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A Resource Guide for Investors

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FOUNDER Linda Pliagas info@realty411guide.com PRESIDENT Nikolaos K. Pliagas EDITORIAL STAFF Bonnie Laslo Isaac Newark III Stephanie Mojica COPY EDITOR Chris Wrenn Isaac Newark III PHOTOGRAPHER John DeCindis COLUMNISTS Dave Lindahl Jason Hartman Randy Hughes PRODUCTION Augusto Meneses

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Questions? 805.693.1497 or 310.499.9545 Realty411 / reWealth magazine is published quarterly in Santa Barbara County. © Copyright 2012. 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 adviser, attorney or tax consultant. Real estate investing is risky and could result in loss of capital.

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“I changed one thing one time and left the ‘rat race’ forever. I can show you how I did it,

Matt Theriault

Real Estate Investor Founder of EpicProAcademy.com and CashflowSavvy.com Host of the Epic Real Estate Investing Podcast on iTunes

8 9 10 13 14 15 16 18 19 20 24 26 28 30 32 33 34 36 38 39 40 42 43 44 46 48 50 56 58 59 62

contents

How Real Estate Performs During Inflation Editor’s Letter: It’s EASY to Build Wealth The BIG Property Grab by Dave Lindahl 3 Profit Centers to Create Cash Flow Build Wealth Starting with Only $100,000 Who’s on the Radio? It’s the Real Estate Guys Jason Hartman’s Financial Freedom Report The Real Estate Scoop in Hollywood LA Clubs Host TOP Real Estate Leaders A Solid Foundation with Whiterock Capital Tom Wilson’s Tale of Two Turnkeys Spotlight on Ohio with Missy McCall Hammonds Why the Industry Seriously Dropped the Ball Tips from Shortsale Masters Bill & Dwan Twyford The Lady Landlords take San Diego by Storm Matt Theriault Helps Readers Conquer Fear The Property Flip Pros Share their Insight Cash Flow In the Carolinas with Alex & Kevin How to Market Your Self Storage Facility Insight from America’s Land Trust Expert 401(K) Investing with Accuplan Benefits Services Belize: A Tropical Paradise with a Strong ROI Inside a Note Deal with Tony Martinez Why Arizona Real Estate Leads in Appreciation Mathew Owens, CPA gives 10 Keys for Success Community Buying Group Saves Investors Money Chris Dannenfeldt Shares his Rehab Wisdom Norada Real Estate Helps Investors Profit Seller Financing Options in Indianapolis Market Spotlight: Kansas City, MO Should You Fix and Flip or Buy and Hold?

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n this article we’re going to take a look at how real estate performs in various macroeconomic climates. If you’re following the news and the actions of not only the US government but most of the major governments in the world, then it is very reasonable, maybe even a foregone conclusion, that we are headed for massive inflation in the not too distant future. If things get even more out of control we could even experience hyperinflation. On the other

Rental property owners, especially those with fixed interest rate mortgages, receive higher rental income while their biggest expense stays fixed. Thus their cash flow increases. One important note here. In times of high inflation, properties with shorter rental periods generally perform better so residential rental property with 6 to 12 month leases are a good bet. Commercial rental properties such as office complexes and shopping centers, which often have 5

ever, real estate has just gone through a major deflationary period while other commodities such as gold, silver and oil have had major upswings. So real estate has less room to fall and less risk than other commodities. But here’s the kicker, cash flow real estate has a huge advantage over other assets during deflation: the cash flow! Even if the value of a rental property drops during a period of deflation, the rent 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 heading for massive deflation, just like in the Great Depression. It is out of the scope of this article to go into details on the factors leading to these two scenarios. However, if you are a real estate investor, or are considering investing in real estate, then it is important to understand how real estate investments perform in each of these two scenarios. What happens in periods of high inflation? The purchasing power of the dollar declines. As a result, creditors are getting paid back in dollars that are worth less then they lent out and as a result they raise interest rates. Creditors like interest rates to be a few percentage points above inflation. So let’s use some numbers as examples. If inflation hits 12%, then interest rates could easily go up to 15 to 20% so creditors can make money. But at 15% the cost of a mortgage skyrockets and most people can’t afford to buy a home. This happened in the ’70s and many other times in history. As fewer people qualify for mortgages, rental demand increases and rents go up.

