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Ultimate Passive Income


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High cash flowing properties with a plethora of steps taken to mitigate many of the risks typically associated with real estate investments. Ideal for Retirement accounts as an alternative to CD\'s at a much higher rate of return.

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Ultimate Passive Income

  1. 1. Ultimate Passive Income Government Insured Housing A SAFE Way to Invest in Real Estate
  2. 3. Does this economy we are facing remind you of any other DIFFICULT TIMES our country has faced in the past? How about November 1929?
  3. 4. November 8, 1929
  4. 5. “ AFTERMATH OF A STOCK MARKET CRASH” November 8, 1929
  5. 6. “ Behind the Exciting Show Window of Frenzied Wall Street Is an Endless Pageant of Obscure Tragedies”
  6. 7. “ Plans Go Glimmering in Thousands of Homes as Margins Melt and Savings of Lifetime Are Swept Away.”
  7. 8. We will show you how to turn THE HOUSING CRISIS into one of the best opportunities to make money in your lifetime!
  8. 10. In the next few minutes we will show you how to increase the value of your investment account by 25% The First Year then predictably and securely earn 10% each year thereafter.
  9. 11. Why Real Estate? <ul><li>It is a tangible asset that provides a hedge against inflation. </li></ul><ul><ul><li>A real structure on land will always carry some non zero real value. </li></ul></ul><ul><li>You have the ability to influence value, unlike most other asset classes. </li></ul><ul><ul><li>Can remodel property to increase its market value. </li></ul></ul><ul><li>Offers unique tax advantages. </li></ul><ul><ul><li>If structured properly, you can make money in the real world while simultaneously creating phantom losses that can offset some (if not all) of your federal/state tax burden. </li></ul></ul><ul><li>Provides immediate cash flow (unleveraged). </li></ul><ul><ul><li>By purchasing a property free and clear and placing a tenant in it. </li></ul></ul><ul><li>Can purchase under fair market value (FMV), unlike most other asset classes. </li></ul><ul><ul><li>Imperfect information, coupled with motivated sellers provide tremendous investment opportunities. </li></ul></ul><ul><li>Offers more predictable, better returns. </li></ul><ul><ul><li>Performance is based in part on rental income. For Section 8 rentals, the government guarantees rent every month. </li></ul></ul><ul><li>Provides a benefit to the community. </li></ul><ul><ul><li>Helping people that need a place to live. </li></ul></ul>
  10. 12. Stocks Bonds Mutual Funds CD's Precious Metals REAL ESTATE Cash Flow ( YR) 0-2% 3-6% No 1-3% No 10% Purchase Under FMV No No No No No Yes Long Term Appreciation 8-10% No 8-10% No 6-8% 2-3% Tax Advantages No Sometimes No No No Yes Tangible Asset No No No No No Yes Ability to Create Value No No No No No Yes Social Good No No No No No Yes Leverage Potential 50% No No No No 80% Hedge Against Inflation No No No No Yes Yes Average After Tax Annual Return 8% 4% 8% 2% 5% 12%
  11. 14. <ul><li>Thomas Stanley </li></ul><ul><li>How millionaires make their money. 80% invest in real estate. </li></ul><ul><li>Either hold their wealth in real estate or made their money in Real Estate . </li></ul>
  12. 15. Compound Interest CD's (2%/yr) Stocks (8%/yr) Real Estate (12%/yr) Age 30 $10,000.00 $10,000.00 $10,000.00 Age 40 $12,189.94 $21,435.89 $31,058.48 Age 50 $14,859.47 $46,609.57 $96,462.93 Age 60 $18,113.62 $100,626.57 $299,599.22 Age 70 $22,080.40 $217,245.21 $930,509.70 Age 80 $26,915.88 $469,016.13 $2,890,021.90
  13. 16. Greatest Opportunity <ul><li>We all understand and agree that Real Estate provides the best returns in the long run. However… </li></ul><ul><li>Within the real estate market, which sub-markets provide the greatest opportunity over the next few years? </li></ul><ul><li>To answer this question we need to look at some current statistics... </li></ul>
  14. 17. <ul><li>Foreclosures are higher than they have ever been! </li></ul><ul><li>Source : </li></ul>
  15. 18. October 2008: 279,561 November 2008: 259,085 December 2008: 303,410 January 2009: 274,399 February 2009: 290,453 March 2009: 341,180
  16. 19. Foreclosure Process <ul><li>Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Notice of Default or Lis Pendens. The foreclosure process can end one of four ways: </li></ul><ul><ul><li>The borrower/owner reinstates the loan by paying off the default amount during a grace period determined by state law. This grace period is also known as pre-foreclosure. </li></ul></ul><ul><ul><li>The borrower/owner sells the property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history. </li></ul></ul><ul><ul><li>A third party buys the property at a public auction at the end of the pre-foreclosure period. </li></ul></ul><ul><ul><li>The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure, via a short sale foreclosure or by buying back the property at the public auction. Properties repossessed by the lender are also known as bank-owned or REO properties (Real Estate Owned by the lender). </li></ul></ul>
