The Real Estate Investment News is the monthly newsletter publication of Mid-America Association of Real Estate Investors. This month at MAREI: Title Issues.

1. AUGUST 2017
T H I S M O N T H A T M A R E I
Common Issues.that real estate investors face
when buying property at the Meeting. Real
World Real Estate Investment Transactions:
From Standard Closings to Advanced
Strategies. find out how to put them together.
R E A L E S T A T E N E W S
Service Animals, Seller Finance Call to Action,
Interior Inspections & Terrorism
M A R E I . O R G
CONTRACT
TO CLOSE
A CHECK LIST
REN E W S L E T T E R O F M I D - A M E R I C A A S S O C I A T I O N
O F R E A L E S T A T E I N V E S T O R S
N E W S
INVESTMENT

2. PROTECT YOUR TENANTS AT
BEDBUGTRAPS.COM
MAREI Members receive 10% off through October 1st, then our
discount goes to 5%. Log into MAREImember.com for details.

3. You will find a list of other groups complete with links to details that
meet through out the Kansas City Metro area listed at
MAREI.org/Calendar/Other-Groups
AUGUST MTG
FROM OTHER GROUPS >
THE CALENDAR
M A R E I . O R G / C A L E N D A R
See full day
workshop
page 5
COMMON CLOSING ISSUES
WORKSHOP
REALWORLDTRANSACTIONS
MAREI Founder & 17 Year Veteran Real Estate Investor Kim Tucker is spending
the day and opening up her transaction book to share the top items she has
learned with it comes to buying houses from motivated sellers, from banks
and from deceased people. Come find out how the deas were put together
and the tools you need in your tool box to invest in real estate in Kansas City
now.
Experts joining Kim include Mary Kellog from Alpha Title and Attorney Julie
Anderson to touch on Legal Issues. Lunch is included & seating limited to 60
people. Super Early pricing $39 for MAREI Members till the 8th, then price
goes to $59 till the 16th. Regular Price if space is left is $79. At Johnson County
Community College
Weareallouttherebuyinghouses,butit'snotalwaysassimpleasfindingthe
deal,writingthecontractandthenshowingupaclosing. Whenyousendthat
contractofftothetitlecompany,therearealotofissuesbehindthescenesthat
getresolved. AttheAugustMAREImeetingwewillbetakingalookatcommon
issuesthatcomeupatclosingthatifyouknowaboutinadvancecanmakeyour
closingsgosmoothly. (Newtoclosings,seeourwebinaratMAREI.org/Closings)
JoinusaswewelcomeMaryKelloggfromAlphaTitleandChristineEllisfrom
AccurateTitleforthisinterviewstylepresentation. MeetingisTuesdayAugust8th.
NetworkingandVendorHallisfrom6to7:00andpresenationisat7pm.
MonthlymeetingsareheldattheHolidayInnat8787ReederRoad,Overland
Park,KS. MAREIMembers&FirstTime GuestswhoPre-RegisteratMAREI.org
attendfree-allotherspy$25atthedooror$15online.
SHARK TANKSEPTEMBER MTG
MAREIhasquitethelineupofsharkswhohaveeithertheknowhowtoput
togetheryourdealorthefundingorboth. Weareinvitinginseveralofoursharksto
sitinourtanktoevaluateyourdeals. Ifyouhavearealestateinvestmentdealor
businessthatyouneedhelptoputtogether,pleasecall913-815-0111oremail
Kim@MAREI.orgtogetyourdealapprovedtobepresentedonTuesday
September12thattheMAREIMeeting.
03RE INVESTMENT NEWS
Mailing Address:
6709 W 119th #332
Overland Park, KS 66209
Phone: 913-815-0111
Web: MAREI.org
Web: MAREIMember.com
Email: Kim@MAREI.org
Views and advertising expressed in the
RE Investment News are not necessarily
endorsed by Mid-America Association of
Real Estate Investors. The information
contained within should not be
construed as a recommendation for any
course of action regarding financial,
legal, or accounting maters by Mid-
America Association of REal Estate
Investors.
Email to inquire about advertising
oportunties or membership.
Many Thanks
MAREI would like to thank
all the attendees and
sponsors at MAREI's 3rd
Annual All Star Networking
Event.. Because of your
generosity and suppor we
were able to provide a little
over 8,000 meals to
Harvesters and with the
corporate match we
recieved, that brought us to
just over 16,000 meals.