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to 10 year leases can actually see cash flow go down as expenses such as utilities, insurance, maintenance, etc., increase while rents are flat. How is appreciation affected by periods of inflation? During times of high inflation, the cost of the raw materials needed for new construction increases, which also directly affects overall property prices. As the costs of materials, labor, and legal rise, prices of existing properties are positively impacted. But what if we’re headed for another Great Depression? We certainly hope that is not the case, but let’s take a look at how real estate performs in deflationary times. If residential real estate performs well in inflationary times then you might expect that it would not perform well as an investment in times of deflation but as we’ll see that is not the case. In times of deflation, there isn’t much money available to buy anything. This lack of money creates a lack of demand, and the lack of demand forces prices down and that includes real estate prices. How-

PAGE 8 • 2012

each month. Other investments do not. Plus, it’s easy to find renters during deflation because banks don’t have the money to lend for mortgages. People can’t buy homes, so they have to rent. If you expect a period of deflation, your real estate investment will perform best with longer lease periods so increase your lease durations as much as possible. In summary, you can see that residential rental properties do very well in times of inflation and they have advantages over other investments in times of deflation.

Lori Greymont P.S. – Our team of experienced real estate professionals can help you create a customized investment plan and find properties in the best rental markets in the country that fit your plan. To reach Summit Assets Group, please call: 408-268-9777.

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It’s HARD to Make a Living But it’s EASY to Build Wealth

by Linda Pliagas, founder/publisher

n Los Angeles, a commute is unbearable. In fact, INRIX®, a leading international provider of traffic information, reports that the City of Angels is the second most congested city in the nation. Many Angelenos drive three hours per day just to work. I thought that was bad until I discovered people who commute into California every week from other states, only to see their families on weekends. (I sat on a plane next to a bicoastal commuter once.) The sacrifices made by individuals just to make a basic living (food, clothing, shelter) for themselves and their loved ones is mind boggling. I know what it’s like to drive hours every day to punch a clock; it’s tough! Even if you love your profession, commuting for hours, putting up with office politics and trying to please demanding bosses can be overwhelming. It can also be very stressful. Plus, with an economy like this, wages and salaries are just not very generous. Companies seem to be using the “bad economy” as an excuse for poor pay, lack of benefits, and company perks. When I was a college student majoring in journalism, I was not taught about business or finances at all, in fact, nobody ever discussed Realty411Guide.com

Linda with Dmitriy Fomichenko of SenseFinancial.com at an event.

salaries. When I discovered how much journalists made, I was shocked and greatly disappointed. Let’s just say it’s a career that you definitely have to be passionate about because media salaries tend to be modest. Having loved magazines since I was a child, I decided to enter the profession and watch my pennies so that I could invest as much money as possible in something that I knew was a sure thing: Real Estate. You see, because I studied the mechanics of money on my own, I knew that most millionaires made their wealth through real estate. I understood vital concepts about the time-value of money and how location and appreciation could easily skyrocket a person’s net worth. But the hardest part I thought was getting started. So my husband and I worked hard to accumulate the funds

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Continued on pg. 52

PAGE 9 • 2012

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The BIG

by David Lindahl www.REMentor.com

Property 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 and excitedly walking to the mailbox everyday ready to gather that days set of cash flow checks the Postman dropped off . It’s those cash flow checks that allow you to live this life of leisure and it never stops to amaze you how they have gotten as high as they are and they keep increasing!! …Or…you could wake up on Monday morning three years from now, living the same life your living now… and if that’s OK with you, that’s OK with me. But if you want to change your life in any way, that change will probably require money… And here’s the deal.…you have about two and a half years to stake your claim and get your share of a lot of wealth that’s about to be created during this big property grab. What the heck am I talking about? I’m talking about the multi-family real estate market. If you will do for the next three years what most people won’t do, you will be able to do for the rest of your life, what most people can’t. I’m not talking about becoming a landlord! God no!! Leave that to the qualified management companies who love to handle tenants, trash and toilets. I’m talking about investing in multi-family properties while the prices and cash flows are at historic lows and watching your wealth and cash flow skyrocket as the economy gets better. How do I know this is going to happen? It happened to me, this is how I made