  17. 20. REO’s The Next Big Wave!!! <ul><li>Due to the unprecedented number of foreclosures, most houses are not being sold at the foreclosure auctions, resulting in them being returned to the banks. </li></ul><ul><li>These homes, called Real Estate Owned (REO) homes, sit accruing tax and insurance liabilities for banks. </li></ul><ul><li>Banks are desperate to get rid of them, and often sell portfolios of REO properties for huge discounts to liquidators such as Innomax Solutions ( ). </li></ul><ul><li>The Problem : The best discounts are available to institutional investors who can afford to purchase 50+ properties at a time directly from banks. </li></ul><ul><ul><li>It is difficult for the average investor to obtain similar discounts. </li></ul></ul><ul><li>Our Solution : Ultimate Passive Income leverages Innomax Solutions’ bank direct relationships to obtain properties for the average investor at “institutional” (bulk) investor prices. We then leverage our nationwide construction and property management network to deliver fully remodeled homes with tenants in place for a fraction of Fair Market Value. </li></ul>
  18. 21. <ul><li>While many people this last year have been complaining about the difficult economy, losing jobs, their homes, and their retirement accounts… Our Clients Have Been Reaping The Benefits Of What They Are Calling Their BEST YEAR EVER! </li></ul>
  19. 22. Question <ul><li>What is the most conservative, predictable way to make money within the REO sub-market? </li></ul><ul><li>Leverage UPI’s bank direct relationships to get “institutional” (bulk) investor pricing on individual assets. </li></ul><ul><li>Purchase free and clear to avoid mortgage liability. </li></ul><ul><li>Leverage government Section 8 housing program for guaranteed rent. </li></ul>
  20. 23. <ul><li>The Section 8 Housing Choice Voucher Program assists low-income individuals and families with their rental payments. The tenant has the same obligations as any tenant under their applicable state law. The main difference is that each month the property owner will receive two payments for the tenant’s rent – one from the tenant, which is about 30% of his or her income (on average), and the balance from the local housing authority (HA). </li></ul>
  21. 24. Section 8 Advantages <ul><li>Guaranteed on time rent payments:  The majority of each month’s rent payment comes directly from the local HA, so you don’t have to worry about whether you are going to receive a rent check each month.  </li></ul><ul><li>Maintain the quality of the property: The fact that there are annual HA inspections creates another check and balance that minimizes the chance that your home suffers negligent abuse from the tenant. These inspections are not required for non-Section 8 tenants. This provides a great way for an absentee landlord to maintain the quality of their property. </li></ul><ul><li>Minimal Vacancy Time: Finally, in oversubscribed cities, there are a steady stream of tenants looking for places to rent. This minimizes vacancy in rentals. </li></ul><ul><li>Internal check and balance: Even though the Section 8 tenant is responsible for a portion of the payment (in most cases), the fact that he or she is dependent on the local HA for this subsidy creates an internal check and balance in oversubscribed cities, which tends to lead to greater integrity and accountability than a typical non-Section 8 tenant that has the money to go elsewhere. If a Section 8 tenant risks becoming homeless in the event of non- compliance, then one would expect the Section 8 tenant to take better care of your home. </li></ul>
  22. 25. Ultimate Passive Income Acquisition Strategy <ul><li>We seek to identify “oversubscribed” Section 8 markets: </li></ul><ul><ul><li>Cities that have substantial waiting lists for Section 8 vouchers (more people needing vouchers than are currently available). </li></ul></ul><ul><ul><ul><li>This creates an internal check and balance because if a tenant abandons the house, destroys the property, or chooses to not fulfill their financial obligation to the landlord, the tenant will have their voucher taken away from them. Since there is an extensive waiting list to get back on the program, this results in the negligent tenant being forced to find alternative living accommodations. Since these tenants do not have a lot of money, for most tenants, this means they will become homeless. </li></ul></ul></ul><ul><ul><li>Cities that have more Section 8 ready tenants looking for housing than properties that meet Section 8 standards. </li></ul></ul><ul><ul><ul><li>Our experience is that while it doesn’t 100% eliminate potential negligence, it certainly is a substantial detractor for tenants and keeps them accountable. </li></ul></ul></ul><ul><li>Based on our experience, the markets best positioned to maximize profitability are Birmingham, AL; Cincinnati, OH; Kansas City, MO; Indianapolis, IN; and Memphis, TN. </li></ul>
  23. 26. When is the Best Time to Invest? <ul><li>We realize that Section 8 investing in completely remodeled properties provides the greatest opportunity for stable, predictable income but the question still remains…when is the best time to invest? </li></ul>
  24. 27. <ul><li>1970’s </li></ul>2000’s 1980’s 1990’s There Are Times to Sell!
