting with Only $100K)! O by Kathy Fettke How could the difference in returns be so dramatic? It’s simple ne of the greatest benefits — the use of leverage can help us of real estate investing acquire much more than we could is the ability to leverage on our own. But there’s more! Pat through creative financing. had purchased income property so he The use of OPM (Other was able to apply the monthly rental People’s Money) can increase our returns income toward the debt. In fact, the infinitely. Let’s compare the ROI (Return rents more than covered the expenses on Investment) on three different invest- — so much so that Pat was able to ment vehicles: gold, stocks and real estate. receive a 10% annual return, which Here are some sample case studies of three would net an additional $150,000 people with $100,000 to invest: over the 15 year period. Add that net rental investments. Sandra buys $100,000 worth of gold — income to the $700,000 profit, and Pat’s Real estate isn’t always easy because using no leverage. total return is $850,000 in profit! it does require hands-on management. Joe purchases $100,000 in stocks, but However, what if Pat put all his rental However, that manager doesn’t have to be he buys them on margin so his stock value income toward paying off the loan instead you. There are very good companies who is $200,000. of pocketing it? He’d have all properties specialize in property management. Real Pat uses $100,000 as a 20% down paid off in 15 years thanks to the acceler- estate also requires that you buy right. payment on $500,000 worth of income ated pay-off. Pat would be a millionaire! There are many agents who specialize in property. Plus, those properties would be netting finding high-yielding rental property. Be Let’s look down the road 15 years to an annual rental income of approximately careful about working with agents who compare investment strategies, with the $100,000 per year. Remember, that’s the don’t own rental property because they assumption that each investment increases same amount of money Pat started with. may not understand it. 5% per year in value. (Please note that If you are new to real estate investing, markets go up and down, so this example Let’s summarize these numbers: consider working with someone who is is only being presented for the sake of $100,000 at 5% over 15 years became: highly experienced AND successful in comparison.) $207,000 for gold what you are trying to achieve. • In 15 years at a 5% return, San- $415,000 in stocks You can download a free report, “7 dra’s gold would be worth $207,000. She $1 Million plus $100,000 annual rental Steps for New Real Estate Investors” has slept well at night knowing she owns income for life. at: “real money” and is thrilled that she’s And, while you’re there, join the network doubled her money. Enough said? for free on-going real estate education, • In 15 years at a 5% return, Joe’s Actually, no. There’s more: Taxes. resources, market updates and referrals stocks would be worth $415,000. He Both Sandra and Joe will need to pay to leading agents, property managers and has to pay back the margin so he nets capital gains taxes if they decide to cash wholesalers nationwide. $315,000 and he’s thrilled that he’s tripled out. Today, long-term capital gains tax Kathy Fettke is the founder and CEO of his money. is normally 15%, however Congress is Real Wealth Network “The Real Estate In- • In 15 years at a 5% return, Pat’s considering eliminating the capital gains vestors Resource.” Members have access properties are now worth $1 million. tax. There is discussion of including it as to free education, resources and referrals The initial 30 year fixed loan of $400,000 ordinary income, which could bring it up to turn-key rental properties around the is now payed down to $200,000 so the to as much as 50% in tax. United States. Real Wealth Network has profit is $700,000! Not bad for an initial If Pat wanted to cash out, the capital over 8,000 members, so the shear power of $100,000 investment. gains tax would also apply, unless he numbers allows the group to acquire prop- decided to use the funds to buy another erties at huge discounts. Membership is property through a 1031 exchange. Ad- free. Kathy is also host of The Real Wealth ditionally, Pat would have enjoyed many Show on KABC Los Angeles and on iTunes deductions from owning real estate that and is a regular guest expert on ABC, would not be available with stock or gold CNBC, CBS Market Watch and PAGE 14 • 2012
  • 13. Who’s On the Radio? 3 Profit Centers, pg. 13 portunities in a third area of investing that relatively few get involved in (primarily It’s the Real Estate Guys! due to the lack of expertise available): creative financing aka purchase options. Both wholesaling and rehabbing in- volve equity positions in the property, T not so with creative financing which is hey love real estate and have the flip side of wholesaling. Sensei ex- accepted the mission to share plains: “Say that a wholesaler is looking news, information, ideas, for a property with a minimum equity perspectives and strategies that position of 20 percent. A property that will help their listeners become invest- doesn’t meet his minimum will make ing geniuses. Robert Helms and Russell him walk away from it. But someone Gray are hosts of The Real Estate like myself will come in and structure a Guys™ Radio Show, one of the most deal with that same property. Say that a popular real estate podcasts of today. property is upside down, most people at Their discussion topics, guests, events this point would go the short sale route. – even their sponsors – are all chosen Robert Helms and Russell Gray But if you don’t want that short sale to with this mission in mind. negatively reflect on your credit re- Robert Kiyosaki, author of Rich Dad education and expert perspectives in a port, then you’ll want to use a different Poor Dad says, “If you’re serious about fast-paced, entertaining style. method like ‘subject to.’ I can take this investing in real estate, listen to The The Guys talk investment strategy, upside down property and package it up Real Estate Guys™ – they really know economics, tax and asset protection and sell the paperwork to another home what they’re talking about.” planning, market and property due buyer or investor while leaving the mort- gage in place. What ends up happening “Live where you want to live, but invest is the seller releases his right to the deed with the original debt remaining in the where the numbers make sense.” seller’s name and the new buyer starts making mortgage payments directly to the lender. This creative financing tech- – Robert Helms, The Real Estate Guys™ Radio Show nique is called ‘subject to’ (purchasing subject to the existing financing).” While The Real Estate Guys™ Radio Show diligence, international diversification, Sensei references “the saving of his cred- has been broadcasting weekly on con- and much, much more! it rating” as the principal reason a seller ventional radio since 1997 and is now Gain valuable insights from inter- would opt for ‘subject to’ financing, he heard worldwide on iTunes as the #1 views with notable experts, industry cites other benefits as well. “Their big- downloaded real estate podcast. Plus, leaders and real-life investors. Discover gest benefit is that they don’t have to get it’s free. proven strategies for making money a loan. The loan is already in place.” When you tune-in to The Real Estate with real estate in any market, how to A deal like this may not be obvious Guys™ Radio Show, you’ll hear from avoid common and costly mistakes and to a newcomer, Sensei points out that special guests including the likes of… what is working in the real world right most real estate investment firms don’t • Robert Kiyosaki, The legend himself, now. Relevant topics, credible guests, do deals of this type. “They’re not multi- author of Rich Dad Poor Dad upbeat delivery and no sales hype have faceted. They are mostly salesman work- • Donald Trump, real estate mogul made The Real Estate Guys, (www. ing the cookie cutter method of simple • Steve Forbes, Forbes Magazine, one of the transactions, and they work off commis- • Peter Schiff, economist and author of most listened to real estate talk shows sion, which is typically capped. As an in- CrashPoint 2.0 in the world. There is a new episode vestor, we (BBI) don’t just assist buyers • Rich Dad Advisors - Ken McElroy, released every week, so be sure to and sellers; we present opportunities to Garrett Sutton and more subscribe today by visiting their online homebuyers and investors and we don’t • Success Stories (and Failures) of network. — edited by Lori Peebles work off commissions. We work off prof- Real-World Investors its, which are not capped.” Bonus: SIGN-UP for their free e-mail So when it comes to creating cash The Real Estate Guys™ Radio Show newsletter at RealEstateGuysRadio. flow in the coming year, Sensei and his hosted by professional investor Robert com. Be sure to also “LIKE” them colleagues at Black Belt Investing invite Helms and financial strategist Rus- on Facebook for the latest updates at you to consider wholesaling, rehabbing, sell Gray, the show delivers no-hype and creative PAGE 15 • 2012
  • 14. Inflation Isn’t Coming… IT’S HERE! Over the last five years, the growth rate in consumer preference. In contrast to between the two indexes is much closer, this, PPI tracks specific products and but the “all items” index is still grow- commodities over time. Thus, PPI is ing approximately 17% faster than the a much less subjective index, since it “Core” index. tracks specific products and specific Another point of comparison against commodities, tracking their aggregated the Consumer Price Index is the Pro- price changes over time. from Jason Hartman’s By adjusting the weight- Financial Freedom Report ings and allocation of theA CPI “Basket” it is possible to t the Financial Free- suppress the reported rate of dom Report, we have inflation very significantly. been warning about Comparing the core CPI, inflation for quite a all-items CPI, PPI for finishedwhile. For a long time, the Con- goods, and PPI for all com-sumer Price Index has shown what modities tells a very starkappear to be very benign levels of story. This unmistakableprice increases, leading some to story is that over the past fewbelieve that the monetary expan- years, products and commodi-sion required to finance profligate ties have been exploding ingovernment spending can be done ducer Price Index or PPI. These two in- price while the reported CPI index haswithout consequence. However, analy- dexes differ in a very significant manner remained benign. Even when com-sis of both the methodology that is used that makes their contrast even more tell- pared across a five year time horizon,to create the core consumer price index ing. The Consumer Price index is based the growth rate of PPI finished-goodsand a handful of other price indicators on a weighted basket of goods that is and all-commodities indexes have beentells a significantly different story. adjusted over time. The weightings of nearly double that of core CPI. This The most commonly quoted trend indicates that the priceprice indicator is the “Core CPI” of real products and realthat excludes food and energy. commodities are growingThe stated purpose of this meth- twice as fast as we are beingodology is to show a less volatile led to believe.price indicator. However, food This observation meritsand energy costs are very real further analysis into theand their absence from the component parts of theprevailing index does not make Consumer Price Index. Inthem any less of a necessity. order to provide a basis ofOne of the more common index comparison, it is useful tocomparisons is the Core CPI vs. compare the growth rates ofAll-Items CPI. The disconnect the Core CPI, Food, Hous-between these two indexes is ing, Medical, and Energy.very stark across the last four quarters, different areas are steadily changed, and Since Q4’08, the two aspects that standand since Q4’08. Most of this is due the weightings within categories are out the most significantly are energy andto recent spikes in the price of energy. changed to reflect perceived changes medical costs. Thus, it is quite PAGE 16 • 2012
  • 15. ing that Energy is completely ignored in and more places. The only place where class or wealthy people. In short, infla-the “Core” CPI, and medical is assumed inflation seems to be absent is in the tion has been engineered by the gov-to be a mere 6.6% of the “all items” government reported price indexes. The ernment to transfer wealth from you toconsumer price index. them, and also carries the effect This is where the of transferring wealth from thesubtle problems of re- poor to the rich as their assetported CPI figures come values and rents inflate.into play. The index as- None of us possess thesumes that people spend ability to singularly impactless than seven percent inflation. However, we doof their income on medi- have the ability to singularlycal care. However, it is change the effect that inflationinteresting to note that will have on us. By followinghealth care represents the Financial Freedom Reportapproximately seven- system of prudent investing, itteen percent of the US will place you in an advanta-economy. The dramatic geous position for the infla-growth rate of heal care tionary environment that hascosts is being hidden by suppressing reason for this is quite clear … the po- already arrived and is not likely to endthe weighting of medical costs in the litical authorities do not wish to be held at any time in the near future.reported price index. responsible for pursuing financial poli- Action item: Shift your personal and One of the principal factors that is cies that escalate prices and rob people financial decisions toward defending As the Federal Reserve continues to print more money, it dilutes the supply of money available in the global marketplace, and pushes up nominal prices. The area where inflation lands first is in necessity items like food and energy.holding the CPI index down is slow of their purchasing power. against inflation with high quality fixed-growth in the ‘housing’ segment of the The extended impact of inflation is a rate debt that generates rental incomeindex, which represents approximately steady confiscation of people’s purchas- and is attached to real assets. The illu-41.5% of the total index weighting, ing power by the government. As the sion of stable prices cannot endure in-and reflects the ‘equivalent rent’ of a Federal Re-residence, instead of the market value. serve contin- ues to print Jason Hartman has been involved in several thousand realThe obvious driver of the suppressed more money, estate transactions and has owned income properties in 11housing costs is financial crisis and it dilutes states and 17 cities. His company, Platinum Properties Investorensuing recession that has softened the the supply Network, Inc. helps people achieve The American Dream ofequivalent rent for primary residences. of money financial freedom by purchasing income property in prudentHowever, most people don’t live in the available in markets of an index. They purchase a the global Jason’s Complete Solution for Real Estate Investors™ ishome with a mortgage that has a fixed marketplace, a comprehensive system providing real estate investors withpayment, which doesn’t go down when and pushes education, research, resources and technology to deal with allthe price of their home decreases. Other up nominal areas of their income property investment needs.people sign a lease for a house or apart- prices. The Contact him at or 714-820-4200.ment that frequently lasts one year anddoesn’t go down if housing demand area wheresoftens. inflation The summation of all these factors lands first is in necessity items like food definitely, and the façade will eventuallyclearly points to one inescapable conclu- and energy. Furthermore, it impacts break. When it does, you do not want tosion. Inflation isn’t coming, and it isn’t poor people the hardest since they be among the masses who are clamoringon the horizon; it’s here! The signs of spend a much higher percentage of their for real assets … you want to own theprice inflation are showing up in more income on food and energy that middle real assets that people are clamoring PAGE 17 • 2012
  • 16. The Hollywood elite have been known to dabble in real estate, some amass even greater fortunes than in their acting careers.Celebrity Real Estate Moguls by Stephanie MojicaO ne of the perks of being a celeb- wife Dolores donated 80 acres of land to $500,000. Now 19, Cyrus is earning a rity is the ability to buy man- be used for a future Palm Springs medical more than respectable second income sions that even some doctors and center. Most of their fortune, estimated at from flipping similar properties through-lawyers can only dream about. Celebrities more than $500 million when Hope died out Studio City and Toluca Lake. Judgingsnagging prime real estate is definitely not in 2003, came from real estate holdings by her recent purchases and sales, shenew, but recently some savvy stars have and sales rather than acting revenues. clearly prefers homes with unobstructedcaught on to the importance of developing Miley Cyrus, an actress with her own panoramic views of Los Angeles and spa-multiple streams of income. “Flipping” accomplishments and also the daughter of cious pools as well as hot tubs.houses is a growing trend among Holly- Billy Ray Cyrus of “Achy Breaky Heart” Another famous real estate investorwood stars, ranging from Miley Cyrus of infamy, started eyeing a second career as a is Vanilla Ice, best known for his 1990s“Hannah Montana” fame to iconic actress real estate investor at the tender age of 17. rap song “Ice Ice Baby.” Unlike manyand singer Cher. She could not legally buy her first house fellow celebrities who also invest in real Decades before the “Flip This House” until she was 18, but quickly caught up for estate, Vanilla Ice aka Rob Van Winkle hastrend became so popular in and out of lost time. spoken publicly finding plenty of financialHollywood, acclaimed comedian and ac- One of her recent investments, a 5,173- success flipping houses. Austin, Texas >tivist Bob Hope was an accomplished real square-foot home on 1.15 acres of landestate investor. In the 1960s, he and his in Studio City, quickly netted her about Continued on pg. 59 Miley Cyrus started eyeing a second career as a real estate investor at the tender age of 17. One of her recent investments, a 5,173-square-foot home on 1.15 acres of land in Studio City, quickly netted her about $500,000. Right: Miley Cyrus Photographs: PAGE 18 • 2012