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. People would say, “Oh, that Dave Lindahl is so successful because he bought at the right time”…. which was partly true. In the seven years that I’ve been teaching other investors these methods, I have accumulated an additional 5,800 units… but the naysayers do not acknowledge that, they just focused on the fact that I started out in the right place at the right time. Which was true. But now everyone has the chance to “be in the right place and buy at the right time” and here is why... Over the last few years the economy has been devastated by this recession. A lot of people lost a lot of jobs, a lot of unsavvy investors have lost a lot of properties, and a lot of banks have lost a lot of money! Because of this, as everyone well knows, the banks virtually stopped lending. Not only for buying investment properties but especially for the new construction of those investment properties. Because of this, there has been almost no new multi-family properties built in the last four years. OK so why is now such a good time to be buying? Well, there is this group called “Echo Boomers”, they are the babies of the Baby Boomers, there are over 74 million of them and they just started hitting the age of 18 last year. Why is this important? Because they have just started coming into the renting age, it is estimated it will

take 10 to 12 years for the Echo Boomers to go through the marketplace, just like there were 14 years of Baby Boomers. 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 buying 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 management 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 flowing 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 leisure….you are rich. 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…..now 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!

N ATIONAL R EAL E STATE I NSURANCE G ROUP , LLC

About the Author: Dave Lindahl is a national investor who owns over 7,000 apartment units. He is also the principle owner of REMentor.com, a real estate investing education company. He can be reached at davidrementor@gmail.com

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PAGE 11 • 2012

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3 Profit Centers to Create Cashflow in 2013

by Isaac Newkirk III

ensei Gilliland is one of those individuals who, whether at work or at play, gives it everything he has. And when the CEO of Black Belt Investors (BBI) is not indulging his passion for the martial arts or fishing in the Rocky Mountains, he’s helping his investor partners realize lifelong dreams of anywhere from three to six financial independence. months. The landlord is in it His company BBI is a for the long haul.” full service firm involved Sensei trains and coaches in flipping, creative fireal estate entrepreneurs nancing, lending and and, when asked his opinrentals. Sensei’s mantra ion, he’ll let you know that for the coming year is: he considers wholesaling “There are opportuniSensei Gilliland, Francisco the foundation of the sucties in the marketplace and Sensei’s son, Carson cessful real estate operator. that can create income “So if I’m an investor who streams by short-term really wanted to get into real estate, and I investments, which don’t require the risk don’t have a hundred grand to buy it and of most investment deals.” He cites three fix it, we can build our cash base through specific areas in which this can be accomwholesaling because it doesn’t require any plished: wholesaling, rehabbing, and crecash or credit. If you can picture a pyraative financing. mid, you start building with the foundation It all begins with the wholesaler, acand that’s wholesaling (learning to find the cording to Sensei, whom he defines as deals and create cash). Then we graduate “The go-to-guy who finds and flips fantasto rehabbing or purchasing at auctions or tic deals [for the investor] that are priced doing some sort of creative financing like significantly below market value. Consider lease options or seller financing and ultia Costco warehouse versus a Macy’s. You mately becoming a landlord. The problem can get similar products at both stores, but with most people is they like to start on the Macy’s will charge you at full retail. I like third or fourth level and they can’t because to think of my company as Costco... We they don’t have the cash, credit and/or the buy cheap, we sell cheap, and we are the experience.” suppliers of great quality real estate deals Just as people have personalities, Sensei to other investors and home buyers.” believes that properties (and deals) have The vast majority of real estate invespersonalities as well. The most successful tors are landlords and rehabbers and, since deals match the personality of the property 1995, Sensei has been involved in both to the personality of the investor. “Maybe areas. “Rehabbers that flip are in it for the the rehabber that buys the property is clear short term (immediate income), and landto make $20,000 off of his flip, but as a lords are looking to hold for the long term wholesaler he probably made $8,000. Now (for residual income, tax benefits and eqthe difference between the wholesaler and uity). As a wholesaler, our job is to find a the rehabber is that I didn’t put any money great deal, bind it under contract and sell into the deal, I didn’t have to close on the the contract to either an investor or end deal through escrow or title, I didn’t have to user (home buyer). My job is to sell that suffer the rehab expense or incur the holdcontract and get paid in 21 days or less.” ing cost, and I don’t have to put my hands Typically, Sensei doesn’t wait until the together as its sits on the market and hope end of escrow to get paid like most people and pray that it sells. So I made $8,000 in do. He adds: “For the rehabber, he is going 21 days or less without the risks, whereas to get paid after he buys it, fixes it, goes the rehabber is willing to take on all the through escrow and flips it. That’ll take