  25. 28. <ul><li>1970’s </li></ul>2000’s 1980’s 1990’s And There Are Times to Buy!
  26. 29. <ul><li>Donald Trump: </li></ul><ul><ul><li>According to his biography as posted on , Donald made his initial wealth in New York City commercial properties in the early 1980’s , only to lose most of it in the late 1980’s (due in part to the Tax Reform Act of 1986). ` </li></ul></ul><ul><ul><li>Donald then re-established his status as a “billionaire” through several savvy commercial real estate deals in the early 1990’s . This inspired his book, entitled “The Art of the Comeback”. </li></ul></ul><ul><li>Robert Kiyosaki: </li></ul><ul><ul><li>According to his “Rich Dad” book series, Robert made his wealth investing in Phoenix during the depressed market of the early 1990’s . </li></ul></ul><ul><li>Ron LeGrand: </li></ul><ul><ul><li>According to , Ron went to his first seminar in 1982, and within 2 years (i.e. by 1984 ), “had amassed 276 units” and “had over $1,000,000 in equity”. </li></ul></ul><ul><li>Russ Whitney: </li></ul><ul><ul><li>According to his book, “Building Wealth”, Russ started investing in Schenectady, NY in late 70’s, and continued investing heavily through the down market in the early 80’s . </li></ul></ul><ul><ul><li>On the back cover of “Building Wealth”, he claims to have become “a self-made millionaire by age 27 (i.e. 1982 )” </li></ul></ul><ul><ul><li>On page 42 of “Building Wealth”, he claims to have “turned $1,000 into $4.8 million within 18 months”. Other commentators believe this period was from 3/1/82 – 9/1/ 83 . </li></ul></ul><ul><li>Notice that all of the above “guru’s” made their wealth during real estate downturns (i.e. 1980 - 1984 and 1990 – 1994)!!! </li></ul>
  27. 30. <ul><li>The real estate market is cyclical, with downturns in the early 1970’s, mid 1980’s, and early 1990’s. </li></ul>
  28. 31. <ul><li>Conclusion : More wealth will be created in real estate in the next 3-5 years than has ever been created! </li></ul>
  29. 32. Warren Buffet <ul><li>“ Be fearful when others are greedy, and be greedy when others are fearful.” </li></ul><ul><li>Legendary billion dollar investor, Warren Buffett, recently announced that he is jumping back into the market. He is cautious about the short term and optimistic about the long prospects for the U.S. economy. </li></ul><ul><ul><li>“ Buy American. I am.” – Warren Buffet </li></ul></ul>
  30. 33. Dr. Jay Butler of ASU Realty Studies <ul><li>Dr. Jay Butler gives his frank assessment of the current situation: </li></ul><ul><li>“ During the last year, the housing market has been confronting issues derived from the hyper-market of previous years such as the subprime meltdown and overly ambitious investors. Unfortunately, there is increasing data, such as job losses and layoffs, that the economy is now weakening and will add further stress for the housing markets.” </li></ul><ul><li>Conclusion : The REO market will continue to grow and more wealth will be created in real estate in the next 3-5 years than has ever been created! </li></ul>
  31. 34. Now that you know all of this, you can choose one of two paths. <ul><li>1). Do everything yourself with no guarantees: </li></ul><ul><ul><li>Identify the cities where you want to invest; </li></ul></ul><ul><ul><li>Find properties cheap enough to remodel; </li></ul></ul><ul><ul><li>Find reliable construction crews in these cities to complete the remodels; </li></ul></ul><ul><ul><li>Find a reliable property manager that understands Section 8 to lease and manage your properties for you. </li></ul></ul><ul><li>OR… </li></ul><ul><li>2. Leverage Ultimate Passive Income’s experience to have everything completely done for you with some incredible guarantees. </li></ul>