  • 17. A rrive early or you may while work- possible to this incredible business of real not be able to find a ing regular estate entrepreneurship and investment, to seat at the popular jobs as real train and inspire them to do their best and Investors Resource estate ap- reach their own goals and, of course, toCenter of America (IRCA-Los praisers, have fun while doing it.” He says it’s theirAngeles). The only free club in but through way of “giving back” and helping othersSouthern California serves up t h e i r  i n - in this wonderful real estate business thatdelicious finger foods and show- vestments does so much for so many. Although Lovecases some of the biggest names managed to admits that the first few years were chal-in real estate (like Bruce Nor- Robyn Love, Peter Fortunato and Steve Love retire much lenging, the club grew in size and influ-ris, Dave Lindahl, Mike Cantu, earlier than ence, at times accommodating as manyRobyn Thompson, Bob Diamond, Vena anticipated. Now, they dedicate their lives as 350 people. Its reputation for credibleJones-Cox, Frank McKinney, Tony Alva- to spreading their message of financial free- education and serious networking attractsrez, Jack Miller, Peter Fortunato and John dom through sound real estate investing. many, including other local club leaders. LA Clubs Host TOP LeadersSchaub). Hosted by Steve Love and his So how did it all come about? As a matter of fact, their good friend Phyl-wife, Robyn, the gracious couple extend a “The club was actually co-founded eight lis Rockower, founder of The Real Estatewelcome so warm you feel as if you were years ago jointly by Ron LeGrand and our- Investors Club of LA (REIC of LA), askedinvited into their home. Their hospitality selves. He chose us to run the Los Angeles them to join her to operate her monthlyand first-hand knowledge of real estate deal area group because we were his most suc- club too. After 17 years at the helm, Rock-making rounds up hundreds of loyal fol- cessful students in this area,” Steve Love ower wanted to scale back to devote morelowers into the Four Points Sheraton ball- recalls. “But after starting ten groups na- of her time to doing deals and one-on-oneroom in Culver City on the first Tuesday of tionwide, he’d realized that he’d bitten off a mentoring. As the longest-running club inevery month at 6:30 pm. The club recently bit more than he wanted to chew, timewise, Los Angeles, REIC also hosts hundreds ofchanged its name to Prosperity Through so he backed out to spend more time on local followers every month as well.Real Estate, which is a better reflection his many other business endeavors.” Love “So now we run two club meetings everyof the founders’ mission. The Loves be- says the club’s mission was simple fromgan their career in real estate part-time the start: “To introduce as many folks as Continued on pg. 29 INVEST WITH CONFIDENCE I M M E D I AT E C A S H F LOW I M M E D I AT E C A S H F LOW D D iscover the lowest-risk, highest-quality residential investment properties in the iscover the lowest-risk, highest-quality residential investment properties in the country. Using sophisticated methodology, the best investment properties are carefully selected bysophisticated methodology, the best investment properties are country. Using an experienced investor and rehabbed beautifully to secure the carefully selected by an experienced investor and rehabbedinstant cash to secure the best tenants. With competent property management, and beautifully flow, your best tenants. With competent property management, and instant cash flow, your investment pays worry-free dividends from day one. investment pays worry-free dividends from day one. PROFILE OF YOUR FUTURE PORTFOLIO PROFILE OF YOUR FUTURE PORTFOLIO Typical Property “Contact me for a Price $139,000 “Contact me for aPrice: $110,000, fully renovated, built 2005 Rent $1,395Price: $110,000, fully $1,195Currently Rented for renovated, built 2005 free cash flow analysis.” Year Built 2001Currently Rented for $1,195 free cash flow analysis.” TOM WILSON, President Mention REI Voice Magazine and receive one-year of free TOM WILSON, President 408-867-1867 Mention REI Voice Magazine andyour first purchase. free Mention Realty411 or reWEALTH and receive 1 of property management with receive one-year year 408-867-1867 premium home warranty with your first purchase. property management with your first purchases. PAGE 19 • 2012
  • 18. by Bonnie Laslo & Linda Pliagas If any of these stumbling blocks sound familiar then it’s time to take action and access experts who can provide simple solutions to the most common real estate challenges. Over the years, Whiterock Capital, Inc. has been there to provide answers to novice investors just starting out as well as expe- rienced investors who realize they are to busy in their demanding careers to take on real estate investing alone. “We help individuals select the right investments and even assist them with the initial decision making as to what proper- ties in which to invest,” Edrosolan explains. “We are there all the way through the investment cycle, from purchase, to rehab, and to the successful close,” he adds. The Whiterock Capital Inc. niche has specialized in the rehabilitation of dis- tressed properties. They turn toxic assets into performing properties in two states: California and Arizona. Their network of wholesalers, bird dogs, asset managers, agents, and brokers give them ample pickings of buys. Besides their formal professional network, they also rely on bandit signs and other creative market- Richard Edrosolan & Anthony Patrick of Whiterock Capital, Inc.; Photos by John DeCindis ing which puts them in direct contact with Whiterock Capital Offers Clients a Solid Foundation A fter nearly 40 years of cumulative hands-on real estate experience, Richard Edrosolan and Anthony Patrick, owners of Whiterock Capital, Inc. know some of the obstacles that face novice inves- tors. Many of the same questions are repeatedly asked: distressed homeowners. Whiterock Capital, Inc. is interested in multifamily apartments complexes, bulk house packages, pre-scrubbed bank tapes, as well as individual single family deals. * How does one get access to discounted properties? When a property is purchased, improve- * If stable monthly income is needed, which property should be ments are planned immediately. purchased and where? “Just putting in granite counter tops, stainless steel appliances, and knocking out * Is commercial real estate to risky for a newcomer? a wall or two can make or break an inves- * Should I buy for cashflow our appreciation? In California or out of state? tor’s exit strategy,” Edrosolan PAGE 20 • 2012
  • 19. For the buy-and-hold investor simple stag-ing and curb appeal is important because it can 3 Ways to Find Funds for Dealsequate to a lower vacancy by attracting a long- Finding money to invest in real estate is one of the most cited obstacles.term tenant. The challenge of having to scrape money by saving can be a painstak- ing chore.While it can take years of discipline to accumulate funds, many investors may already have access to the resources they need without Education is a Pillar for even knowing it. Whiterock Capital, Inc. shares three often bypassed ways Success in Real Estate investors can find the money they need to expand their portfolio. Edrosolan and Patrick know that the right edu-cation and training makes a difference. In fact, • HIDDEN HOMEOWNER EQUITY Are you a home owner with a fair amount of equity? Is so, you shouldboth of them met many years ago at a bootcamp consider obtaining a home equity line of credit (HELOC), as the rates haveseminar. While discussing their mutual interests never been lower. Additionally, by establishing such a line of credit, you canand philosophies on real estate, they realized that use the equity in your home (or equity in an investment property) to investthey had much more in common than just invest- as you choose. Once established, your line of credit is usually good for upment strategies, and they soon began working as to 10 years. Most HELOCs only require minimal monthly interest paymentsa team. on your outstanding balance. You can repay the balance at any time with- out a prepayment penalty, and the interest paid is generally tax-deductible. Disillusioned with the grandiose promises of-fered by many of the educators at the time, they • HAVE YOUR BOSS CHIP INformulated their own techniques and a system If you are a participant in your company’s 401(K) retirement plan, you maymodel based on their past investing experiences. be able to borrow money (not withdraw as that might create tax penalties)After purchasing hundreds of properties already, from your 401(K) plan. Recently, a Whiterock Capital investor borrowedthey are also on pace to double current holdings the maximum $50,000 from his 401(K) plan, citing financial hardship as hisand volume during the next year. Whiterock reasoning for the loan. Because of his reduced hours at the company, the hardship loan was granted. He then purchased a bank REO in RiversideCapital, Inc. is also expanding their client base County for $56,000. He spent $5,000 to rehab the home and subsequentlyto include others who are also interested in tak- sold it to an FHA first time buyer for $100,000. At the close of escrow heing advantage of purchasing distressed assets in repaid his 401(K) loan in full, but he was over $25,000 wealthier than heeither the California or Arizona marketplace. was before the loan. Edrosolan and Patrick have simplified the in-vesting process for their clients. Patrick explains: • INVEST WITH A SELF-DIRECTED IRA“Clients receive wholesale buyer lists, in-house If you have not heard about a self-directed IRA (Individual Retirement Ac- count) as of yet, not to worry, most people haven’t, either! The vast majorityprograms, financing (no credit is required), of financial institutions want simplicity in their product lines and so they only offer the plain vanilla deposit accounts, certificates of deposit (CD), stocks and mutual funds. Those assets are much easier to manage, and more importantly, generate more revenues for those institutions. Fortunately, a handful of companies will set up self-directed IRAs, which enable you the investor to invest as you choose — such as in real estate! secured trust deed investment programs, private lending opportunities, and professional administrative consulting.” Their streamlined process has created successful and profitable re- sults for many residential and commercial investors. “We have systems and training modules both to develop your skills and enhance your knowledge, not only now but also throughout your future as a real estate investor,” Edrosolan adds. Once an individual is a part of the Whiterock Capital investment team, they will also have the benefits of mentoring, but they will not be instructed by someone reading out of a manual from out of state. Instead, Patrick says they will be personally mentored by knowledge- able individuals who are all successful active real estate investors themselves. “You will be supported in your education not only by your mentor, but by an assistant and a dedicated coaching director, all who are per- sonally involved in your success,” Patrick adds. A Whiterock Capital Richard Edrosolan mentor is with the investor from the beginning of the program, > PAGE 21 • 2012
  • 20. Richard Edrosolan and Anthony Patrick of Whiterock Capital, Inc.W Whiterock Capital, Inc. clients receive wholesale buyer lists, in-house programs, financing (no credit required), secured trust deed investment programs, private lending opportunities and professional administrative consulting.first in helping them to select the best Besides having a direct pulse on their Empire. Price points are very attrac-investment in their area of preference, all investments Edrosolan has managed tive, but proceed with caution. Withthe way to a successful close of escrow. various ways of capital raising and ar- interest rates at a historical low, it is “Your Whiterock Capital personal ranging project funding over the years. very tempting to acquire properties fastservice continues with quick telephone His efforts maintain Whiterock Capital, without thinking of the responsibilitiesand email responses to your questions Inc. with a stable and ready funding that real estate brings. Without a teamand inquiries, seven days a week, 365 for expansion of its current assets and and mentors to guide overleveraged,days a year.” Patrick explains. Portfolio holdings. Currently, the principals invite overwhelmed investors, their exuberancerisk management is the utmost goal. The submissions of houses and mortgage can get them into trouble.principals of Whiterock Capital, Inc. notes up to $200,000, as well as com- Patrick is an experienced inspectorare experienced rehabbers and property mercial apartment complexes up to $5 and property manager who is continu-managers who continuously focus on million. These professionals understand ously focusing on ways to improve qual-ways to improve quality and the bottom win-win structures, and the number of ity and the bottom line. The company’sline. Patrick explains: “We are actively joint venture projects increase daily. inventory of properties is worth a privateon site at these properties looking over viewing for those looking for start-everything in an effort to save our cli- Whiterock Capital is Focused to-finish customer service. Whiterockent’s money and increase cashflow.” While many investment firms spread Capital, Inc.’s mantra of “You choose This type of attention to detail with their holdings among several cities and the opportunity — we do the work”a proactive team inclines investors to states, Whiterock Capital Inc. prefers gives investors simple answers and easybuild a long-term relationship with the to focus on limited markets and instead solutions. It’s a refreshing concept to ancompany, and some clients have been become experts in those areas. For the industry once plagued with complexitydoing business with Whiterock Capital, past few years, their attention has been and mistrust.Inc. since the formal inception of their captivated by Phoneix and an area in Visit orcompany three years ago. Southern California known as the Inland contact them toll free at: PAGE 22 • 2012
  • 21. PAGE 23 • 2012
  • 22. The Tale of Two Turnkeys L by Tom Wilson Some providers call equals less maintenance and more money et me tell you their offerings turnkey, in your pocket. Great properties share about two great but are missing some or these common traits- real estate deals all of the four essential • Built within the last ten years for the busy pro- elements. If the compa- • No structural problems fessional. Both ny selling you the prop- • High quality carpet, flooring, tile, fix- are single family homes that erty does not possess the tures, and appliances have been renovated and are deed, it is not a turnkey. • Nice landscape offered as turnkey rental in- If the seller has yet to • Good floor plan, usable back yard, 3 or vestments. Investor Special Tom Wilson complete renovations, 4 bedrooms, at least 2 baths, 2 car garage #1 is priced at $100,000 and rents for the property is not turnkey. If the prop- • Architecture that fits into the neigh- $1,200—a 1.2% rent ratio. Investor Spe- erty does not have rent paying tenants, the borhood and appeals to tenants and future cial #2 is priced at $100,000 and rents for property is not turnkey. If the seller offers buyers $1,050—a 1.05% rent ratio. Which prop- to “look after” the property until you find Reference Check the Seller erty do you choose? a property manager, the property is not Do you really know who is providing One really is a better deal than the oth- turnkey. this turnkey? Handshakes make me feel er and I’ll let you know why later. How- Now that you understand the four es- good, but a reference check makes me ever, if instead of choosing, you thought, sential elements that define a turnkey feel better. Do not hesitate to ask for ref- “I can’t make a decision based on such property, how do you evaluate the myriad erences, to check the provider’s on-line limited information,” then you’re in the opportunities available to you and get to reputation, and to screen for lawsuits and top 50% of real estate investors. In a mo- the top of the class? By analyzing how bankruptcies. A reputable provider will ment, I’ll help you get to the top of the each deal rates in four major categories: happily answer all your questions and has class by understanding the crucial data Location, Property Condition, Provider, dozens of happy customers ready to sing required to properly analyze a turnkey and Property Management. their praises. If you come across any of deal. Your test will be to use this informa- the following, beware! tion going forward to make investment Analyze the Location • The person you are dealing with is decisions based on information gathered, Location will make or break a deal, and an agent or referral service not on the slickest presentation or the per- we’re not just talking about corner lot or • Any part of the deal seems to-good- sonalities involved. cul-de-sac. Understand what is going on to-be-true First, why turnkey investments are in the region as well as the neighborhood. • You don’t get a firm answer about how not created equal. To the top tier turnkey The best long-term holds have the follow- many of their investors get loans and how property providers, turnkey means that ing in common: often they fail an appraisal. A reputable all the elements of the investment are in • Broad based economy with many differ- provider will seldom fail appraisal. place so that all the investor has to do is ent employers • You are asked to take over a contract for “turn the key” on their bank vault and • Growing population a raw property and cover all of the un- watch the money flow in. Clearly there is • High income, high education, young known expenses for conversion to a rent- more to it than that, but not all that much families al. The seller says that with a little carpet more. By our (and I mean the top pro- • Low vacancies, lower than average fore- and paint the property will be rented in 3 viders) definition, a turnkey investment closures weeks. property has ALL of the following attri- • Stable home prices year-to-year (no big • The provider does not own properties in butes: 1. The provider is in possession of swings) the same area that they are recommending the deed, 2. The property has been care- • Business friendly and landlord friendly to you fully selected and renovated with renters local government • The provider does not own clear title to in mind, 3. The property has been leased, the property (check the county records!) 4. A property management company is ac- Understand the Property Condition tively engaged in managing the property. Make sure you are getting what you Interview the Property Manager After the investor purchases the property, pay for. Really nice properties attract re- Do you really want to question whether the property manager simply redirects the ally stable renters. Pay close attention to you’re being overcharged to fix a leak? rent checks to the investor. the quality of the renovation. High quality Do you want to worry about a lease PAGE 24 • 2012