4. 04 RE INVESTMENT NEWS WWW.MAREI.ORG
INDEPENDENCE HOUSING
AUTHORITY & RENTAL READY
real
estate
news
The Independece Housing Authority issued a letter
in July to all participating landlords informing them
that to use their Housing Quality Standard with the
city the county or for any other purpose than for
Housing Authority purposes. That to use the HQS
Inspection otherwise would be a violation of the
tenants 4th Amendment Rights.
The Seller Finance Coalition and National REIA are
working hard to change parts of the Dodd Frank law
to make it easier for real estate investors to ofer
seller financing and contract for deed options to
owner ocupant buyers.
They have introduced HR 1360 and they need your
help. They need everyone in the real estate industry,
across the country, to reach out to your Legislators
and ask them to support HR 1360.
National REIA has set up an online form to allow you
to send this letter with just a few mouse clicks. Go
to www.MAREI.org/Action
SELLER FINANCE
The City of Indpendence, recently started their
Rental Ready program that requires periodic
inspection of rental properties as a condition of
lawfullly renting rental properties. They had made
the statement that landlords could use a Section 8
Inspection from the housing authority in place of
paying for an additional inspection.
JOIN MISSOURI POA
On July 24th the Missouri Property Owner
Association became an official not for profit in the
state of Missouri. Their mission is to bring together
all real estate investors, property owners, landlords,
property managers and others to protect our industry
from undue and illegal legislation at the state level.
Their next step is to build their membership through
local associations like MAREI, individual members
and business members. Membership dues will go to
pay for lobby efforts and attorney fees. We need to
the entire state of Missouri to take part, not only with
membership dues but with donations of your time.
Please visit MissouriPOA.org to learn more and be
sure to follow on Facebook and Meetup.

5. 05RE INVESTMENT NEWS
Assistance animals that work, provide assistance,
or provide emotional support to the benefit of a
person with disabilities must allowed, without
extra fees or rent. However you as the landlord can
verify the need by requesting a doctors order or
prescritpion. You can also expect the animal to be
well contained when not "working" and be on a
leash or harness when in public. And you can
require the resident to pick up after the animal in
the yard and in the home and to keep the home or
rental unit clean.
We have a lengthy article on the MAREI Blog at
www.MAREI.org/Articles
Rental Residents and Landlords in Columbia
Missouri have been living with mandatory rental
ispections since 1978. Inspections with out tenant
consent, with out a warrant and often requiring the
inspector to turn over anything they might learn in
that inspection to law enforcement.
Over the past 5 years, the fees associated with
these inspections have gone up between 70% and
370% depending on the fee.
After seeing numerous law suits challening similar
ordinances across the country, most finding that
the mandatory interior rental inspections are
unconsitutional and a violation of the 4th
Amendent, Landlords and Proeprty Owers are
consider a class action suit against their city.
If they go to court, all property owners and rental
tenants in the state need to support the case as
this could set precedent in other cities in Missouri
and across the Country.
SERVICE ANIMALS IN OUR
RENTAL PROPERTIES
TERRORISM AWARENESS
National REIA recently released a white paper
discussing the need for landlords to be vigilent and
to report things out of the ordinary to the
authorities and let them decide if your tenant is
dangerous.
Examples include lots of people coming and going
at odd hours, tenants work hard to avoid contact,
keeping the rent paid with no obious means of
suport, checks or credit card payments of rents and
fees from odd sources. people that never seem to
move in, but continue to pay rent and more.
Please visit MAREI.org/Articles to read more.
COLUMBIA MISSOURI
TENANTS & LANDLORDS
COULD CHALLENCE CITY

6. As a real estate investor buyer or
seller there are some extra things you
may or may not think about. Let's
take a look at some of the issues that
have came up in my own transactions
over the past 17 years or so.
Investor Friendly Title Company
The very first transaction I was ever a
part of, we were sitting at the closing
table talking to the closer and going
over the fees on the Settlement
Statement. One fee caught my eye
and the closer explained that because
we were buying without the benefit
of a real estate agent in the
transaction, we were being charged
an extra $250. Title companies or
closing agents that work with you as a
real estate investor on a regular basis
are not going to charge you extra
because you don’t have a real estate
agent.
At one closing we were going to
“Assign the Contract” to a new buyer.
We found that while our investor
friendly title company that we closed
with all the time had no problem with
assignments, that the Title Company
on that transaction didn’t know what
an Assignment was so we were told
that they were illegal by the person
we were working with. At the same
time, I had just closed an assignment
transaction at a different office with
the same company the week before.
Before you every go to contract, it
helps to interview title companies to
find ones that know what real estate
investors do and know how to close
their transactions.
Entity Documents
This will be dictated by what entity
you might be buying your property in,
it could be your own name. It could
be a corporation or an LLC and it
could be a Self Directed IRA or Solo
401k .
06 RE INVESTMENT NEWS WWW.MAREI.ORG
by Kim Tucker

7. Before you start making offers make
sure you have your entity set up, have
all the documentation needed to
prove your entity is legal and know
how to fill out the contracts and sign
on behalf of the entity.
If you are buying in an LLC for
example you need to sign in a certain
way to make sure you don’t invalidate
the asset protection of the LLC and
you need to have the proper
documentation needed to close. This
might just be your Articles of
Incorporation and in other cases you
might need to have a certificate of
good standing, which cost me close to
$300 in the state of Utah to register
as a foreign entity and to get a
certificate. And most title companies
will want you to have a corporate
resolution stating that you can, in
fact, sign for the LLC.
Line Up Funding
This one pretty much goes with out
saying. You need to know how you
are going to pay for the property
before you write the offer or have
some idea of who might buy it from
you if you are going to wholesale the
property.
Here in our office, we have been
doing this for many years. So while
we don’t have a pre-approval, we
have a list of about 10 people that we
can take a deal to who will fund us.
This ranges from family, to friends, to
private money and hard money
lenders at the MAREI meetings.
When we were new, we were pre-
approved for a construction loan at
the local bank and you might also
reach out to the local hard money
lenders.
When you have a house you are
wholesaling, some of you might assign
the contract and need no money to do
a deal. Just be sure you have a few
very active, cash buyers lined up. You
may also want to have some short
term funding lined up so you can close
on the deal and then resell it in a few
days or weeks and make a bit more
money out of the deal.
Finding & Negotiating the Deal
Over the years we have bought in
many different types of situations.
Sometimes we used our Real Estate
License and went after listed
properties or bank owned properties.
We have bought on the courthouse
steps and we market and buy directly
from sellers. We talk about many
different ways of finding deals,
negotiating them and getting them
upder contract.
Write and Execute the Contract
This is fairly simple and straight
forward. Make sure you have the
buyer and seller names correct. This
is especially important when you are
buying from a bank seller. When you
write a contract with a bank seller,
usually they will not let you change
the buyers name if you mess it up or
decide to switch from your personal
name to your company or your self
directed IRA.
Contract Summary
Back in the time of paper we had a
document that listed out all the details
of the transaction, all the parties and
all the contact information.
If I am buying the home in a legal
entity, I assemble all the paperwork
that my title company will need, note
that if you use the same company over
and over, they will keep this on file for
you.
I use this summary and package of
legal documentation to give to the
title company and any lenders and
Realtors as they will need all the
information.
In the electronic world, I would still
fill this out the summary form
because your seller may not be
electronically savvy and they will
need a lot of the information
contained. You may find that some
Title Companies and Realtors will
have an online website to summarize
all the details and upload all the
documentation, so be sure to ask.
Send it all To the Title Company
We will usually email the contract
and the summary to the title company
and mail or hand deliver an earnest
money check. Your Title Company
may have an easy way to
electronically send money to them
that is free through or may want a
wire. Do keep in mind that if the
closing is in less than two weeks that
they will not be able to accept a
personal or business check, in this
case the earnest money would need
to be wired or in the form of certified
funds.
Be sure to ask for a receipt to
confirm that they did in fact receive
the summary and the contract via
email and the earnest money in what
ever form you sent it.
If you are working with a lender, send
a copy of the summary and entire
contract to them as well as they will
usually want to see it.
Some things to think about as you
send this to the title company . . . you
might want to call and talk to
them about it, just in case their might
be an issue you can’t live with and
need to get out of the contract during
07RE INVESTMENT NEWS • PAGE