  32. 35. <ul><li>Our Core Values: </li></ul><ul><ul><li>Operational Excellence : Providing an unparalleled seamless buying experience by executing every single detail of our business with such detail and total concern for our customer that our competitors appear amateur by comparison. </li></ul></ul><ul><ul><li>Integrity : Aligning our interests with our customers' interests by providing a transparent fee schedule.  Also, earning the respect of our suppliers, employees, marketing reps, and customers through open, honest communication, accountability to one another, and a predictable working environment. </li></ul></ul><ul><ul><li>Openness , Honesty, Accountability, Communication, Transparency, Predictability </li></ul></ul><ul><ul><ul><li>Worry free investments </li></ul></ul></ul><ul><li>We Specialize in High Quality Remodels: </li></ul><ul><ul><li>All major systems (Hvac, plumbing, electrical) are addressed. </li></ul></ul><ul><ul><li>All remodels are completed within 6 weeks of closing. </li></ul></ul><ul><ul><li>We are so confident in the quality of our remodel, that we offer a 1 Year unconditional guarantee . </li></ul></ul><ul><ul><ul><li>Absolutely no money required for repairs for a full year </li></ul></ul></ul><ul><li>We Have Done All the Research For You as to Which Markets are Oversubscribed: </li></ul><ul><ul><li>We are so confident that you will have a Section 8 tenant upon completion of your remodel that we offer a 1 year unconditional rent Guarantee ($700/mo prorated daily). </li></ul></ul><ul><ul><ul><li>Rental income guaranteed for a full year </li></ul></ul></ul>
  33. 36. <ul><li>We Help Our Clients Invest Intelligently, Conservatively, and Profitably: </li></ul><ul><ul><li>All properties are guaranteed to be 20% or more below the value established by an independent third party appraisal, or we will either pay you the difference or swap your property with another property (at our discretion). </li></ul></ul><ul><ul><ul><li>Guaranteed to get a property at least 20% below fair market value </li></ul></ul></ul><ul><li>We have Teams of Experienced Professionals that have Completed Hundreds of Remodels: </li></ul><ul><ul><li>Systems (Operational Excellence) </li></ul></ul><ul><ul><li>Infrastructure </li></ul></ul><ul><ul><ul><li>You do not have to reinvent the wheel. Leverage our expertise and infrastructure </li></ul></ul></ul><ul><li>Reliable Property Management </li></ul><ul><ul><li>We work with property management companies with years of experience managing Section 8 rentals. </li></ul></ul><ul><ul><li>=> Have confidence your property is taken care of </li></ul></ul>
  34. 37. Irresistible Offer <ul><li>1). Investor chooses one of five oversubscribed Section 8 markets: Birmingham, AL; Cincinnati, OH; Kansas City, MO; Indianapolis, IN; or Memphis, TN. </li></ul><ul><li>2). In the market chosen above, the investor receives a completely remodeled property for $54,000 that includes: </li></ul><ul><li>  </li></ul><ul><ul><li>a) Completely remodeled property within 6 weeks of closing. </li></ul></ul><ul><ul><li>b) 1 year unconditional guarantee on quality of remodel. </li></ul></ul><ul><ul><li>c) 1 year unconditional guarantee on rental income ($700/mo, prorated daily, starting upon completion of remodel). </li></ul></ul><ul><ul><li>d) Guaranteed 20+% equity position based on an independent 3rd party appraisal upon completion of remodel. </li></ul></ul><ul><ul><li>e) An investment performance similar to the one modeled in the following slide. </li></ul></ul>
  35. 38. Section 8 Investment Opportunity Summary (Income Statement) Total Investment: $54,000.00 Item Monthly Annually INCOME: Gross Potential Rent ($700 - $850/mo) $725.00 $8,700.00 Less Vacancy (assume 5% due to oversubscription) ($36.25) ($435.00) NET MONTHLY RENTAL INCOME $688.75 $8,265.00 EXPENSES: Insurance ($60 - $75/mo) $68.00 $816.00 Tax ($30 - $45/mo) $40.00 $480.00 Repair Expense Budget (assume 10% of Net Monthly Rental Income) $68.88 $826.50 Property Management (8% of Net Monthly Rental Income) $60.90 $730.80 NET MONTHLY EXPENSES $237.78 $2,853.30 CASH FLOW: NET CASH FLOW $450.98 $5,411.70 Cash-on-Cash Return (doesn't factor in appreciation or guaranteed 20+% built in equity upon purchase) 0.84% 10.02%
  36. 39. Section 8 Investment Opportunity Summary (Internal Rate of Return) Assumptions : Calculation: Purchase Price: $54,000 Year $ Appraised Value: $70,000 0 ($54,000) Hold Time (years): 5 1 $ 5,411.70 Cost of Sale (% of Sales Price): 7% 2 $ 5,411.70 Appreciation (%): 2% 3 $ 5,411.70 Annualized Cash Flow: $ 5,411.70 4 $ 5,411.70 5 $77,287.36 Annualized Internal Rate of Return (IRR): 14.94% IRR (assuming NO appreciation): 13.18%