  • 23. ... how do you evaluate the myriad opportunities available to you and get to the top of the class?being renewed because the property man- that needs replacing because the seller $1,050. The house is only 10 years old,ager did not respond to your tenants? It painted over rotten wood, the hot water comes with a premium home warranty,is maintenance costs and occupancy that heater needs replacing (and there is no is already leased and the appraisal camewill make or break positive cash-flow. warranty), and the HVAC needs repair. in at value. The employment in the stateThis is why competent property manage- His bill is greater than the net income that is the highest in the country, the city hasment is essential. Just as when selecting a was predicted for the first year. The city 25 Fortune 500 companies with diverseprovider, check the references of the prop- he purchased in has only one industry, and economies, the population is growing,erty manager. Look for the following- within a year, the one new UK manufac- rents and values are appreciating. Mary’s• Endorsed by the turnkey provider and turing plant that was scheduled to come to first tenant leased for three years. When itmanages the providers own properties town and employ 2,000 people gets post- did turn over, the property required mini-• Many years of experience andample references• Fees no greater than 10% for upto 4 properties with full service andhalf of one month’s rent for newleases• Experience managing the sametype of property you are purchas-ing (houses, not apartments orcommercial)• Many other rentals in the samearea so they do not need to makea special trip to check up on yourproperty Sam’s Property: Mobile, Alabama Mary’s Property: Dallas/Ft.Worth Yes, there’s a lot that goes into Built: 1962 Built: 2002analyzing a turnkey property, but Purchase Price: $100,000 Purchase Price: $100,000it is YOUR money. Ask questions Down Payment: $20,000 Down Payment: $20,000until you are satisfied, and by all Closing Costs: $2450 Closing Costs: $2500means, visit the property before Prepaid Taxes & Expenses: Prepaid Taxes & Expenses:you buy. $2200 $3300 Additional Closing Funds: Additional Closing funds: $0 Back to the Beginning $5000 Rent Estimate: $1050 Back to the two investor specials Rent Estimate: $1200 Rent Actual: $1050at the beginning of this article, Rent Actual: $1000 Repairs Year#1: $0which are real case studies. (Names Repairs Year#1: $3600 Cash out of pocket Yr#1:have been changed to protect the Cash out of pocket Yr#1: $25,800duped!) $32,850 ROI: Yr#1: 9.5% ROI: Yr#1: -3%Investor Special #1 priced at$100,000 and rents for $1,200,purchased by “Sam.” During the loan poned indefinitely because of economic mal make-ready. It was leased again atprocess the appraisal for the property uncertainty in Europe. Adding salt to the $1,125 before the current tenant movedcame in short and Sam shells out another wound, Sam’s tenant fails to renew his out. The cash flow exceeds Mary’s ex-$5K to close the deal. After closing, Sam lease. Sam experiences another 3 month pectations. Mary earns an A+ because shefinds out that the rent was a “market esti- vacancy and he has to drop the rent to purchased in a top, low-risk, metro andmate” and after waiting for 3 months and $900 because of the now weaker rental from a reputable provider.dropping the price twice, he finally gets it market. Sam is very sorry he didn’t do hisrented for $1,000/mo. homework. For more information about Tom Wilson, Within 6 months Sam is notified that Investor Special #2 is purchased by be sure to visit his website at:the 50 year old house has exterior trim “Mary” for $100,000 and rents for PAGE 25 • 2012
  • 24. Goodby e Corpor ate America Hello Financial Freedom!I by Isaac Newkirk III t was fourteen years ago that Missy McCall Hammonds found herself tiring of Corporate America. As she con- ness I had in 2007, when all financing went away, I would not be sidered new employment opportunities, she set down a in business today.” number of criteria: 1) the replacement of her corporate Missy refers to the market in Butler County as linear, which income, something she could succeed at, no gender lim- means it doesn’t have the highs and lows that are present in so itations, and no limit on the amount of money she could many other areas. “Property values in some areas have decreased, earn. It wasn’t too long before the real estate industry but in many areas they’re actually on the rise. We have a numberpiqued her interest. She looked at the various niches available and of new businesses moving into our area and we have a growingdecided that the rehabilitation of properties was just the ticket for population, which means an increased demand for properties.”her. “I liked taking up new things and making them pretty.” She A professional person who understands that real estate is a goodsays and warns: “However, I fully understood that rehabbing was investment is the kind of individual who typically comes to hera lot more than making things look pretty; it’s updating the electri- enterprise. “My investors understand that real estate is an impor-cal and plumbing [systems] and knowing how a toilet works. It’s a tant part of their portfolio but, as busy professionals, they don’tfull process of the mechanics and the carpentry. It meant learning want to manage it; they just want it to act like stocks and have aa lot more than painting and making it look nice.” return on their investment and for it to be hassle-free. My typical Missy’s escape from the 9-to-5 grind was successful because investor is 40 plus. At that point in their lives, they’re lookingshe researched the industry for one year. She strongly suggests more towards their retirement and thinking long-term.”individuals starting a new business to begin with a plan and bud- Is America on sale? Missy believes that it is. She suggests thatget. “Coming from corporate, we had it drilled into our heads that you come to Butler County, Ohio. “I think we have another threewith every transition we wanted to make we had to find out all the years of foreclosure inventory. And that’s because of governmentpossible obstacles and then found solutions for them.” That busi- intervention in slowing down the flood of markets.”ness plan served Missy in good stead as she navigated the many It is readily apparent to those in the industry that the job marketchallenges of her nascent business. will play the principal role of success in the industry, and Missy is Her real estate business began with no exception. “Without jobs, people can’t make their house pay- sales to homeowners. When the fi- ments. And the job losses across America were staggering the last nancing completely evaporated, three years.” Although total bleakness may exist elsewhere, Missy she was able to move seamlessly says that job market is not so glum in her home county. “Our un- into the investor mode. employment is typically one percent below the national average.” “Your willingness to change Missy believes that the stability of the marketplace — along and adapt to your environ- with demand for properties — would be the primary reason for ment…is the key to your suc- investors to include Butler County properties in their portfolio. cess. Who I was when I started With an occupancy rate hovering at 98 percent, an investor would my business was someone that be hard-pressed to find a more stable investment. sold retail to homeowners,” she says. “If that was the only busi- Visit Missy’s website:
  • 25. Want to Make a Fortune in Notes? We have the Blueprint for Success sset entures LLC (855) 798-1411 Do you own a self storage facility? Are you looking to purchase a self storage facility? Trying to decide if you want to run it yourself or have a management team in place? How do I make it successful? Maybe you are looking for an experienced management team to step in or simply want to improve your team. and have the best facility in town? With the right tools, education Kevin Rollings, CSSM, is a Teacher, Owner and and the perfect coaching, your experience as a Self Storage Manager and Owner can be the start of a rewarding career. Kevin is dedicated to helping other Self Storage Owners and Manage- MASTERS ment Teams get the best potential his expert management tools and tial profits! tricks of the niche. Get the best poten Please visit his site for details on this 2-Day AFFORDABLE Masters call us today at: PAGE 27 • 2012
  • 26. Why the Real EstateIndustry has SeriouslyDropped the Ball! by Marck B. de Lautour, BBA MBA the ones able to buy and properly manage rental property.T Owner, SBD Housing Solutions The fact that Financial Advisors have he Real Estate Industry has ingrained themselves in American culture seriously dropped the ball! to the point that anyone wanting to put And this is not a recent oc- some money aside for retirement is natu- Africa and Hong Kong. Most have never currence…. rally going to do it through mutual funds seen the assets that they own, and yet are The big winner through the or stock investments says a lot about their cashing the monthly rental checks everypast few decades has been the financial customer service. month like industry. People have to invest Not that investing in the stock market is As an all-inclusive real estate invest-their money somewhere andwhen real estate agents, brokers, ...the fact that the RE industry has languished behind inand property managers made itFAR TOO complicated to invest allowing the average John Doe an avenue to invest hisin houses, they turned to thesophisticated and finely tuned hard earned money in Real Estate is a real shame.model of the stock market. Thiswell-oiled machine has done a great job of a bad thing! Not at all…..but by compari- ment firm, we specialize in buildingcatering to those in their wealth accumu- son, the fact that the real estate industry wealth for our clients. Taking a leaf fromlating phase of life. And it seemed that has languished behind in allowing the the Financial Planners book, we actuallyonly those real estate investors that were average John Doe an avenue to invest his take the time to sit and discuss a plan of‘hands on’ with their investments were hard earned money in Real Estate is a real action with our clients; where do they shame. want to invest, what cash do they have Now dawns a new age of investing….. available, do they plan on leveraging their where geography and physical presence assets, when will they be looking to use mean nothing. In the same way the cash flow as an income source for that you don’t need to drive to retirement, all of which are just pieces of a Atlanta and tour the Coca very personal and unique puzzle. Cola plant to feel comfort- At SBD Housing Solutions we handle able investing in Coca the entire operation for our clients. From Cola stock, SBD Hous- targeting properties, the acquisition, utili- ing’s detailed 9-page ties, construction estimates, project man- Investment Prospectus agement, remodel, bill payment, leasing, more than prepares and property management. Our clients an investor to make know that the ‘value added’ is in the an informed buy- details. Being able to invest in Real Estate ing decision.SBD with the same ease as the stock market has Housing Solutions always been the goal. is a Kansas City Although I am not naïve enough to based operation think I can change an industry single but has clients handedly, I believe that we in the Real from as far as Estate services industry can all do our part Brazil, the U.K., to bring some credibility back to the sound Australia, South investment option that is…..housing.
  • 27. Never Miss an Issue! LA Clubs Host Top Leaders pg. 19month,” Love explained. It’s interesting to training seminars, personal real estatenote that the clubs are less than a mile apart deals, two actives sons and even speakingand yet both of them draw large numbers of on up to five one or two-week cruises perinvestors consistently. year, the Loves are certainly busy, yet they REIC of LA is normally held on the sec- always manage to have time to encourageond Tuesday of each monthat 7:30 pm at the Double For more information about IRCA-LATree Hotel in Culver City, (now Prosperity Through Real Estate)but it’s always best to call or REIC of LA, contact: 818-217-4630first as they sometimeshave to move the locationdue to large conventions. of LA, founded by Because of our popularity and unique online www.realestateclubla.comPhyllis Rockower, has a marketing strategies, our publication has twomodest fee of $197 per distinct covers, but we have just one mission:year, which covers the cost of a more ex- and motivate others to not give up on their To Make You Wealthy, Subscribe Today!pensive venue and other membership ben- goals and dreams of financial freedom byefits too. Between juggling two successful investing in real estate.clubs, a weekly radio program, monthly — article by Linda Pliagas 2 Years for Only $ PAGE 29 • 2012
  • 28. Short Sale Investors Receive an Edge For 10 years Bill and Dwan Twyford have been leaders in the world of short sales. Their mission of by Bonnie Laslo helping distressed home owners who are under water have led them to a life of success and acclaim. learned the business the same way — through a direct experience. They met at a REIA group, fell in love, got married, raised three amazing chil- dren together, and turned their personal struggles into their business. They joke, “Our MESS became our MESSAGE!” They believe their success is partly due to the fact that homeowners can relate to them because Bill and Dwan “get it.” Soon after they began helping hom- eowners they started teaching real estate investors how to do what they were doing. Next thing you know they wrote two-best sellers, were guest speakers on many TV shows like MSNBC and Fox & friends, as well as speaking on stages with Donald Trump, Robert Kiyosaki, SuzeOrman, and many others. Assisting as many people as possible in these economic times is a purposeful Bill and Dwan Twyford way of making money. “Sharing shortR sale information to everyone who needs eal Estate is cyclical; therefore, the very FIRST short sale program all the it will help families sleep better at night,” certain niches may work better other guru’s use today), a sea of informa- Dwan says. “It’s a two-fold event, helping than others during given markets. tion and a ton of confusion exist on this the homeowner also helps you and your One thing that is NOT cyclical is topic. Due to the complex and sensitive family.”Bill and Dwan Twyford, the Nation’s most nature of short sales, it’s important to “Short sales give struggling familiessought after real estate investing experts! learn from experienced educators who a fresh start, which resonates with the Bill and Dwan have devoted 20 years have been negotiating short sales for many couple because they both know what it’sto helping people: Investors and home- years. Bill and Dwan use a THREE-STEP like to need a second chance,” adds Bill.owners alike. They help investors become PROCESS that gives them and their stu- When I interviewed Dwan she sharedwealthy and distressed homeowners get a dents an average 75% closing ratio! That a funny story with me, “She was single-fresh start. is unheard of in this crazy industry, yet handedly raising a child and struggling at One strategy that has worked especially they make it happen year after year! a string of dead-end jobs. She knew realwell the past few years has been negoti- estate would create a sense of stability forating short sales. A short sale is when a > Bill Twyford,a former paint contrac- her daughter. She often took her daughterhouse is sold for a lower amount than the tor and single dad to two children, went along and Aylawould play while mommortgage owed on it. Many properties through a divorce and a foreclosure and fixed-up the properties. Dwan’s daughtercurrently have large loans that are valued learned this business through his own (who is now 23) became so fascinatedfor far less,resulting in negative equity. personal experience. with fixer-uppers that when she was a While short sales are nothing new (it > Dwan Bent-Twyford,a single mom and child she went exploring a boarded uphas been prevalent since Dwan started the former waitress at Denny’s, also went home nearby with three of her nine-year-trend back in 1996 — she actually wrote through a divorce and a foreclosure and old friends. The neighbors called PAGE 30 • 2012