8. 06 RE INVESTMENT NEWS WWW.MAREI.ORG08
inspection period.
1. Rehabbing to Sell?
2. Notice of Intent to Sell?
3. Seller Deed Restrictions?
4. Self Directed IRA Buyer?
5. Wholesaling?
The Waiting Game
After the contract is sent to the title
company, it becomes a waiting period
for the title company to get title back.
Let them know if you think there
might be problems that need
addressed on the title so they
research it now, this week, rather
than 3 days before closing. If you
anticipate closing early or plan on
wholesaling it, they need to know
that in advance.
During this waiting period, you will
typically perform your inspections on
the house and renegotiate the
contract or negotiate repairs. Then if
you are getting a loan that requires
an appraisal, that would be done next
and then the lender would review all
the paperwork, possibly want to
review the inspection and ask you a
few more questions in order to get the
final clear to close.
If you are a wholesaler, during the
waiting period and possibly during
your inspection period you
would want to seek out and secure
your end buyer. Write and execute
your “Assignment” Contract and
collect the assignment fee or write
and execute a sale contract and
collect their earnest money deposit
and send a summary of this contract,
the contract and earnest money to
your title company. If you are unable
to secure a buyer, your inspection
period is the time to back out of the
contract.
If you are not wholesaling, the last
projects for you would be to secure
insurance on the property, schedule
utilities to be turned on, and to start
lining up contractors if the home will
be renovated.
During this period be sure to stay in
contact with your lender or your end
buyer to make sure everything is on
track. And you want to see the title to
review it as soon as possible as often
their are minor issues that you would
need to coordinate with the seller
and the title company to resolve:
Finding the divorced or estranged
spouse and getting them to sign off,
finding other heirs or proving there
are no other heirs, getting the
probate court or bankruptcy court to
approve, getting loan payoffs, and
other things that get a lot more
complicated very quickly.
Just Before Closing
Usually the week before closing you
want to review the preliminary title
one more time and check with the
title company to be sure all
problems are resolved, if they are not,
you may want to negotiate an
extension on the closing with your
seller and / or your end buyer.
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9. Next check with your lender or end
buyer and make sure they are ready
to close, if not, go back and negotiate
extensions.
If everyone is ready to proceed, make
sure everyone is set up to sign closing
documents. Sometimes that might
mean they have an appointment at
the title company and other times it
might mean that the title company is
going tosend them documents and
they need to go sign where ever they
live in front of a local notary. In at
least three transactions, our title
company had to email documents to
the seller, who had to get them
printed and take them to a US
consulate to be signed an notarized
as they were not in the continental
US.
You want to make sure your lender
has all their documentation set up
and has their money ready to go and
knows how to wire it to the title
company. Not a hard proposition if
you are using a traditional lender.
But if you are working with a private
individual, you may need assist them
If you are wholesaling, you want to
double check your end buyer is ready
to close and fund.
If you are buying yourself you need to
makes sure you are schedule to close.
If you are paying cash, you may be
able to the money and close via fax or
email as nothing you are signing needs
to be notarized as the buyer. And if
you are paying cash or have a down
payment to send in, schedule your
wire a couple of days in advance so
you have time to get all the double
checks against fraud completed.
Closing
Ask for a copy of the Settlement
Statement the day before closing and
review. Errors can be fixed at closing,
but catching them a day or two in
advance makes things much easier.
At closing, you may get keys if you are
buying it. Before you go take
possession of the home and BEORE
YOU DO ANY WORK ON IT, double
check with the title company to make
sure all parties have signed, all loans
are funded and the closing is
recorded. We have heard stories of
buyers who went to closing and got
keys, went to the house and started
work, only to find out that the seller
never closed. So always double
check.
And if you are wholesaling, you would
then go pick up your profit from the
assignment or resale or you might
have it mailed or wired.
Problems do come up at closing
through out the entire process. We
are going to be talking about the most
common problems that come up at
closing at the August 8th MAREI
Meeting. We have invited in the
teams from Accurate and Alpha Titles
to share what they are seeing in real
estate investor transactions.
I am also teaching a workshop on real
wordl transactions on August 19th to
walk you through some common
transaction scenarios.
09RE INVESTMENT NEWS • PAGE
Call Mark for Your Next
Mark Yanda
MarkYanda.Houzz.com
(913) 980-4260
PROJECT!

10. 06 RE INVESTMENT NEWS WWW.MAREI.ORG10
Question: I’ve made offers on over 250 properties, and
most of my offers find the circular file. I’m very focused
on the distressed market – offering a price calculated as
such: List Price: $100,000 After 30% ARV deduction:
$70,000 Repair Escrow $5,000 Profit $5,000 So – I’m
offering $60,000 for a $100,000 list price. Am I doing
something wrong? Is my ARV allowance too high? Are
certain markets say, Leavenworth Rd – KCK, permitting
for margin than others? I’d love some advice!
So the magic formula is
MAO = (70% *ARV) – Repairs
MAO = Maximum Allowable Offer
ARV = After Repair Value
Repairs = Costs to repair to ARV Value
In your scenario, I would need to know more.
While we know the list price is $100,000, the list price is
totally irrelevant to figuring your offer other than the fact
that if your offer is way below the list price, the seller is
less likely to talk to you.
Repair Costs in your scenario is $5,000 and in 17 years I
have never seen a house that only needed $5,000, but I
guess it is possible.
Profit listed was $5,000. NEVER do any rehab with an
expected profit of $5,000. Usually, you don’t use the
MAO formula and then subtract profit unless you are
wholesaling the house.
Scenario with more details:
Subject house that is listed for $100,000, the average
house in the subdivision is selling for about $140,000.
There are a few totally renovated homes that are similar
in size and shape that have sold for $155,000. You
determine the house needs the following updates and
repairs to bring it to the $150,000 value: roof ($8,000),
painted inside ($3,000), painted outside ($3,500),
carpet replaced ($3,000), hardwoods refinished in the
kitchen, living and dining ($2,000), install granite in the
kitchen ($4,000), new appliances ($2,000), new light
fixtures ($1,000) and new faucets ($1,000). It should
take you about 6 weeks to get the renovations
complete, 4 weeks to market and get it under contract
and 5 weeks to get it closed. Total of almost 4 months
holding time. And you will need to pay a Realtor 6% to
sell it.
Plus axes are $1800 per year or $150 a month.
Insurance is $150 a month and Utilities are 150 a
month.
List Price: $100,000 / ARV: $155,000
Repair Costs: $27,500 in hard numbers plus $2,500 for
what iffs, brings repairs to $30,000
Holding Time: 4 months Costs: $450 a month

11. 11RE INVESTMENT NEWS • PAGE
Maximum Allowable Offer for Full Rehab
MAO = (ARV x 70%) – Repairs
MAO = ($155,000 x 70%) – $30,000
MAO = $108,500 – $30,000
MAO = $78,500
And if you are wholesaling it, the MAO would then say
you need to buy it for about $73,000
Maximum Allowable offer for Average Resale
Next look at the repairs needed. Is the house really nasty
and does it really need all those repairs? Or is it totally
livable as it sits, just needs cleaned. Maybe you could
replace the roof, paint the outside and call it good for an
average resale.
If it’s livable, with a good cleaning, a new roof and
exteior paint, then you need to go back to comps and
see that the average house is selling for $140,000. Run
your repairs again taking into account only the roof, the
exterior paint, and cleaning and the fact that that would
take you 2 weeks to make repairs instead of 6. That
gives us new numbers
After Repair Value: $140,000
Repair Costs: $12,000
MAO = ($140,000 x 70%) – $12,000
MAO = $86,000
Subtract wholesale profit if $5,000, and offer $80,000.
What a Realtor would list it for:
Speaking as a Realtor, If it was livable and just needing
a roof and a exterior paint job, I would suggest to
the home owners clean it from top to bottom and then
list it for about $95,000. Then market the heck out of it,
sell it for about $92,000. I would split about a 6 percent
real estate commission with the buyers agent of $5,700
and if I had an extensive real estate investor buyers list,
maybe sell it to one of my landlord buyers pocket the
whole $5,700.
If you talk to a lot of investor across the metro, you will
find that many have pused the MAO up to between 75%
and 80 % of Maximum Allowable offer. I don’t suggest
that as you could end up with no profit.
Why are none of my offers getting accepted?
This is the same problem we are facing at the KCInvest
office, offers are not getting accepted. Yet I get email
after email from wholesalers with deals what gives?
Not Many Deals To Begin With
The number one reason why OUR offers in my office are
not getting accepted, is that we are dealing in nicer
areas. Take a look at the average house the area
wholesalers are shipping out and they are mainly in the
under $50,000 range, in my office we are looking for
$80,000 and up.The Wholesalers can get the deals
because there are more low end houses for sale and less
retail buyers in those markets. The average home buyer
under $50,000 is going to be a real estate investor and
not an owner occupant buyer. Plus there is less
competition to buy the lower end houses, more
motivated sellers, more deals. But less profit.
Owner Occupant Buyers
The next reason our offers are not getting accepted is
that we are competing with owner occupant buyers who
are going to pay more than an investor. Wwe are looking
for the really bad house in a really nice neighborhood or
a seller who has a really HUGE motivating factor to sell
their home. The really bad house needs more repair that
the average owner occupant buyer can do. Or they
have some huge problem that the owner occupant can't
solve.
Newbies Offering Too Much
The third reason why our offers are not getting accepted
is that there are a lot of new investors who are willing to
put the property under contract for too much money
and then try to wholesale it. The seller gets excited and
then gets mad when the wholesaler who can’t sell it
does not buy. This makes the investor look bad to those
sellers and they will not look at another investor offer
and end up listing it with a Realtor who is going to net a
higher sale price for their seller, usually.
If you are new, PLEASE learn your numbers and don’t
offer too much just to get it under contract only to back
out. Doing so t makes the rest of us look bad. If the
numbers don’t work, let the seller marinate a bit, their
price will eventually come down and it will come down
way faster if we all are offering about the same amount.
If you go in and offer 20% more and can’t close the deal,
you just wasted 2 to 3 months of your sellers time and
you give investors a bad connotation.

12. 06 RE INVESTMENT NEWS WWW.MAREI.ORG12
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phone mo: (816) 931-2207

13. MARKET UPDTATE June 2017
4,264
homes sold
3.2% Decrease from 2016
49
average days on
market
14.0 % Decrease from 2016
98.3% of asking price
0.6% Increase over 2016
$12k
$12,408 average
sale price
increase from
same time
last year (5.4%)
4,104pending sales
11.7% Increase over 2016
7,446houses for sale
22.2% decrease
2.3 month supply
average: $241,567
median: $210,00
There has been a general slowdown in sales across the country, and this cannot be blamed
on negative economic news. Unemployment remains low and wage growth, though nothing
to overly celebrate, has held steady or increased for several years in a row. There is strong
demand for home buying, emphasized by higher prices and multiple offers on homes for sale
in many submarkets. As has been the case for month after month – and now year after
year – low inventory is the primary culprit for any sales malaise rather than lack of offers.
With job creation increasing and mortgage rates remaining low, the pull toward
homeownership is expected to continue. Yet housing starts have been drifting lower, and
some are beginning to worry that a more serious housing shortage could be in the cards if
new construction and building permit applications continue to come in lower in year-over-year
comparisons while demand remains high. Homebuilder confidence suggests otherwise, so
predictions of a gloomy future should be curbed for the time being.
For further detail see http://www.kcrar.com/statistics
New & Existing Combined
Data from

14. A fiancial independencenumber tells you whenyou’re free
from the need to work. It’s basically a math equation, as
you’ll see later in this article. But discovering your
personal fiancial independence number is about much
more than money or math. It’s about your life and what
matters to you. And it’s about whether money supports
your ideal life or simply suppresses your potential.
While I don’t believe money is the most important thing in
life, I do agree with Zig Ziglar that money is reasonably
close to oxygen on the “gotta have it” scale in today’s
economic-centered world. A fiancial independence
number is useful because it tells you exactly how much
money you really need.
In the rest of this article, I’ll show you how to calculate your
fiancial independence number. Plus, I’ll also even share my
own number.
Money and the Ideal Life
You certainly need money to survive. But you also need
money for opportunities to live a life that is more fulfiling,
flxible, and fun. Money buys you food to nourish your
body, but it also buys you the time and flexibility to feed
your soul and to share your best self with the world.
Becoming your best self. Sharing your gifts with the world
Thse are the loft ideals that I aspire to. Perhaps you have
your own lofty ideals.
BY CHAD CARSON
Whatever your personal ideals are, I bet they’re bigger
than money. But as I realized soon aftr I graduated from
college, simply trading my time for dollars wouldn’t lead to
my ideals.
It’s not that working a job or running a business were bad
things. Serving others with your time, energy, and skills can
be incredibly fulfiling. But even a great job can become a
drag when you know you must do it to earn money.
Instead of happiness and growth, a less than ideal job
situation traps you like a rat running on a wheel. While most
people call it making a living, you’re really on a long path
called “making a dying.”
Luckily, there is a diffrent fiancial path you can take.
Instead of trapping you, this path creates more freedom and
independence. Which brings us back to the fiancial
independence number.
The Financial Independence Number Defied Written as a
formula, your fiancial independence number looks like this:
Investment Income > Personal Money Needs
Investment income is the money you receive from investment
assets like real estate, stocks, and bonds. When your
investment income exceeds your personal money needs, you
no longer need to trade hours for dollars in order to survive
fiancially.
14 RE INVESTMENT NEWS WWW.MAREI.ORG
"What's Your Financial
Independence Number?"
Coach Carson is a member of Metroline REIA in Charlotte North Carolina. Learn
more about him on his website at www.CoachCarson.com. Reprinted from the
Real Estate Journal a publication from National REIA.

15. When you reach your fiancial independence number, you
break the cycle of working for money. You draw a line in
the sand beyond which you will no longer fiancially need
a job.
Joe Dominguez and Vicki Robin in Your Money or Your
Life call this line in the sand the crossover point. Robert
Kiyosaki in Rich Dad, Poor Dad calls this leaving the rat
race.
In the language of real life, this fiancial independence
number means you could survive at a certain level only
using the production of your investments. For example,
your net income from rental properties would cover your
personal overhead. Or with more traditional investments
like stocks and bonds, the 4% rule for safe withdrawal may
allow you to live of of 4% of your total holdings each year
for a long period of time.
But before you begin hustling to accumulate wealth and
income, let’s look at how to actually calculate your own
fiancial independence number.
How Much Does the Ideal Life Cost?
Th formula for fiancial independence may be simple. But
actually squeezing all of your fiancial hopes, dreams, and
insecurities into a math formula is challenging. If you’re
like me, it’s a process you’ll continually tweak and update
throughout your life.
But the fiancial independence number does not have to
be perfect to be useful. Like any other goal, you can benefi
from moving towards a goal even if the goal is just a
reasonable guess.
So, how do make an educated guess for your fiancial
independence number? How do you fiure out the cost of
your ideal life?
I like to begin with the present by calculating your current
expenses. You can do this a couple of diffrent ways::
1) Estimate your expenses using personal fiancial
spreadsheets.
2) Use softare apps to automatically track your expenses.
You simply enter your credit card and bank account info,
and the softare automatically tracks and categorizes your
spending. Some of the most popular apps for this are
mint.com (free) or YouNeedaBudget.com (paid).
Once you have an estimate of what you currently spend
over a 1 year period, you can make a guess for the future.
Many people fid that their personal expenses will actually
go down aftr retirement. If you pay off your home mortgage
before retirement, that obviously reduces one major
expense. And you may be surprised how much you can save
in taxes when you live of of investment income. My
blogging colleague Jeremy at gocurrycracker.com has
legally not paid income taxes for 4 years aftr retiring early.
For more information to help you estimate your future
expenses after retirement, I like the article How
Much Will It Cost You to Live in Retirement by Darrow
Kirkpatrick of caniretireyet.com. Darrow retired early himself,
and he writes about the nitty-gritty fiancial
details of retirement.
My own number may or may not be relevant to you, but I’ll
share it just to give you another perspective. I have a bottom
line number of $36,000 per year, which is what I
know our family could live of of based upon current
expenses. And I also have a comfortable number of $60,000
per year which would give us plenty of cushion.
But the most important number is yours. And that’s
something you can now fiure out for yourself.
Life After Financial Independence
Reaching your fiancial independence number does not
mean that you can’t still work and make more money. It
does not mean you will stop growing fiancially for the rest of
your life. It does not mean you are perfectly safe and secure
forever.
Achieving the goal simply means that the pressure is off
Your assets could support you instead of your job. Ths is an
incredible place to be. An entire universe of life
possibilities opens up.
Th same job that you once hated could be transformed when
you know that you’re there by choice. Creativity and energy
that had been dormant for years will suddenly
reemerge.
New opportunities, new businesses, new questions, and
new exciting paths will open themselves to you. And even
more amazing, these benefis don’t just emerge once you’ve
crossed the fiish line.
As I explained in my article Retirement Reimagined: Th
Peaks and the Plateaus, the freedom of fiancial
independence can be experienced in many stages along the
way. So, whatever an ideal life means for you, I
highly recommend you fiure out your own fiancial
independence number. It will provide a clear, focused goal
that will help you win with money.
15RE INVESTMENT NEWS

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