  37. 40. Retirement Income Purchase Price: $54,000 Rental Income (per mo): $450 Number of Homes 1 5 10 15 20 Total Investment Amount $54,000 $270,000 $540,000 $810,000 $1,080,000 Net Monthly Rental Income $450 $2,250 $4,500 $6,750 $9,000
  38. 41. Purchase Procedure <ul><li>The investor selects one of five oversubscribed markets in which they would like to purchase a completely remodeled, professionally managed Section 8 rental property (Single Family Home). </li></ul><ul><li>The investor will then sign a purchase contract with Ultimate Passive Income and be required to wire $54,000/property into escrow with Cornerstone Title Services. Money can be wired from self directed retirement accounts and/or cash accounts. </li></ul><ul><li>Upon closing, 50% of the funds will immediately be released to secure the property that will be remodeled. The property will then be placed in the investor’s name for collateral. The professional property management company will coordinate with the remodeling crew to promptly begin marketing the property for a Section 8 tenant while the remodel is taking place. </li></ul><ul><li>An additional 25% of the funds will be released upon completion of the HVAC installation (approximately 1-3 weeks from close of escrow depending on the amount of repair necessary). </li></ul><ul><li>The final 25% of the funds will be released upon completion of the remodel (no more than six weeks from close of escrow). </li></ul><ul><li>Upon finding an interested pre-approved Section 8 tenant (with a Voucher), the professional property management company will perform credit and background checks. </li></ul>
  39. 42. Purchase Procedure <ul><li>Pending a positive background check, the property manager will submit the Request For Assisted Tenancy (RFAT) form to the local Housing Authority (HA) and schedule a time for a property inspection (Section 8 Housing Quality Inspection). </li></ul><ul><li>Upon completion of the initial inspection, a “punch list” will be created (if it doesn’t pass) and the property management company will turn it over to the remodeling crew that originally remodeled the house. </li></ul><ul><li>The remodeling crew will complete the remodeling to Section 8 standards. </li></ul><ul><li>The property manager will then schedule a property re-inspection. If for some reason it did not pass a second time, steps 7 through 9 would be repeated as many times as necessary to achieve a passing inspection. </li></ul><ul><li>The local HA will work with the tenant, property manager, and investor (unless you choose to sign a power of attorney enabling the property manager to negotiate on your behalf) to arrive at a set of rental terms that work for all parties subject to the Section 8 constraints (mentioned above). During this process, the HA negotiates rent based on Rent Reasonableness. </li></ul><ul><li>The HA enters into a contract with the property owner/manager of the unit. </li></ul>
  40. 43. Purchase Procedure <ul><li>The owner and tenant sign the property owner/manager’s Rental Agreement or Lease. </li></ul><ul><li>The HA receives a copy of rental agreement between the tenant and property owner/manager. </li></ul><ul><li>The HA inspects the unit annually. </li></ul><ul><li>The HA reviews tenant eligibility annually. </li></ul><ul><li>Note : Steps 1 through 13 will be completed within no more than 6 weeks from close of escrow. In the event a tenant is not placed by the time the remodel is complete (no longer than 6 weeks), we will pay the investor $700/mo in guaranteed rent (prorated daily) until a tenant is placed in the property. In addition, if the tenant leaves before the end of the first year, we will pay the investor $700/mo in guaranteed rent (prorated daily) until another tenant is placed in the property. </li></ul>
  41. 44. Purchase Procedure
  42. 45. <ul><li>We can show you how to self-direct your retirement funds to invest in real estate. </li></ul><ul><li>Your returns remain tax deferred or tax-free </li></ul><ul><li>We can help you identify a THIRD PARTY ADMINISTRATOR. </li></ul><ul><li>It’s simple, easy and we do the work for you. </li></ul>
  43. 47. Will you be part of it? Contact me: