Realty411 - A FREE Real Estate Investing Magazine by Investors!!!


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Realty411 - A FREE Real Estate Investing Magazine by Investors!!!

  1. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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 warrantywith your first purchase. property management with your first purchase. PAGE 19 • 2012
  18. 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. 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. 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
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