  • 29. authorities as they could see movement in the as most havevacant property. Upon arriving, the police were never closed ashocked to find that the intruder was a child real estate dealclaiming to be an investor. “My mom and I do and most ofthis all the time,” the 9-year-old said innocently. the ones who“We look at the houses and buy them.” claim to have Dwan giggles as she recalls this story as she closed dealswas so proud of her daughter while the other have closed lessmothers were horrified! Dwan says that in order than five beforeto balance her limited time she made investing they wrote aa family affair. While she worked in the homes program. Inrehabbing them, her daughter would be by her fact one guruside playing and painting. actually took One of the things Dwan loved about Bill is Dwan’s originalthat he was doing the same thing: Allowing his program andkids to paint and play while he rehabbed his own photo copiedfixer-uppers. her testimonials The Twyfords went through the trials and (with the pagestruggles that many people in a short sale numbers and all) to their website:situation are currently in. It is for this reason and placed them in his own program. they both approach their investing and Another shows copies of his checks They specialize in all areas of realshort sale education from the perspective of from speaking events and claims they estate investing:the homeowner.“The homeowners know and are real estate deals! • Wholesalingcan tell if a person cares for them or not,” Bill The Twyfords have closed over • Short Salessays, adding: “Always do what is right for the 2,000 documented deals and feel • Rehabbing • Rentals • Bulk Buying Due to the complex and sensitive nature • Subject To’s • Rent to Owns of short sales, it’s important to learn from • Forensic Audits experienced educators who have been • And so much more. These are just a small sample of the negotiating short sales for many years. incredible programs they offer to make you the best investor possible. I have interviewed MANY investors over thehomeowner. They have one chance to start over with that kind of experience they are years and I have to honestly say thatwhile investors have hundreds of opportunities to your absolute BEST BET for success Bill and Dwan are top-notch! Theirmake profit.” because you will do exactly as they love of the business, their ethics, their Bill advises investors to keep in mind that the do every day – MAKE MONEY! desire to truly help others is absolutelybanks loss mitigation departments could result IN OTHER WORDS – WORK second to none!in tight margins. It’s important to look at the WITH THE TWYFORDS! Although I am a writer, after speak-big picture and press forward with getting deals An investor should educate them- ing to the Twyfords I’m going to givecomplete. This tenacity, he says, is the key to selves as much as possible before real estate investing a crack myself!being successful. even attempting to negotiate a short I’ll write a follow-up after Dwan helps The Twyfords offer their #1 tips to new inves- sale, wholesale a property, rehab, or me close my first deal…!tors: Stop buying every program that comes invest for long-term wealth. In thedown the pike that promises to do all the work spirit of sharing valuable informa- To speak to Bill or Dwan personallyfor you, make you millions while you sleep, and tion, the Twyfords have created Bill has given me permission to giveallows you to never speak to a bank or distressed hundreds of videos sharing their real our readers his CELL phone number –homeowner. They say to stick to ONE person estate investing knowledge which 303-870-8851. He said to tell him thatwho has a proven track record and let that person can be seen at Linda sent you and that he will giveteach you to run the same multi-million dol- DwanBentTwyford. you a once-in-a-lifetime deal on hislar business that they themselves are running. You can also get a FREE real programs and some FREE coaching toThey say to “beware” of many of these guru’s estate investing program by heading ensure your success! PAGE 31 • 2012
  • 30. It’s a Lady’s World San Diego’s Newest Club Caters to Female Investors by Linda Pliagas she feels this route is risky for new inves- Jasmine Willois and Jason Kennedy R tors to take. She admits that she is not “flip eal estate investing is a diverse happy”. Instead, the club founders want Kennedy filled in for her and spoke about business. A savvy investor to emphasize the message that true investing out of state, and at that very mo- can make money in a wealth is built by holding assets ment Willois knew she had to approachvariety of ways from flipping long-term. him with the opportunity to lead the land banking. Jasmine “Slow and steady wins the Jason Kennedy joined in March of 2012.Willois and Jason Kennedy’s race every time,” Willois says. Willois describes Jason as a perfect fit be-main strategy for success is She adds: “The club has at cause he is a “true gentleman,” one whobuying and holding rental its core the know-how to build is sensitive in fostering a non-competitiveproperties out of California, foundations of adequate cash environment where ladies can reach theirwhich is a niche that was rarely flow.” maximum potential. He too realized thattouched upon at the groups they Even though the clubs name has the ladies of San Diego needed a gentlerfrequented. So in February of “Lady” in it, men are welcomed club where women could let down their2010, Willois decided to start the to the group. Currently, men make hair without feeling intimidated. WhenLady Landlords of San Diego with Stacy up about 40% of the attendees and 50% of one enters through the club’s doors, a seaKennedy, to educate others on how they their online community. of femininity awaits. The color pink is socould maximize their dollars and gener- As fate would have it, in January 2012, boldly displayed in a variety of shadesate more cash flow outside of the Golden Jason’s wife, Stacy, was scheduled to speak throughout the room: Pink balloons, pinkState. at the monthly event, but she was eight table cloths and pink flyers. > Willois says that many investment groups months pregnant at the time and realizedemphasize rehabbing for profit, however she had over committed herself. So Jason Continued on pg. 52 Justin Harrison - AL 205.616.3761 Julie Harrison - MS PAGE 32 • 2012
  • 31. There’s Big Money in Conquering Your Fear: And Here’s How to Do It! by Matt Theriault“Show me the money!” learn how to conquer it, the big money you virtually eliminated from a person’s life. seek will forever exceed your grasp. Then why does fear still stop us? The an- You say, Ok, I will.I Through my own personal experiences swer is simple. Whether a threat is real or and now through several years of coach- imagined, the mind will not automatically t’s actually in plain sight and yours ing others in their real estate investing, I’ve make the distinction. The mind will initial- for the taking, if it weren’t for that come to know fear for what it is 99.9% ly categorize everything as a saber-toothed one thing that stands between of the time: False Evidence Appear- tiger, and unless you ignore that initial as- you and it. That thing is fear. ing Real (F.E.A.R.). Although sessment and consciously re-categorize Fear is what stands between I can’t think of any fear at the your fears for what they really are... False the money you’re mak- moment that I’ve experi- Evidence Appearing Real, you will forevering right now and the money you enced as being real, I’m fall short of your personal potential. Simplywant to make. Just on the other sure there’s an excep- put, the fear we experience today is strictlyside of that fear exists an abun- tion, so I left the .1% psychological. It’s imagined. It “appears”dance of wealth, freedom open to satisfy that ex- real and dangerous, but it’s not.and happiness. Big money! If ception. Whether it’s the lack of time, money,you could only figure out how to Fear, literally, is a distressing credit and/or knowledge that’s hinder-conquer that fear, that big money emotion aroused by impending ing your real estate investing, you’ll wantwould be yours. Such a simple con- danger, evil, or pain. Fear is a basic sur- to know that it’s not those things that arecept, but it almost seems insurmountable, vival mechanism related to the behaviors stopping you. It’s the fear, or the unknown,doesn’t it? of fight, flee, escape, or avoidance. The around those circumstances that stop you; capacity to fear is a And this is our clue as to howWhat? You’re not afraid of anything? Fear part of human na- to conquer fear. The “fear con-isn’t your problem? ture. This emotion is queror” is action. Not only will both learned and in- action produce your results, itWell... if the lack of time, money, credit herited; it is a lesson will conquer and cure your fears.and/or knowledge has stifled your real es- that has been passed Conversely, inaction, indecision,tate investing progress, fear is your prob- on from generation to and procrastination fertilize fearlem. The reason most would not admit that generation beginning causing it to grow.fear is their problem is because fear comes millions of years ago Simply put, take action in thein so many different shapes, sizes, names when humans initial- face of your fears and your fearsand intensities that they don’t recognize it ly learned to fear the will disappear.for what it really is. It’s not always called likes of saber-toothed But! Easier said than done,fear, sometimes it sounds like: tigers and hungry right? Indeed. But, there’s an ex- wolves (now that’s Matt Theriault ercise you can use to make tak-•I’ll call that FSBO tomorrow. what I call impending ing action in the face of fear easy.•There aren’t any deals out there right danger, evil, or pain!). The last I checked, Yep, easy. Imagine what your income, ornow. threat from these beasts did not interfere your life for that matter, would look like if•I can’t qualify for a loan. with my last attempt at closing a deal. How taking action in the face of fear were easy.•The REO agent won’t call me back. about yours? Probably not, but everyday The sky is the limit!•The market is saturated with other inves- fears that seem just as daunting do. In the interest of helping you reach thetors. What is important to understand is that sky, I’m about to introduce to you the•I’ll wait until the election is over. the vast majority of fears we face cannot “easy” way to conquer fear so you can•The market hasn’t hit bottom yet. be categorized as impending danger, evil, take actions that will produce the results or pain. There are few things out there that you desire. I call this easy exercise the Fear, or any variation of the word, isn’t will kill us or cause us physical harm. As False Evidence Test. When executed withmentioned in any of the above examples, long as we look both ways when crossing integrity, the test flushes out the false evi-but they are all founded on fear. Until you the street and steer away from dark alleys Continued on pg. 61recognize fear for what it really is and at night, most danger, evil, and pain can PAGE 33 • 2012
  • 32. The Scoop on the California Market with the So Cal “Property Flip Pros” by Isaac Newark IIIT he California market is as of $255,000. Ortiz says the outcome Ruth and Chris used their accumulated hot as its deserts and as was fantastic because they invested in knowledge and gut instincts to know high as its mountains. The a quality rehab, which included a full when to get out. foreclosures are getting kitchen and bath remodel, new floors, “I had already experienced the crash scooped up by savvy all- interior and exterior paint, landscape, of the ‘’90s when I was fairly new in thecash investors who then rehab them and plus new appliances and high-end business.”sell them for a quick profit. The dis- fixtures. When asked how this crash com-tressed market is creating phenomenal This sample deal is just one of the pared to the others, Ruth replies: “Theopportunities for investors. But now that success stories that Christian and Ruth current crash was totally different. Thisinventory is shrinking will we see the can share from their nearly 20 year crash was more like a tsunami, a totallymarket rise even more? Is their Shadow real estate business. Ruth got her real different animal.”Inventory still yet to be released? To estate license right out of high school. Ruth and Christian believe that, a keyget a view on the state of real estate At the beginning of her career, she said to understanding where we are todayin California we talked with seasoned she was doing property rehabs without in the California real estate market isveterans Ruth Ortiz and Christian really knowing what they were. Early knowing what precipitated the recentYepez. They are the principals in the on, while taking classes in real estate, market crash. “I think the artificiallyfirm USA Real Estate Group, LLC, and she met Christian. They decided to go high prices were caused by governmentthey specialize in the rehabilitation of into business together and their business and political manipulation,” Ruth ad-properties in southern California. They relationship progressed into marriage. mits. “It’s an attempt to escalate pricesare known as the “Property Flip Pros” Eighteen years later, both partnerships so people will go out and refinance andfor their unique ability to find deals and (marriage and business) are booming. build up lines of credit.”turn a profit for their investor partners in Christian says he remembers a timeseemingly non-existent situations. Coming Back to California when “If you were breathing and not Currently, Chris and Ruth flip about in prison, the banks would make you afour to five properties per month Chris and Ruth may be slam-dunking loan and hand you the keys to a home.”throughout Southern California. A re- deals now but two years before the Ruth and Chris believe the real estatecent deal they rehabbed was a property crash, they voluntarily left the Cali- industry nationwide continues to be ma-on La Verne Avenue in East Los Ange- fornia market to seek greater return nipulated by the powers that created allles. They purchased the two bedroom, elsewhere. “We felt that properties were this. “The crash is being handled not asone bath house for $136,000. It was a over-inflated. We sensed that something a quick elevator ride to the bottom, butpocket listing brought to them by an- was going to happen,” Ruth recalls. more as an elevator ride with intermit-other broker. The total rehab costs were They recognized that the high prices tent stops on various floors on the way$25,000. The property was put back on that forced them out of the market to the bottom.”the market at $249,500. were artificially created. “Prices were These expert investors say the market Within three days it received ten ridiculously high. As an investor, you is still shaky and they caution noviceoffers and went for the asking price wondered how long this was going to rehabbers to be careful when buying for last and how were you going to make profit. “We still have a way to go. We’re The ‘Property Flip Pros’ money. We got nervous and that’s why almost at the bottom, but we are not we decided to get out of state.” there quite yet.” Christian and Ruth ended up going out In the meantime, Christian and Ruth of state and working the Texas market will continue to take advantage of the (San Antonio) for awhile. “Whatever distressed California market by doing it took to get the job done, we did it as many deals as they can before the because we just didn’t feel there was market changes yet again. enough room to make money in Cali- For more information on rehabbing fornia.” with Christian Yepez and Ruth Ortiz, Whereas others took a bath trying contact: 562-304-7787 or visit online to force deals in a constricted market, PAGE 34 • 2012
  • 33. South West Cashflow is committed to delivering investors a turn-key solution in real estate. We help create passive cash flow, thus securing your financial freedom. SouthWest Cashflow is a company of experienced property professionals specializing in acquiring, repairing, and managing high-quality, cash-flowing properties in several markets across the country. Profitability. Security. Stability. Having purchased and sold over 1,500 Your hard-earned money is invested into Own property in stable neighborhoods homes nationwide, we know what it a tangible asset that our newly emerging through a company with a history of solid takes to acquire cash-flowing, turn-key “renter” society needs - housing. acquisition, rehab, and management. properties. Phone:(800) 696-1423Recent Property Additions $87,900$72,000 $1,700,000 $74,
  • 34. market analysis by Bonnie Lalso W ith the low cost of living, know what is.” expanding finance and They both have worked with a wide technology infrastructure range of levels of experience: From and good climate, the Charlotte, the novice buying their first invest- North Carolina market is projected ment, to the seasoned investor buying to have increased investment op- their 100th property. They strive to portunities. make things as easy and informative Forbes magazine rated it as one of as possible. Burrell and Franks say the top cities to stretch a paycheck, their goal is to educate buyers on their which means even more families market and allow them to invest at their Alex Franks and Kevin Burrell will move into the area, increasing pace, knowing that once they see their the amount of people looking to rent returns, they will continue to buy ad- purchasing now will be selling for and purchase properties. ditional rentals. $5,000 to $10,000 more.” Investors should take Charlotte, ” Carolina: North note that Charlotte is cur- rently number two in the Finish it with this line: nation for appreciation and Finish it with this line: 9th for growth.3-325-1925 Cash Flow with Southern Please add their contact info too: Charlotte is in the 5th consecutive month for home appreciation. On Please add their contact info too: average, for the last five Due to the city’s existing growth “Charlotte has already madeLiquidator, months the city has gone up 1% per Carolina the shift LLC. trend, Charlotte was able to handle back into a retail market,” Liquidator, LLC. Carolina Burrell ex- month. the downturn in the economy better 454 South Anderson Road plains. “Builders areSouth Anderson Road New developments are going up 454 back in full blast, “ than most other cities. It was is also BTC 507, it’s a great market right now. Values are literally everywhere,” according to Bur- BTC 507, rated as one of the fastest-growing not going down, and I can Hill, SC 29730 rell. As the city’s economy expands so Rock assure you cities in America, according to the Rock Hill, SC 29730 are the city’s greenway projects, which in a few months theToll Free 1.800.754.2911 same homes you’re Charlotte Observer, Forbes, and Toll Free 1.800.754.2911 helps residents and families experience 24/7 Wall Street. Carolina Liquidators, a bou- MARKET HIGHLIGHTS: well-rounded living spaces. Currently, the city of Charlotte has an extensive tique real estate firm in Charlotte, * 9th in the nation for growth trail system called the Carolina Thread is helping investors capitalize * 2nd in the nation for appreciation Trail. It’s a regional trail network that on the burgeoning local market. * 6th for the most affordable cities connects 15 counties and more than The owners, Alex Franks and * Ranks among Top 10 best places 2.3 million people. The volunteer and Kevin Burrell,, have over 35 years to live community partnerships have helped combined experience in real estate * Charlotte Airport under going a create over 93 miles of trail threading and have been helping investors one billion dollar expansion open space, trail ways, riverbeds, and connect with the opportunities * 17th Largest City in the US. urban areas throughout the Carolina available in their area. * Home of the Panthers, Charlotte region. Bobcats and the Nascar Hall “Charlotte is in the spotlight With many number Fortune 500 of Fame now, it used to be the investors’ companies making their business base * 2nd largest banking center in the hidden gem. But that’s no longer US behind NY, and home to in Charlotte and the amount of new the case,” Burrell says, adding: Bank of America construction taking place, Charlotte “The secret is out, and the savvy * City has 11 Fortune 500 companies will continue to attract residents from investors are coming in from * Ranked #1 Least Expensive City around the nation seeking a better life, around the world.” for Business Travel. as well as investors from around the Sales have quadrupled in the * Ranked #1 for “Happy Young nation in search of secure returns on last few months for Carolina Liq- Professionals” their investments. uidator. Burrell says the numbers * Strong rental market, 40% of the speak volumes “If that’s not a sign For more information about the Char- population rents that Charlotte is the new market * Increasing Rental Demand with lotte area market, please call Carolina that everyone is heading to, I don’t job and population growth Liquidators at: 803-325-195 or email: PAGE 36 • 2012
  • 35. LISTING LISTING CAROLINA LIQUIDATOR has an investment has an investment opportunity that works for everyone. works for everyone. We have options that work for everyone from We have options that work for everyone from the passive investor to the person looking to the passive investor to the person looking to aggressively build their portfolio. aggressively build their portfolio. Carolina Liquidator and its affiliates are pri- Carolina Liquidator and its affiliates are pri- marily a real estate investment company that marily with buying, selling and holding real that works a real estate investment company es- works withover 34 years combined experience tate. With buying, selling and holding real es- tate. With over 34 and the Mortgage industry in the Real Estate years combined experience in the Real to help and achieve your real estate we are able Estate you the Mortgage industry we arein ways that otherwise may not have estate goals able to help you achieve your real been goals in ways specialize in themay not have been of Charlotte, NC; and Rock Hill, SC. possible. We that otherwise metropolitan areas possible. We specialize in the metropolitan areas of Charlotte, NC; and Rock Hill, SC. Carolina Liquidator, LLC. Our Rental Homes are Turnkey Ready by Strict Standards: Carolina Liquidator, LLC. 454 South Anderson Road Our Rental Homes are Turnkey Ready by Strict Standards: BTC 507, Rock Hill, SC Road 454 South Anderson 29730 1. New heating and air system with 10 year warranty 1. New heating and air system with 10 year warranty 2. New Water Heater with 5-year warranty Toll Free 1.800.754.2911 29730 BTC 507, Rock Hill, SC 2. New Water Heater with 5-year warranty microwave with Toll Free 1.800.754.2911 3. New appliances, stove, fridge, dishwasher, 5 year warranties 3. New first floor of stove, fridge, dishwasher, microwavebaths and laundry rooms. 4. Tile appliances, home, including living area, kitchen, with 5 year warranties 4. Tile first floor of home,exterior, if neededarea, kitchen, baths and estate portfolios 5. Paint interior of home, including living We strive to build real laundry rooms. 5. Paint interior of home,exterior, if needed 6. Replace plumbing and electrical as needed We strive to build real estateclients! one house at a time for our portfolios 6. Replace plumbingthe bedrooms as needed 7. New carpeting in and electrical one house at a time for our clients! 7. New or granite counter tops 8. Tile carpeting in the bedrooms 8. Tile or granite counter tops detec- 9. MISC, door stoppers, smoke tors, light switches and covers etc. 9. MISC, door stoppers, smoke detec- 10tors, light switches and covers etc. New lighting and/or ceiling fans 10 New lighting and/or ceiling fans ** Complete turnkey properties set for retail standards ** ** Complete turnkey properties set for retail standards **
  • 36. Market Your Self Storage Facility at Maximum Velocity! by Kevin Rollings, CSSM©Wow, you have the keys! ing? Flyers, newspapers and signs. •Don’t forget to tell them about how they NOW WHAT? can save money: referrals, upgrading, first •Community sponsorship; i.e., churches, month free, savings for auto pay. You are at YOUR self storage facil- community sports, parades... •Let them know about extended services:ity. Even though occupancy is lower than need a truck? How about a businessyou want it to be, suddenly you feel your •Media: do you have a Facebook or Twit- center? Boxes? No problem we offer thoseexcitement level building. Why? This is ter account? Air spot on the radio, TV here. Let them know everything that theyyour dream; you are an entrepreneur now. news commercial? can do in your one stop location.You see the future, your dream, and areready to make it happen. •Your current clients: Did you let them •Have them fill out a visitor’s card and What does the average renter think know that there was a change in manage- the show them around, let them know theabout when they think self storage? ment, have you asked them to tell friends? units available in the size they want.Downsizing? De-clutter? Too much stuff, Have you let them know you appreciate **Extra tip: follow up with them if theybut want to keep it? them? leave and reach out asking if they found Think about how often you see self what they needed. If not you are still therestorage facilities. It must be a busy busi- •Are you promoting it: car wash, free to help.ness with people storing their treasures, dump day, customer appreciation day?because self storage is everywhere. Typically when visiting a self storage unit You can bet that “in the day of the life” It would be nice if those of us in self facility, you will be greeted by the self of a self storage owner or manager, it willstorage had a magical self storage wand to storage manager or owner. rarely be a dull one. It takes patience andwave and “Voila, we have 100% occu- the outstanding ability to communicatepancy!”. First impressions are always the BEST! well with both agencies, your staff and Unfortunately the average is 76% oc- Customer service: That’s a huge key to your tenants.cupancy. Why? Because we do not use success in this industry. We go through a Your potential hinges on happy tenants.everything available to us. So, how do I checklist in our training, it goes something With the right tools and the right educa-promote my facility? What will make my like this: tion or coaching, your experience as aplace stand out and above the rest? Self Storage Owner or Manager can be Owning or managing a self storage •Find out the needs: large vs. small, long the start of a rewarding career in the selffacility will allow you to get to know the term vs. short term storage industry.customer service industry up and closeand personal. BUT, it goes beyond that!!! •Why do they need self storage? Then Kevin Rollings, CSSM© is the owner appeal to them on that level: moving, busi- and CEO of Alcatraz Storage, Hoosiers How do you spread the word about ness, divorce, downsizing, college student. Self Storage, and Self Storage Facilityyour facility? Do you do any of these? Management. Whatever the situation is •Have you told them about the discounts, Kevin and his team have the answers!•What is your web presence? Do you have perks and added advantages you offer? Visit online at: www.selfstoragefacility-a website? Is it accurate? Does it do what 24 hour security, easy rental payment, and get your 30 minuteyou want? Have you tried local advertis- temperature controlled units. evaluation FREE! PAGE 38 • 2012
  • 37. Do YOU Need aLAND TRUST? BEÊTHEÊBANK. the others. You need the knowledge that your attorney doesn’t have on this asset pre- serving technique. Why work so hard to have one SAFETY.ÊSECURITY.ÊDOUBLEÊDIGITÊRETURNS. uncontrollable tenant event cause you EarnÊconsistent,ÊpassiveÊincomeÊinÊ to lose all of yourÊportfolioÊutilizingÊPRIVATE your proper- LOANSÊandÊTAX LIENS. ties? Come Ê on! You are OurÊfreeÊgiftÊtoÊyou:ÊTheÊMMGÊCapitalÊ working very GuideÊtoÊTrustÊDeedÊInvesting hard to build Ê your asset LogÊontoÊMMGInvestors.comÊforÊ portfolio. Why moreÊinformation. lose it now? by Randy Hughes Land Trusts are the first Mr. Land Trust line of defense to insulate youW from the millions of lawsuits hat is a land happening in America every trust? Why do I year. The most dangerous need to use land terrorist of the 21st century trusts? Both are that you need to fear is thevery important questions. But contingency fee lawyer! Dolet’s be straight forward with you want protection fromthis article. You have worked the contingency fee lawyervery hard to accumulate prop- or would you rather have aerty for investment. You put bare knuckle fight with himyourself, you family, and your without any defense guards inchildren’s future at risk invest- place?ing in real estate. You have probably noticed Do you realize that one false that it is VERY difficult tomove with just one of your find any information aboutproperties can cause you to lose Land Trusts and how theyall of your hard earned invest- operate. That is why peoplements? One careless tenant can from all over the Unitedbe injured on your property and States come to my websitethe world will fall all around to find accurate informationyou. Ask yourself the follow- about Land Trusts. Most at-ing question “Can you control torneys do not know how towhat is happening in all of set up and administer a Landyour properties right now – this Trust (they receive only threeminute?” Is it possible that a hours…if any, of trust educa-careless tenant can be injured tion in law school). Manyor die tonight in your rental attorneys have purchased myproperty? This happens every home study course or attendedday in America. my seminars to educate them- You need a land trust for selves on land trust law.each property. You need to“insulate” each property from Continued on pg. PAGE 39 • 2012
  • 38. by Lamarr Baxter R by the crash, it could have resulted ecent statics show that up to in losses not as great as those real- 10,000 Baby Boomers per day ized in having all their money in will turn 65 for the next 19 the stock market. While I believe years. Sadly, up to 80% of the stocks, bonds, mutual funds, money that population either lack a retirement market accounts should be a part account or have an underfunded retire- of your retirement portfolio, others ment account to sustain them in their alternative asset classes should also retirement years. Part of this problem is be included such as: attributed to the economic downturn that • Real Estate occurred in 2008, which is still haunting • Secured Private Notes many of us in the present. • Private Placements/Private Shares Over the past 50 years the population has been taught to fund • Precious Metals an IRA or 401(k) along with other miscellaneous retirement • Business Investments related accounts and all that would be fine at the age of retire- • Secured Business Loans ment. Another segment of the population had depended on the • Accounts Receivable Factoring equity in their real estate to serve as their primary, additional • Seed Capital For Starting and/or supplemental retirement savings vehicle to serve as their • Your Own Business income source in retirement. Unfortunately for many, that plan The above listed investment options are just some of many is no longer a viable plan based on past retirement planning options available to you using a self directed IRA. The list practices with declining returns in the stock market and declin- also reflects the type of investments that are in demand for ing real estate values resulting in negative equity for a vast capital that could grow your retirement accounts faster and majority of the population whom purchased properties prior more securely than some of the traditional investments in to the 2008 economic meltdown. This can all be reversed by which you have invested in the past. With a self-directed IRA, your only two investment restrictions as it relates to asset classes are life The ability to TRULY diversify your insurance and collectibles. Outside those two investment class restrictions, retirement portfolio is key to growing you have almost unlimited investment options available to you using a self- and securing your retirement nest egg. directed IRA. It’s almost a certainty taxes will increase in 2013 based on the current incorporating the use of a self directed IRA into your retirement economic affairs of our country. There- planning strategy by allowing you to take control of your retire- fore, anticipate higher income taxes and capital gains taxes on ment funds, choosing a wider array of alternative investment investment in 2013. In order to reduce and/or avoid taxation in options outside of the stock market and having the ability to these two areas would be to consider establish a self-directed TRULY diversify your investment portfolio. IRA, in particular a self-directed ROTH IRA in 2012. The ability to TRULY diversify your retirement portfolio Making your investments with a self-directed IRA funds is key to growing and securing your retirement nest egg. The versus private capital allows you the ability to defer taxes on historic rule for a sound investment strategy has always been your gains or not pay taxes at all on the gains with a self- “diversify”. Unfortunately, many of us were not diverse enough directed ROTH IRA. The rules are as follows for avoiding in 2008 when the stock market crashed. The reason being is that taxation on growth within a self-directed ROTH IRA: ALL of your funds were invested in a single investment engine, The ROTH account must have been established and funded the stock market. Imagine if you had the opportunity to invest in with for at least (5) years; The account holder must be 59 ½ or other asset classes outside the stock market that weren’t affected Continued on pg. PAGE 40 • 2012
  • 39. It’s Your Future. Take Control. Open an IRA Account online now. GET YOUR RETIREMENT FUNDS NOW Let us teach you how!BRIAN DAVIS BRYAN CALDERON LAMARR BAXTERDirector of Business Development Director of Business Development Director of Business Development(San Diego/SOCAL) (Orange County/SOCAL) (Northern California)3111 Camino Del Rio North Ste 400 Irvine Towers 9245 Laguna Springs Dr. #200San Diego, CA 92108 Elk Grove, CA. 95758Phone/Cell (619)-892-2438 Irvine, CA 92612 Phone: (916) 509-7150Fax (888) 706-9556 Bus (949) 705-4554 Direct: (916) 708-0235Email: Cell (949) 233-5866 Fax: (916) 405-4000Website: EFax (949) 242-2730 Email: Website: Website:
  • 40. Mixing Business with Pleasure Dr. Michael Newton discovers which is essential for any good investment. He doesn’t a tropical paradise with just rely on Google Earth, he physically goes to view a fantastic ROI each investment before he buys it (key word: before!).A His most recent acquisition even took him outside few years ago, Michael Newton of our nation’s borders . It is an investment opportunity arrived at our magazine’s invest- that excited him so much that he contacted our publica- ment mixer held in West Los tion with an urgency to share it with our readers. Angles. He was eager to learn Let me set the stage: Imagine having an ocean-frontall he could about real estate and was already way ahead of the home with a private dock leading you to the pristine and spark-class due to his emphasis and years of real estate education. ing Caribbean Ocean. Imagine feeling a cool breeze through “ My parents have owned rental property since I was a teen- your hair and being able to hear the seagulls and wind sing be-ager,” admits Newton, “but the beginning of my own journey be- cause there is silence in the air. Imagine having a beach just forgan with my company 401(k) administrator recommending two you and your loved ones to enjoy without having to worry aboutbooks, The Millionaire Next Door and Rich Dad Poor Dad.” privacy or security? Newton says that Rich Dad Poor Dad opened his eyes to While ocean-front property is the U.S. is a luxury that onlyanother way of thinking that he had no exposure to prior. celebrities and CEOs can afford, tranquil and clean beach living After his financial awakening, Newton was eager to take ac- can be a reality for the rest of us in beautiful Belize.tion. He purchased his first rental, a single family home, in North “Belize is gorgeous, fun and friendly to foreigners,” NewtonLas Vegas. Shortly after that he purchased three rental homes in says, adding, “It boasts white sandy beaches, turquoise 80 degreeKansas City, MO. Next, he closed on three more rental homes in water, rain forests, Mayan ruins, and has the largest living barrierDallas. reef in the world!” “All three Dallas homes are brand new construction rentals Surprisingly, Belize is closer to most of the U.S. than Hawaii,with great terms, 5% down and 95% financing,” he explains. and it is the only English speaking country in Latin America. Newton finds great deals because he focuses on research, Continued on pg. 55 Visit Belize! You Will Not Belize It! Invest in Cash Flow Property Located in a Tropical Paradise! English-speaking paradise Closer to most of US than Hawaii Friendly people GO OFFSHORE TO MAKE US dollar accepted MONEY AND SAVE ON TAXES! in the US or Canada Small, stable government 805-405-3183 ONLY SERIOUS INQUIRIES, PLEASE.
  • 41. 19 Cents on the Dollar strategy Inside a Note Deal with Tony Martinez, President of Asset Ventures, LLCN otes provide multiple benefits for investors, the key is you can buy non-performing notes for pennies on the dollar.In addition, Tony Martinez, president of Asset Ventures LLC, by Isaac Newkirk III gage] – we had equity insays notes offer many more options to create a positive return. it. The Arrezo Deal had a second lien with an unpaid “We want to make sure our investors are Ventures selects go through balance of $86,000. Weprotected,” says the founder and president rigourous research. “What we paid $9,600 for it. Whenwho has over 18 years in the industry. do in the research phase is we the owner stops paying He adds: “We have multiple avenues have contact with the banks on the loan, the bank hasfor a successful investment. That’s one and lenders and they’ll give us Tony Martinez delinquent debt. Theyof the advantages of investing in notes as a pool of notes that’s limited to benefit from selling it off.opposed to investing in properties. When address, the amount of the loan, the fair As a non-performing or toxic debt, theyou invest in properties, you’re limited to market value, and just a limited amount bank would package it up and sell itthe options of the marketplace. With notes, of information,” Martinez explains. “Then to someone like myself for pennies onyou have exit strategies.” we have to do our due diligence, our data the dollar because it doesn’t have face Martinez entered the industry as a build- mining. Every note is then researched value to them anymore.”er back in 1989. During his early years in against a one hundred point checklist to Of utmost importance, Martinezthe profession (dealing with a lot of REOs see if we want to purchase it and move on believes that it must be understood thatand short sales) he became particularly to the next level.” “In the acquisition phase, we don’taware of the banking industry’s desire to Each pool of notes obtained by Asset buy the property, we buy the paper.rid itself of delinquent properties through Ventures from their network of banks So we’re the bank now. What we dothe short sales arena. As he became more involves anywhere from 50 to 500 notes. is, we’re buying the collateral paper,knowledgeable of the process, principally The pool would be packaged with very which is a bank note. So, if it wasby acquiring short sales notes (non-per- similar types of notes and an initial assess- owned by Chase or GMAC or Wellsforming or delinquent notes) directly from ment would be done on a small sample Fargo for example, it’s now ownedbanks, he also came to realize how he (say, 25 to 50 out of 500) to get a feel for by us and we’re the bank. We don’tcould help people retain their properties, that particular pool. Asset Ventures has necessarily need to take ownership ofat the same time. specialized researchers who perform this the property but we’re still going to Asset Ventures are negotiating about task. Tony says that “Researchers don’t do make money because they’re obligated400 notes and have an additional 700 any analyzing, they just gather the infor- to pay us. So we’ll go to the borrowernotes in the pipeline. Their goal is to mation pursuant to the checklist. Then it and create options for them to getacquire about 100 notes a month and goes to the next level where management back on their feet. This is how we helpMartinez says they’re on pace to meet or analyzes the data. They go through about people while creating positive returnsexceed that goal for the current year. 500 files in a week.” for our investors. Where they may Based in Redondo Beach, Calif., Asset We asked Martinez to show us the in- have paid $500 a month before, theyVentures has three primary responsibili- side mechanics of one of his recent deals. may now pay us $200 a month. In theties: resolution (helping owners stay in Our case study involves the Arrezo Deal. Arrezo Deal we actually settled thetheir house); acquisitions (helping inves- Begun in February of this year, the Ar- note for the homeowner at $22,000.tors make a positive cash rezo Deal was completed in mid-August. So they paid us $22,500 and we wipedflow return on their Martinez says “Once we completed the away $80,000 worth of debt. The in-investments); and research phase of the deal, we began vestor just made $13,000 profit, whichteaching and the acquisition process. We looked equates to 235 percent return on theirmentoring in at the numbers on the Arrezo Deal; money. Everybody wins.”the indus- we bought it for 19 cents on the And that is the main goal for Assettry. dollar. It was a non-performing Ventures — that the investor and also The second mortgage. The biggest the homeowner are successful.notes that positive, when we bought this was For information, visit Asset VenturesAsset – combined with the first [mort- online at: PAGE 43 • 2012
  • 42. Straight Talk with theInvestment Property ExpertsBy Stephanie B. Mojica field says. “We are seeing a recordI number of investors use their 401(k), n the midst of one of the IRA and Roth to invest into single most economically chal- family home real estate. Many of lenged times in history, the these investors have never purchasedPhoenix, Arizona real estate real estate before, thus they aremarket is helping some inves- looking for a full service turn-keytors yield significant financial provider to assist them.”returns. But even investing in one or two As people shift from placing single-family properties is not a fool-stocks, bonds, and certificates proof proposition, Butterfield warns.of deposits into their 401(K)s or Daniel Butterfield “Most investors are scared of the Steve TaplinIRAs for retirement, they often stock market due to the volatility, butneed professional expertise. That’s where a company such as AZ they are also not educated enough toInvestment Property Experts, or IPX, comes in. invest in real estate,” Butterfield says. “It is very difficult to find The firm, owned by seasoned real estate investors and busi- the right type of real estate deals in this current economic situa-ness entrepreneurs Steve Taplin and Daniel Butterfield, has been tion.”helping seemingly average people earn an 18 percent or higher Some beginning real estate investors hire a property manage-return on investment. In a supposedly down economy, such ment company to assist with matters such as collecting rent andyields are nothing short of remarkable. arranging for repairs. However, most beginning investors do not have an “exit strategy” planned, which eventually gets them into financial trouble, according to Butterfield. “Try to focus your efforts on making the least amount of mistakes,” Butterfield says. “The best way to do this is to work with a turn-key professional that can help you identify, buy, renovate, rent and even sell your first real estate investment.” At IPX, which has team members in Phoenix as well as the Philippines, experienced investors work closely with all clients. Some clients are not interested in a pro- active role, but Butterfield and Taplin provide plenty of opportunities to turn novice investors into experts in their own right. Phoenix is certainly not the only hot spot for real estate investments in the United States, but it has many ad- vantages over other geographic locations. Single-family investment real estate in Phoenix generates a minimum of 8 to 12 percent cash-on-cash returns during the rental period and about 20 to 30 percent profit when the investor sells the house, according to Butterfield. Also, Phoenix Butterfield, who has more than 15 years of real estate invest- has mostly attractive neighborhoods and low rental vacancy rates.ment experience, says education for investors is now even more “Granted there are cities such as Memphis that could poten-important than ever. He and Taplin not only hold complimentary tially yield similar returns but they also have extremely highmonthly events for current and prospective clients, but also vacancy rates and these types of rental neighborhoods do notthey co-host a popular weekly talk radio show, “Real Estate – have a high potential for resale,” Butterfield says. “Investors maySTRAIGHT TALK.” certainly find nicer homes in Venice Beach, however the cash- The program airs on Money Radio 1510 AM, which is Ari- on-cash returns are extremely low or even negative in some caseszona’s premier business and financial talk radio channel. Also, with financing, thus as an investor you would be relying on purethe network’s management has publicly lauded Butterfield and speculation to make a return on your investment.”Taplin as leading real estate investment experts. “We feel an educated investor is a knowledgeable investor, To schedule a complimentary investment consultation with IPX,which also sets accurate and obtainable expectations,” Butter- visit or call (602) PAGE 44 • 2012
  • 43. W hen dealing with resources built. It’s im- (6) PROPERTY MANAGEMENT – real estate invest- perative that you go to Property management can make or break ments, one must networking events and your investment. If you do not have ago through many steps of due expand your relation- competent property manager that actu-diligence. Here are my top 10 ship base. Real estate ally cares about your investment and yourkeys to a successful real estate is a team sport so if you success you will have a losing investment.investing. do not go network you We went through about five different prop- cannot build your team. erty management companies before finally(1) EDUCATION - If you starting our own company and bringingare not experienced in real (4) BUILDING YOUR the management in-house. Most managersestate investments the very TEAM – In order to are bad at some of the basic managementfirst thing you should do is to make your investments functions such as accounting, rent collec-get educated. Take the time to work you must build tion, tenanting, leasing and background 10 Keys for Successful Investments Mathew Owens, CPA teaches us the tricks of the trade. Learn tips that helped this California investor escape from Corporate America by investing in real estate.find out what all of the risks are in the in- your team. Some of the team members checks, repair calls and taking care of thevestment type you are interested in. Find you need are real estate agents, brokers tenant. By far the most important and big-others that can help educate you on the and bankers, private lenders, appraisers, gest problem is communication with theinvestment type, which are not involved in CPAs, attorneys, affiliates, inspectors, owner of the property.the transaction you are doing specifically, property managers and contractors. There Communication is crucial because with-so there is no conflict of interest. Buy are much more but it’s pretty impossible out communication the investor cannotbooks, tapes, and go to multiple seminars to name them all. It takes quite a bit of make decisions regarding the investmentin order to continue your education, and time to develop your team and to make and lack control. Property managementdon’t buy the $5,000 plus books and tapes sure they can be relied upon. also needs to be structured based onsets from the gurus. Buy your educational I have found that building a team is the performance, meaning they get paid ifmaterial from the bookstore and save thou- most important aspect of investing other it’s occupied only, not when it’s vacant.sands of dollars. than your due diligence on the investment Incentives need to be in place to optimize itself. performance.(2) GOAL SETTING – If you do nothave a goal lined out for your real estate (5) DUE DILIGENCE – Before invest- (7) MARKETING – If you do not knowinvestments how do you plan on getting ing in any real estate asset your due how to market for property, capital, prop-there? Most investors buy one property, or diligence is crucial. You need to analyze erty sales and resources, you will not beinvest based on emotion rather than having the market you’re investing in, the market successful in real estate. Marketing anda set goal in mind. timing relative to that market, the specific sales is one of the most important parts of For example, you could have a goal of neighborhood, the market value of the any business. During economic problemsobtaining $30,000 per month in passive investment, the cash flow it produces, the and recessions most companies cut backrental income from your investments rental income it should bring in, all of the on marketing, that’s when it’s most impor-through buying single family rental homes expenses related to the investment and tant to increase your marketing efforts. Ifand apartment buildings. Your goals much more. Inspections should be done there are fewer investors, buyers, and re-should be clearly defined and should as well as a review of all of the backup sources available because of the economy,include protections and risk mitigation documentation such as leases and con- there is more competition going after yourtechniques to make sure it is a stable vi- tracts. Think like an auditor, review all of resources. So in order to attract those re-able plan that can be obtained. the backup information provided by the sources before your competition, you have seller and verify it with an outside source to market more. Marketing and sales is a(3) BUILDING YOUR RESOURCES– as much as possible. I hear horror stories business all in itself so getting educated onYou WILL NOT become a successful real all the time about how people lost money marketing strategies is imperative to yourestate investor without resources. In real in real estate. After inquiring as to what, resources include capital investors, happened I can say that 99% of the time When most people think marketingproperty leads, team members and much the investor did not do or know how to do they think of posting classified ads, send-more. For this you must go to network- the right due diligence on the investment ing out mailers, coupons, bill boards >ing events if you do not already have your in the first place. Continued on pg. PAGE 46 • 2012
  • 44. T wo years ago, a seasoned value to their mem- professionals in their community or across investor named Ben Rao bers. Group organiz- the country. envisioned starting a ers are often spread Q: How many clubs are a part of Com- community to help people so thin running their munity Buying Group thus far?share knowledge and get better pric- own business in ad- A: We have clubs or associations in almosting with major retailers. With that dition to running an every state and have grown to over 10,000mission as a foundation Community i n v e s t m e n t  g r o u p members over the last 18 months. We haveBuying Group (CBG) was born. or meetings that it had double-digit growth for the last six The organization of nearly 10,000 becomes difficult to months straight. By the end of 2012 wemembers now offers individuals the grow their groups. expect to have over 15,000 members. Ourability to buy like larger companies. Ben Rao Our approach is that long-term goal is to continue to add moreThrough relationships with their if we help everyone suppliers and grow the membership to overPremier Supplier Network, they offer spe- succeed, our success will follow and it has 50,000 members in the next 24 months.cial incentives and pricing on products that proven to be true.members use every day. In addition to im- Q: Tell us how our readers can receiveproved customer service and pricing from Q: Are you an investor as well, tell us awesome discounts from the CBG Suppli-their Supplier Network, members also gain about your experience in this field? ers like Lowe’s, Sherwin-Williams, Searsvisibility with other investors who may be A: I have been a real estate investor for and other CBG Suppliers?able to use their products or services. Their over 10 years, flipping properties in addi- A: They can join a real estate investmentCommunity Buying Group Helps Investors Community Buying Group Helps Investors Network, Plus Save Time and Money Network, Plus Save Time and Moneymembership is made up of contractors, tional to managing and owning 40 residen- group, landlord association or nationalproperty owners, investors, landlords and tial rental properties. I really enjoy help- trade organization that participates in theproperty management companies. We met ing other people getting into the business CBG Program or they can join as an indi-Rao during our Mid-West Expo in Kansas and passing on my experience to save them vidual. We always encourage people to joinCity, Missouri, and had the opportunity to time and money. a local participating group as they will getinterview him about CBG. the benefits of the CBG program and the Q: Are you a long-standing member of ability to connect with other like-mindedQ: When did you decide to organize Com- any real estate groups? professionals for networking and on-goingmunity Buying Group? A: I have been a member of NARPM and education. Please contact us to find a groupA: I had the idea about four years ago, but National REIA for years as well as serv- in your area or if you are interested init really didn’t come to fruition until 2010. ing on the board of Kansas City Investment signing your organization up with a groupI am a real estate investor and a landlord Group (KCIG), a member of Mid-America membership. Our customer service repre-and started CBG because I believe we can Association of Real Estate Investors and sentatives are available to personally an-help a huge number of investors and group currently on the Eastern Jackson County swer questions or guide members to maxi-organizers do business better, and build a Landlord Association Board. mize their membership benefits by callingbetter bottom line by having access to the 816-282-6310 x 202. A good place to starttools and buying power that the strength of Q: What are the benefits investors re- would be to look at our website: www.our numbers deserves. ceives for being a member of Community or to contact Buying Group? me at: Why did you see a need in the market- A: The obvious answer is saving moneyplace for this? on materials they are purchasing for a real Q: What is your vision for the real estateA: To help the small to medium real estate estate project. In addition to saving money investment industry?investor, property manager or landlord, on materials and gaining exposure to new My vision is to share as much informa-(small business owner) have access to pro- products, services and ideas, our members tion as we can with each other and movegrams to save them money on material they also have the opportunity to get connected the industry forward together. It’s a giantwere buying everyday and gain exposure to to an entire community of real estate inves- market place and there is so much oppor-new ideas and products and to help them do tors, landlord, property managers and re- tunity from wholesale, retail, rehab, educa-business more efficiently and to network habbers/contractors. tion, technology and legislation. If industryand share information with other real estate We want every member to feel like there entrepreneurs, leaders, groups and asso-investor and landlords. is someone on the other end of that phone ciations would work together, it would be Our second objective is to help real estate that cares and that can help them solve a amazing what we would accomplish.investor groups and landlord associations problem, help them do business better or — article by Lori Peeblesgrow their membership by providing more get them introduced to other PAGE 48 • 2012
  • 45. strategy Analyze the Deal - A Case Study in Strategy { Chris Dannenfeldt Discusses One of His Most Extensive Rehabs } W With thousands of transactions under his belt, Chris Dannenfeldt has undertaken many challenging deals, but this by far was one of the most extensive rehab projects of his career. Dannenfeldt represented the buyer in acquir- ing this decrepit multifamily building for the outlandish price of $2,500! Next, he supervised his rehab team to complete a miraculous transformation. Dannenfeldt turned this neglected eyesore into a trophy property worthy of any investor’s portfolio. Dannenfeldt recently discussed the 5. Exit Strategy - Please tell us specifics of the exit strat- egy as well as what you learned from this deal? We managed the building for the owner and then sold all of the eight condo units to the tenants for a $23,000 profit on each unit. This is a standard project for us. We buy and rehab the property and then sell to an investor. We also manage for the landlord/owner and then sell to the tenants for a capital gain for the investor. Then, we service the owner financed loans for the investor and then manage the details of this incredible transaction. process for the credit rehab and drive the process to get the 1. Research Phase - How you came across your deal? new owners (owner financed buyers) able to get a traditional We purchased over 1,000 properties from the city and we bank mortgage. Seventy percent of our tenants qualify for bought this particular multifamily building for only $2,500. and exercise their option to purchase. We have had 100% We finished the vacant project and then sold it to an investor. success in getting these buyers qualified for a refinance 2. Acquisition Phase - What were the terms of the deal? loan to retrieve our investors their cash outlay back, plus We purchased all the properties with all cash. the profit from this sale. Our goal is to have the investor out 3. Rehab/Maintenance - Was the property rehabbed? within a five year period. The property underwent a complete rehab, which included 6. What returns did the investor make? all new plumbing, electrical, new kitchens, baths, sheetrock, The client made a guaranteed 10% cash on cash return lighting, flooring, and windows. Essentially everything was monthly. He purchased the property for $560,000 and we done to the property to make it livable. sold it for him for $760,000, a profit of $200,000. 4. Management - How long was the property held? Was In addition, he made a guaranteed income of $56,000 per it managed in-house or was the management hired? year, net after all expenses, also guaranteed during his term We are still managing the building for the new owner. of ownership as the landlord. — article by Lori Peebles PAGE 50 • 2012
  • 46. Property Partners I INVESTORS WANT: 3 High Returns 3 Hassle Free Guaranteed Expenses 3 Predictable & Reliable Income and Investment Outcome Chris DannenfeldtTHIS IS OUR MISSION If you’re looking for a balanced, appropriate and suitable real estate investment for your porfolio, understands how to help you get there. 214-447-7304 972-693-2140 214-447-7306 972-692-5448Property
  • 47. Why Should You Consider an IRA? pg. 40 It’s Hard to Make a Living, But It’s Easy to Build Wealth, pg. 9older to withdraw gains without penalty n e e d e d  t o one unitnor taxes invest. They at a time. Many may not feel it’s worth establish- were busy Nothinging a ROTH because of the low contribu- years and we major,tion limits of $5k/$6K and/or may not were hand- just newmeet the requirements to contribute based somely and carpet,on too much income. Keep in mind, you surprisingly new paintare able to convert from your tax deferred rewarded a n d   IIRA, 401K or retirement plans to a ROTH. w h e n  w e think weThere are no income restrictions on a managed to changedconversion, full or partial and you are the buy a home with no money down in one the cabinets in the kitchen of one unit. Theamount you are allowed to convert has of the most high-priced areas of the nation. most challenging part was managing theno limits. So take advantage of these tax How? We found a seller willing to carry property, which I chose to do myself, butadvantages before they become subject to a portion of the note and we used private we just had the typical leaky faucet issues.change in the future. money to get into the deal. About one year and half into the deal, The objective of using a self-directed Since we didn’t need any of our own we decided to cash out. We purchasedIRA is to take more control over your funds to buy our home, we used our nest it for $425,000 and in 18 months sold itinvestment choices and invest in what egg to purchase a small apartment building for $659,000. A gross profit of $234,000!you know and understand. The use of this in 1994. It was then that everything began How many people can make that amount ofinvestment tool requires the necessary due to change. Within a few short years, our net money punching a clock for 18 months?diligence to be performed on any invest- worth skyrocketed. Things were appreciat- And what do they have to go through toment you choose. Arm yourselves with the ing steadily and the equity in the properties “earn” that money? Get up at the crack ofrequired information and education for the was rising much faster than our ability to dawn, commute hours to work, put up withinvestment choices you choose to prevent earn a paycheck by working in our profes- bad tempers, bad attitudes, constant dead-the potential for losses. sions. lines and job stress. Remember, this is your retirement ac- This is the beauty of real estate. A prop- On the other hand, we created wealth bycount we’re talking about here, so become erty can appreciate either due to market simply buying, managing, upgrading, thendiligent and proactive to protect it. conditions or by adding value through a re- selling an asset. Can it get any easier than hab. Profits can come quickly, much faster that? It’s a Lady’s World, pg. 33 than a person’s ability to “earn” a living. This is exactly why I get so excited The average national salary in America about sharing the benefits of real estate “Our mission was to create an environ- is $41,673.83, according to U.S. Social with people because wealth can be createdment in which our members can build ca- Security administration. Having a job can much faster and easier than by “working”maraderie, share tested investment tech- provide for the basics just fine, but what at a given profession.niques, and promote responsible investing quality of life can that type of salary pro- After being in the work force for 20 plusthrough networking, and referral-based vide for an average family of four? years now, I’ve come to realize that morepartnerships,” Willois says. The price of In the real estate world, $40,000 is not wealth can be created by focusing timeadmission to their live club held on the last an astronomical number. One can do a deal and energy into finding and buying proper-Tuesday of every month is $20, however and make that much per transaction either ties than by climbing the corporate ladder.members can receive a $5 discount if they by buying and holding for cash flow, or Buying one property a year, or every fewpre-pay online. buying and flipping for profit. I even per- years, can really make a difference in your The Lady Landlords of San Diego also sonally know someone who made $30,000 life and in the legacy you leave behind.educate their members via seminars, work- on one wholesale deal, and she did not even The time has never been better to getshops and live presentations. If a buy-and- own title to the property! started or to expand your portfolio. Neverhold strategy is your game or you’re curi- One of my favorite deals was when my have we had a combination of so many dis-ous about opportunities in other states, then husband and I purchased a small multifam- tressed properties to choose from coupledit’s time to step into the pink domain of the ily property in Hawthorne, Calif., a blue- with the low interest rates of long-termLady Landlords of San Diego. collar area of Los Angeles. financing. The moves you make now can The market was really hot in 2004, and determine your family’s future. So don’t CLUB DETAILS: it was tough getting the deal because there make excuses about how busy you are. were five other offers, but I wrote a personal Be sure to take time off from “work” to Lady Landlords of San Diego letter to the seller assuring him that I would concentrate on building “wealth”. When: Last Tuesday of every month make the best landlord to take over his Location : Holiday Inn Email the publisher at: building and he sold it to us, even though 3805 Murphy Canyon Road or connect with Linda Pliagas at: another offer came in higher. Upon purchas- San Diego, Calif., 92123 ing the property, we did slight renovations, PAGE 52 • 2012
  • 48. Closing Loans, Opening Doors Opening Doors Closing Loans & - Since 1960 - We Specialize in 1960 Since • InvestmentWe specialize in* Properties 3 Properties Properties • Up to 10 Financed Investment Allowed 3 Up to 10 Financed Properties Allowed • Credit Scores, 620 or higher 3 Credit Scores, 620 or higher • Direct Fannie Mae Direct Fannie Mae Service/Seller 3 Service/Seller Contact Stephen Bighuas for Information Information Please Contact Us for More 901.598.9458 • Ph. 901.598.9458 Address:3500-188th Street SW,#121,Lynnwood,WA 98037 3500-188th Street SW, #121, Lynnwood, WA 98037 Stephen Bighuas Loan Officer Stephen Bighaus herein shall not be *The information contained Loan Officerguarantee of a loan approval. construed as a Ric Jason Gosser Loan Officer With Great Service & FAST APPRO Individual NMLS #112825 Individual MLS #112825 Underwriter All loan approvals are subject to approval. Equal Housing Lender. Company TN MLO-57558NMLS#37801. WA Branch Individual MLS #120413 TN MLO-57820 We’ll take care of you!! TN MLO #57558 NMLS #3274. Branch WA MLO-11285 WA MLO-11285 CL-37801. TN Branch 4470-4315 WA MLO-120413 5 Years of WORRY-FREE Reliable Rentals! • No Vacancies Our Turn-Key homes are really that simple. • No Maintenance Costs We have a time-tested • No Management Fees system to assure that • Already Rehabbed you have worry-free rentals. Our repeat • Already Rented buyers are our proof! RetireWithRealEstate.Biz Call Today for a FREE Report on Selecting Reliable Rentals! 513-275-1512 or email: – Missy McCall Hammonds, CEO PAGE 53 • 2012
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  • 50. 10 Keys for Successful Investments, pg. 46 Mixing Business with Pleasure, pg. 42more but the most important obtain additional umbrella in- Belize is an undiscovered paradise and as investors we knowand under utilized marketing surance or put your assets into how important it is to be the first one to tap into a great deal. New-strategy is internet marketing. a proper entity so that you are ton wants to share what he’s discovered. “Just south of San PedroInternet marketing is revolu- not liable in frivolous lawsuits. on Ambergris Caye, there is a scenic and affordable 400 plus lottionizing the way most com- Generally for tax purposes you development project . The development is the largest and first fullpanies advertise. If you do not want to keep passive invest- gated community in all of Belize and easily accessible from the air-understand it or start to learn ments (investments like rental port in San Pedro. Eachabout internet marketing, you real estate that produce income lot is fully developedwill not gain the market shareyou deserve and will not be as you do not work for) in an LLC and active investments and ready for construc- tion. Each one comes Belize Factssuccessful — 85% of buyers (investments you actively with its own private * Only English-speaking countrygo online first for investment work for) in an S-Corporation dock, water access to in Latin Americainformation. It is an online or similar entity. Please * U.S. Dollars are readily the Caribbean Sea andworld whether you know about accepted consult your individual tax ad- parking spots for golfit or not. * Closer than Hawaii from most visor to go over your specific carts.” U.S. cities situation as it is impossible for It sounds heavenly * Fee simple title, real estate(8) TREAT YOUR INVEST- this advice to relate to every but does it make finan- ownership is exactly like in theMENTS AS A BUSINESS situation. Also be sure to keep cial sense? Newton, US and based on British– Most investors buy one yourself separate financially who is an oral and max- common lawreal estate investment and from the investment or entity illofacial surgeon, thinks * Belize has strong privacy bankdo not fully utilize all of its you hold the investments in so so. “There is no debt ing and asset protection lawscapabilities from a business that you do not pierce the cor- on the developed land * Rental income is taxed atperspective. If you own one porate veil. If you commingle and if the properties are 1.75% and there are NOproperty or 50 plus properties your funds there is a very real placed in the rental pool, capital gains taxyou should be treating it as a possibility that in court your the projected returns are * Small and stable governmentbusiness. Be sure to keep track legal entity protection that 10% plus.” * Undiscovered paradise withof ALL of your expenses re- you worked so hard to setup is Currently each unit vast growth potential - a perfectlated to the investment, the due worthless. starts at $100,000. Why combination for appreciationdiligence you did, travel costs is the price so afford-you incurred, etc., so that you (10) INVESTING IN SUS- able? Because investors are getting in at the ground floor level. “Ican get a deduction for those TAINABLE INVESTMENT relate Ambergris Caye to what Hawaii was before it got ‘discov-items against income from TYPES – Invest in asset ered’ by the world,” Newton says. “Why not be ahead of the crowdother sources. These types of types and real estate invest- and combine real estate investing with a lifestyle that incorporatesexpenses can happen annu- ments that are sustainable in spending time in a world-class resort destination?”ally and a percentage of your the long run. Look closely at Newton believes so much in the project that he is now involvedpersonal expenses can be used the cash flow included in the with the Belize Commerce Alliance to promote Discovery Trips toas a tax loophole in order to de- investment. If it’s negative, Belize. In the past few years, Newton has created a passive incomeduct more against your active unless you are flipping, do not stream and now he is ready to combine investing with pleasure,income from your job. Your invest. Flipping can be much which leads to an even more rewarding ROI.biggest expense in life is your more dangerous than invest- — article by Lori Peeblestaxes. It is the government’s ing for cash flow because you For information about Belize and the opportunities in Ambergrisjob to find more creative ways typically have a payment on Caye, please contact Dr. Michael Newton via email at:to tax us. It is our job to find a flip investment that is not or at 805-405-3183.creative ways to legally not pay covered fully by the rentaltaxes. If you are not winningagainst the government, start income. If you get stuck with the property, you find yourself Crisis, Recovery, and Prosperityto educate yourself on key tax in a negative cash flow situa- Total Solutions Alliance is a net-saving strategies. tion and you can only sustain it work of professionals that pride as long as you have money in themselves on unparalleled ser- Call Us Today:(9) LEGAL PROTECTION the bank to make that payment. vice and performance. We areAND TAX STRUCTURING Many people lose a lot of mon- Pilar Tobias committed to providing unbiased– It is crucial to protect your- ey trying to flip property, not advice and prudent strategies to 209-227-8129self from financial predators. knowing fully what they are help you create and build wealth.There are people out there that doing and the risk they are tak-will sue anyone they possibly Continued on pg. 61 www.TotalSolutionsAlliance.comcan. It’s really important PAGE 55 • 2012
  • 51. O ne of the most exciting home values to appreciate by 37.9 percent Cash flow investment properties are things about being a real in five years. In addition, property values indeed your best hedge against the neg- estate investor is know- remain relatively affordable with the me- ative impacts of a down market. Take ing what markets will dian sales price around $100,000. it from Morgan Stanley’s “Housing 2.0 produce the greatest long- Aside from this Texas residential The New Rental Paradigm” report. The term returns — especially while in the investment area, our report reveals other financial services company observes middle of a challenging housing market. real estate markets with great potential that gross rents are “historically attrac- In a down market, savvy real estate including two from Colorado (Colorado tive relative to current distressed prices. investors are eager to find out how Springs and Denver-Aurora), as well as Adding to this attractiveness is the they can best leverage their resources. California (Sacramento-Arden-Arcade- fact that multifamily data shows rents And expert forecasts are some of the Roseville, and Oxnard-Thousand Oaks- continuing to rise.” More so, it favors best tools they can use to back up their Ventura). Other markets that made the single-family homes as the most ideal strategies. A good example comes from Top 10 include North Port-Bradenton- form of real estate investment in the by Marco Santarelli real estate consulting firm John Burns Sarasota, FL; Las-Vegas-Paradise, NV; market today owing to their huge rental Real Estate (JBRE), which has recently Hartford, CT; Springfield, MA; and potential. JBRE’s forecast also reveals predicted that homeownership will fall Phoenix-Mesa-Glendale, AZ. These areas that homeownership will not be on an from 70.0 percent to 62.1 percent by have a five-year appreciation forecast well upswing until 2025 at 67.1 percent on 2015 due to a weak economy, weak above 21 percent. the back of foreclosed homes return- consumer confidence, limited mortgage And what does this mean for real estate ing to ownership, improved economic availability, higher rates of foreclosures, investors? There’s a gold mine out there conditions and normal mortgage credit, and short sales, and other factors. waiting for you to take full advantage of and an increase in the propensity of The JBRE forecast, although based it! A fall in homeownership means a rise households to own a home. That may on broad market conditions, points out in rental units to accommodate the surge signal the time to consider selling your that we are going to see an increasing in demand from those who have recently portfolio and taking a profit, or trading number of renters and therefore a greater lost their homes to foreclosure, those who up into more real estate using the IRS demand and need for rental housing. cannot afford to buy property, and those 1031 tax deferred exchange. Savvy real estate investors choose who are still saving up for a new home. There are plenty of investment op- investment properties that are located Last October 2011, the National Associa- portunities out there today. Be sure to in markets with the greatest long-term tion of Realtors (NAR) reported that the take action, do your homework and growth potential. This allows them to number of rental homes had gone up to invest wisely. As JBRE puts it, “The invest wisely today while hedging their 38 million units in 2Q11 and the vacancy American dream of homeownership is bets on the future growth and apprecia- rate of single-family homes and multifam- still alive and well...” tion of their chosen markets. ily units was at an all-time low rate of 9.2 Our 2012 Housing Market Forecast percent. Marco Santarelli is an lists the Top 100 Metropolitan Mar- Investors never think twice about snap- investor, author, and kets based on future job growth and ping up bargain properties with positive the founder of Norada projected price appreciation. If you are cash flow. As NAR chief economist, Real Estate Investments interested in finding growth markets Lawrence Yun, puts it, “The dynamics of – a national real estate with strong appreciation potential, then falling rental vacancy rates mean in- investment firm providing the McAllen-Edinburgh-Mission, Texas creased landlord pricing power. Naturally investors with turnkey metropolitan area may be your first as a result rents have been pushed higher... investment property in growth markets choice. We project its 10-year future Rising rents mean a better rate of return nationwide, visit online: NoradaReal- job growth to surge by 32.3 percent and for real estate investors.” for a FREE PAGE 56 • 2012
  • 52. WEALTH CREATION MADE EASY RENTSuccessful Real Estate Investing Beginswith the Right Investment Property!Norada Real Estate Investments helps take the guessworkout of real estate investing. By researching top real estategrowth markets and structuring complete turnkey real estateinvestments, we help you succeed by minimizing risk andmaximizing profitability. FREE REPORT Download a free copy of our valuable 15-page special report, “Building Wealth in Real Estate” and receive a free membership to our nationwide investor network!CALL US AT (800) 611-3060WWW.NORADAREALESTATE.COM
  • 53. 0) 204-8971 or how to access the legal system!him at: hector@ Lori Fouts - Independent 510.520.2753 | www. More Cash Flow • Less Headaches I n today’s DIY and finance payment. Sometimes as low as Invest in Indianapolis! crippled real estate world, $200 a month, which allows for SAMPLE DEAL Jeff Ader and his team at a great return on investment.” orfman Delivers Success Price $45,000 Downpayment: $13,500 2029 Goodlet Ave InvestIndy are a rarity. They Indianapolis, IN know long-distance investors Outstanding property management is essential for success and with over 35that extra special service No Closing need years experience, Many stock-weary investors are now taking advantage of self-direction by purchasing realman Property Management is the industry leader in Indianapolis. The family-run companyFinanced Purchase 30% Down Owner Costs! to be successful. has owned Purchase Price: Property $45,000 estate with their 401(K) or IRA stment properties since 1960. Jeff Ader, a Dorfman executive, tells us why the company is so special. Annual Gross management and seller financ- 70% Loan Amount: $31,500 Jeff Ader (Individual Retirement Ac- Income: $8340 ing are the it’s always elements 30% Down two keyus a bit about Dorfman Property common mistakes are purchasing in a high Ader: First of all,Payment: important to $13,500 count). Ader says that instead company come crime or $45,000 Us for Callment, how did the $695 x 12 Purchase Price:undesirable neighborhood and diversify your investment portfolio. Hav- Closing Costs: $0 Annual PITI: $2,774 a thoroughOur Latest not doing 30% Down Pymnt: rehab. $13,500 that set asset classifications, such as Their $13,500 different apart. ing Total Investment: track of getting a paltry one to two percenter: Dorfman Property Manage- DEALS!!! real estate, stocks,real estate success speaks record for bonds and precious met- return from certificates of deposit — or Annual Taxes: $1,028 *Loan Amount: $31,500 *Annual Gross Income:s founded 35 years ago by Martin Q: Do you have many clients from out of als, helps reduce risk in your overall invest- $8,340 Annual Insurance: $650Year term and his daughter Miriam Ader *8% Interestother countries? state and 30 ment portfolio. “We’ve beenXdoing this for 36 volumes: rent 695/mo 12 *current taking huge risks with the volatility of the ge family Annual Management: $834 10 Year balloon payment A d e r : Ye s , w e Secondly, Principal &build was being advertised Annual people can Interest: years even before itwealth and ($2,774) stock market. properties Vacancy Factor: $667 Annual Taxes: service many cli- accumulate a high net worth by buying ($1,028)as provide ents from Cali- and Annual rental properties over a I believe we do($650) as the thing to do, and period holding Insurance Estimate it Ader and his team are equally known in Maintenance Reserve: $584d property 3 Bedroom 1 Bathroom fornia as well as ofbetter than simple example of why time. Here is a anyoneFee: Annual Management else.” ($834) real estate circles for their property man-ment ser- Annual Net Income: $1,803 Arizona, Florida, rental properties can be such a powerful Indianap- Cash on Cash Return* 13.36% Hawaii, Illinois, wealthAder operates InvestIndy differ- ($667) 825 Square Feet Vacancy: generating investment: agement. Since they have been in business Maintenance: ($584)stors. New York, Ohio, ently than Income: @ 5% inter- investment Annual Net most conventional Georgia and many Exhibit A: $20,000 lump sum $1,803 serving local and out of state investors for an inves- Seller-Financing Available! estbrokerages. years equals $32,578 clients of 13.36% more. In addition, at the end of ten Return* thing, Cash on Cash For one more than 35 years, Ader and his wife, managers we have clients InvestIndy don’t have not guaranteed. aboutto worry Miriam, have learned a thing or two. “Ourview, what in Italy, Austra- Exhibit B: $20,000 can which leaves a bank loan. *All figures are projections only and are on a cash outlaye common lia, France and $100,000 rental property, qualify for whether they style of property management is based that in- 827 North Capitol Japan. $80,000 financed with 5% appreciation permake? Indianapolis, IN 46204 “Our company provides the loan for year at the end of ten years equals $82,889 on being a very good mediator in termsverpaying for a property and not Q: Why do| 317.507.4323 you think people should have the buyer to acquire the property without Continued on pg. 16 earch about rental amounts. Other rental properties in their portfolio? them having to qualify with a bank. This INSIDE INDY: The metro area of India- lessens the need for the buyer to have napolis. was just ranked #1 nationally in spotless credit,” Ader explains. housing affordability by the prestigious Investors can expand their portfolio Wells Fargo Housing Opportunity Index. with as little as a cash outlay of $13,000. Plus, the unemployment rate is lower in The buyer takes over an existing turn- Indianapolis than the national average. key rental with a stable tenant already in Rent your property FAST Ader provides the perfect option place. of communication levels between us and for people with spotty credit or those who tenants. This sends a message to the tenant HIRE Dorfman Property Management or any more loans. Time is cannot qualify that lets them know we’re listening to Ouralso of the essence, he can close the deal Available Services: what they have to say, which makes them Rent Your Property FAST, in a week, whereas a conventional lender want to stay longer.” can take months. Since Ader and his family own a sub- HIRE the Dorfman Team “I own every house that I sell. I’ve stantial real estate portfolio themselves, owned some of them for one year and they know tenant turnover is one of the 35 Years in Business! others for ten years; which means the in- biggest expenses in landlording. “It can Our Services Include: vestor receiving them will get substantial cost up to $1,500 to get the property equity in that investment,” Ader says. rent-ready after a tenant moves out. If the •Tenant Screening The biggest advantage of seller financ- tenant feels they’re being treated fairly, •Tenant Placement Rehabs ing to the buyer is credit worthiness. they’re much more likely to stick around.” •Regular/Emergency Maintenance Banks don’t want to talk to you if your But it’s not only the tenant that’s the •Monthly Statements credit score doesn’t exist at a certain focus of the Dorfman property manage- •Online & Yard Sign / Rental Advertising level. But a seller with the available ment style, it’s the owner-investor as well. •Outside Network of Legal, Property resources, like Ader, is often willing to Jeff says, “We foster great communication •Tax and Debt Collection Services make a deal. This process has another with the owner of the property, 50 percent Family-Owned Business, Over advantage for the potential buyer in that of whom are out-of-state. Investors get 1,000 Properties Under Management you can often get a lower monthly down their reports on time, as we’re their eyes payment. Jeff’s deals are amortized for and ears on the ground. We do virtually ph: 317.634-5955 or visit 30 years. “The reason that works so well everything for the owners so that it’s a for the client is that it creates a very low hassle-free operation for them.” PAGE 58 • 2012
  • 54. LOCATION: Market Spotlight: Kansas City, MO Kansas City, MO COMPANY: Home Solutions Kansas City and sur- eas are incredible. We truly CONTACT: rounding areas. We’re have one of the best rental Ryan Tebbenkamp able to pick up homes markets in the country in ph: 816.682.3998 for incredible prices. terms of Return on Invest- web: Q: What is the best ment (ROI). It’s an areaA part of being an in- investors from around the fter Ryan Tebbenkamp completed vestor in your area? world are buying in. his degree in real estate appraisal A: Our market is Q: How do you handle from the University of Kansas, he steady. Real estate here property management?began to work doesn’t fluctuate upward and downward A: My company has had a relationship forin the industry like other areas of the United States. a long time with a great property manager.helping set com- Q: Currently, how is the rental market? They handle everything for me and ourparables for his A: It is really good right now. The typical clients. Their service is wonderful and itc o m m u n i t y.   I t vacancy rate is low and stands around 5%. makes our life as investors stress-free.was during this Q: When did you start your real estate Q: Is there anything else you’d like totime he observed investment career and how? add? Can you leave our readers withthe benefits of buying rentals for passive A: In 1996, I received my degree in real es- some advice that can help them?income. Since 2001, Tabbenkamp has been tate and real estate appraisal, I saw the op- A: The best thing I can emphasize is fornot only pricing properties, but also provid- portunities in the rental market and started investors to be outstanding rock-bottom priced deals buying properties to hold for cash flow. Sometimes as inves-to investors in Missouri as well as out of Q: What makes tors we may hit bumpsstate. We spoke with Tabbenkamp recently unique in the Kansas City marketplace? in the real estate rentalto get the scoop on the market in this Mid- We focus on aggressively marketing vacan- market, but we have toWestern city. cies and proper screening to procure good remember that in the quality tenants in the rental homes, which long run, it will workQ: What type of opportunities are you results in less turnover. out. Our rewards inseeing in Kansas City right now? Q: Tell us why investors should take a this business are long-term, so let the ten-A: Right now, we are seeing fantastic op- look at Kansas City real estate? ants pay off your debt, as the house appre-portunities with great cash flows in the A: The cash flow for properties in good ar- ciates over time. Celebrity Real Estate Moguls, pg. 18 Most of Bob Hope’s fortune, estimated at $500 million when he died in 2003, came from real estate holdings and sales rather than acting revenues. Realtor Jim Nyquist, adventurous investors make a ton of money who specializes in doing this.” helping celebrities Van Winkle said in a CNBC interview and non-celebrities that he started flipping houses in the Palm make money flipping Beach, Florida in 1997. His success even houses, says the rap- in a time of serious economic challengeper’s public statements along with a buy- garnered him a reality show called “Theer-friendly real estate market is increasing Vanilla Ice Project.”interest in this arena of investing. “The short sales, the foreclosures are “It is nice to have a celebrity offer great, but tax auctions are even better,” Vanbacking to the process of house-flipping,” Photos, left to right: Celebrity icon Bob Hope courtesy of USPS; actress/singer Continued on pg. 60Nyquist says. “Because while some Cher and hip hop mogul/actor Drake.Americans still think of it as decidedlyunglamorous work, the truth is that many Within 24 hours of listing the units with Coldwell Banker, Drake’s properties had netted him a half a million PAGE 59 • 2012
  • 55. Celebrity Real Estate Moguls, pg. 59 Do YOU Need a Land Trust?, pg. 39 Winkle says. “I just bought the Sea- The problem is that most practitioners how to set up your own Land Trusts? Yes. son Three house on a tax auction. If do not know how to set up and administer Is it expensive? No. Is it easy to learn? Yes. no one’s bidding against you and it’s Land Trusts so many of them consequently And, to prove it, I will send you my book- an absolute auction, you can steal the advise people not to use them. You may let, “50 Reasons To Use A Land Trust” for homes for pennies on the dollar.” have been told by someone (an attorney, FREE. Just send me an email at: randy@ Cher, one of the biggest celebrities accountant or friend) that you need a Land in the world, sometimes has appeared Trust, but nobody told you how or where to On October 27th,2012 I will be teaching as the queen of re-inventing herself. find information to help you get started. The my nationally acclaimed Land Trusts Made With the help of architect Steve point here is do not trust someone who does Simple Seminar in Culver City, CA. As a DeChristopher Jr., the actress-singer not have direct active knowledge of Land bonus day, Dawn Rickabaugh, The Note tried her hand at renovating a Palm Trusts and their benefits. Queen, will offer her one day Pumping Paper Springs house that she bought for I have been using Land Trusts in my full For Profits seminar October 28th, 2012. $650,000. She then sold it for $2.5 time real estate investment business for Dawn and I will teach at both seminars million. over 30 years. I have found that many times and show you how to combine Land Trusts Rapper Audrey “Drake” Graham advisors tell their clients, “You cannot do and real estate notes for dy-no-mite Privacy, took a risk and spent about $1.9 that” with a Land Trust. Most of the time Asset Protection and Profits! million of his $11 million fortune on they are wrong! Don’t miss this one-of-a-kind two day two side-by-side condos in Miami. You may have heard about the little event. You can register for one day or both Within 24 hours of listing the units known technique of using a Land Trust for days at: www.realestateforprofit.comor call with Coldwell Banker, Drake’s privacy and profit in this unique real estate 866-696-7347. properties had netted him a $500,000 market. But, do you really need to learn profit. While it’s not necessary to already Join our magazine’s have access to millions of dollars to become successful in the art and science of flipping houses, true hor- Facebook Group and Mingle with Investors! The Choice Is Yours ror stories are well-publicized on Do You Want the Pain of “Flip This House” and created into Paying More Taxes? ABW Tax & fictional plots on prime time cartoons such as “Family Guy.” It is all too Or, We Can Do Consulting, Inc Glenn R. Wilson, easy for an inexperienced investor Advanced Tax Planning for You EA, ATP, ATA, ABA Call now at 805-898-3177 • to get seduced by the potential profit RetireEarlyWithRealestate and not realize that the home was never really a good investment to begin with. “For anyone interested in flipping a house and avoiding the horrors, the important thing is to do some Learn from THE National Expert research up front,” Nyquist says on how to use Land Trusts and adds: “Paying for a good home inspection is a sound investment, and for privacy & asset protection. will help ensure that the property in question really can be flipped for a Visit Randys website for FREE Land handsome profit.” Trust information or call him now @ 866-696-7347 with your questions. Attend his next Land Trust and Join Our VIP Social Network Note Queen Seminars on Randy Hughes Oct. 27th-28th in Culver City. Mr. Land Trust FREE Membership * LIVE Chat 40 Years Experience Register at the website below: Post Your Blog, Events & Deals PAGE 60 • 2012
  • 56. And Here’s How to Do It, pg. 33dence within the fear that stops us. When the falseevidence is revealed for what it is... “false,” tak- HOMEEMOH Ryan Tebbenkamp Bus: 816 682 3998 Email: info@ibuykchouses.coming action becomes much easier. I use this exerciseregularly in my investing workshops to get people SOLUTIONS SNOITULOS Kansas City, Missouriover the fear of submitting purchase offers for realestate, but it will work for any fear. To demonstratehow it works, I’ll lead you through the exact exer- Solid Investment-Great Returnscise I do with my students. Go to for a short video demonstrationof this easy exercise. The sooner you do this, thesooner your fears will disappear so you can startmaking that big money. 10 Keys for Successful Investing, pg. 55 E!ing only to lose a significant amount of money. On OPER TIES ARE AVAILABLthe other side when you are investing for cash flow PACKAGES OF PRonly invest in quality assets. Typically if you invest 10205 Bellaire, Kansas City, MO 11513 Delmar, Kansas City, MO 64134in low end assets in your market you get low end Fresh carpet and paint, Fenced yard, Fin. Updated Nice Ranch, 1 Car Garage/ Fulltenants also. Instead, you need to invest in quality basement, 3BR/1BA, Garage Basement, 3BR/1BAlong-term assets that are going to produce positive 925 SF plus Fin. Bsmt 924 SFmonthly cash flow and make you a great return on $ 775 Rent $750 Rent (Tax: 1,026, Ins. $284) PRICE: $49,000investment based on conservative numbers. Price: $51,000 Recently vacated I truly believe if you do these things, along with Seller Wants Offer!increasing your financial IQ, you will be success- CASH FLOW PROPERTIES!!!ful if you work hard for it. Most of the wealthyindividuals in the world work hard for their moneyand are constantly evaluating their financial situation Most Homes Have Been Remodeledand investment goals. Putting a personal budget to-gether and reviewing it monthly, creating additional In The Past Few Years.income sources, implementing tax savings strategies,protecting your money from financial predators, and KANSAS CITY TURN KEY RENTAL PROPERTIES!!!!constantly educating yourself are the keys to becom-ing wealthy. One Year Home WarrantyFor more information about Mathew Owens, CPA,please visit his website:
  • 57. “Fix and Flip” ve by I “Fix and Flip” versus “Buy and Hold” Terica Kindred has real estate in her blood. the age of 19, and she never looked back. He Tips from Terica i S hould one buy a property to hold or just flip? The answer is complicated because it depends on many factors, including finances, risk tolerance and individual from n goals. To help readers understand both strategies, we asked Terica Kindred to share some insight on the differences Fix and Flip (20K Down) between the two. Kindred’s company, Out Estate InvestmentsThis model requires the investor to acquire the property at below mark (, ue, refurbish the property by making strategic repairs, and selling the p ph: 323.829.0778) is a full-service real estate investment firm headquartered in Atlanta and realized in a matter of months. Los Angeles. Kindred offers everything from no-money down opportunities to more tradi- by Isaac Newkirk III www.OutEstate tional real estate investments. Here is a sample of the two strategies with her program. Fix and Flip ($20K Down) Buy and Hold (No Money Down) This model requires the investor to acquire the prop- This is the more traditional investment vehicle where erty at a below market value, refurbish the property property is acquired and held for a period of time (usu- by making strategic repairs, and then selling it. This ally a number of years). This model favors the passive model offers the quicker route to profits. The goal is to investor, one who is willing to buy and do very little make money within a short time. other than maintain and allow it to appreciate in value. Specializing in ZeroBuy & Hold and Specializing In Money, Hands-Free We help RE Investment & Fix & Flip Investment Opportunities Real Estate Investment Opportunities Landlord Associations offer Atlanta their members MORE VALUE Invest in for just $99 annually* C M Y CM MY With CBG, your members save money at CY these national suppliers plus MANY more: CMY K Individual Investors are also welcome! Save 20% off your first year of CBG Membership – use Promo Code CBG411 w w w. o u te s t a te . c o m Call 816-282-6310 ext. 202 or visit CommunityBuyingGroup PAGE 62 • 2012
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