risk and will need to wait a few months to collect his check.” Remember that Sensei gets paid in a few weeks while the rehabber is waiting until the property sells to cash in, a period during which Sensei could be moving on to other deals. “I can put more deals into the pipeline than rehabbers can. I’m a rehabber also, so I know that I can typically manage about three rehabs at any one time. Whereas, as a wholesaler – which is not as labor intensive – I can put many, many more deals into the pipeline. Ultimately, I’m going to end up making more money than a rehabber. Remember the Costco reference... It’s all about selling quality products at a discount to move the inventory in bulk.” Sensei also believes that real estate wholesalers have another major advantage: the capability of accepting virtually every deal that comes along while the rehabber suffers certain constraints. “Rehabbers have a certain criteria of what kinds of properties they want to buy. If the property doesn’t fall within their guidelines, they tend to pass on the deal. I don’t care if the property is turnkey, if it’s marginal or burned down to the foundation. What’s important to me is the price I’m getting it for and what it’s worth on the after repair value side. So price cures all for the wholesaler and, once I get it under contract, I can sell it to another investor whose criteria it may fit or keep it for myself. This way I’m able to create a dual income stream, one through wholesaling and one through rehabbing.” In his seminars, Sensei will advise you that most investors only know two ways to invest in real estate: buying and holding a rental or buying and repairing the property. He takes considerable pride in the fact that Black Belt Investors offers its clients op-

2013 Realty411Guide.com

PAGE 13 • 2012

Continued on pg. 15

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How to Become a Millionaire (Starting with Only $100K)!

by Kathy Fettke

ne of the greatest benefits of real estate investing is the ability to leverage through creative financing. The use of OPM (Other People’s Money) can increase our returns infinitely. Let’s compare the ROI (Return on Investment) on three different investment vehicles: gold, stocks and real estate. Here are some sample case studies of three people with $100,000 to invest: Sandra buys $100,000 worth of gold — using no leverage. Joe purchases $100,000 in stocks, but he buys them on margin so his stock value is $200,000. Pat uses $100,000 as a 20% down payment on $500,000 worth of income property. Let’s look down the road 15 years to compare investment strategies, with the assumption that each investment increases 5% per year in value. (Please note that markets go up and down, so this example is only being presented for the sake of comparison.) • In 15 years at a 5% return, Sandra’s gold would be worth $207,000. She has slept well at night knowing she owns “real money” and is thrilled that she’s doubled her money. • In 15 years at a 5% return, Joe’s stocks would be worth $415,000. He has to pay back the margin so he nets $315,000 and he’s thrilled that he’s tripled his money. • In 15 years at a 5% return, Pat’s properties are now worth $1 million. The initial 30 year fixed loan of $400,000 is now payed down to $200,000 so the profit is $700,000! Not bad for an initial $100,000 investment.

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How could the difference in returns be so dramatic? It’s simple — the use of leverage can help us acquire much more than we could on our own. But there’s more! Pat had purchased income property so he was able to apply the monthly rental income toward the debt. In fact, the rents more than covered the expenses — so much so that Pat was able to receive a 10% annual return, which would net an additional $150,000 over the 15 year period. Add that net rental income to the $700,000 profit, and Pat’s total return is $850,000 in profit! However, what if Pat put all his rental income toward paying off the loan instead of pocketing it? He’d have all properties paid off in 15 years thanks to the accelerated pay-off. Pat would be a millionaire! Plus, those properties would be netting an annual rental income of approximately $100,000 per year. Remember, that’s the same amount of money Pat started with. Let’s summarize these numbers: $100,000 at 5% over 15 years became: $207,000 for gold $415,000 in stocks $1 Million plus $100,000 annual rental income for life. Enough said? Actually, no. There’s more: Taxes. Both Sandra and Joe will need to pay capital gains taxes if they decide to cash out. Today, long-term capital gains tax is normally 15%, however Congress is considering eliminating the capital gains tax. There is discussion of including it as ordinary income, which could bring it up to as much as 50% in tax. If Pat wanted to cash out, the capital gains tax would also apply, unless he decided to use the funds to buy another property through a 1031 exchange. Additionally, Pat would have enjoyed many deductions from owning real estate that would not be available with stock or gold PAGE 14 • 2012

investments. Real estate isn’t always easy because it does require hands-on management. However, that manager doesn’t have to be you. There are very good companies who specialize in property management. Real estate also requires that you buy right. There are many agents who specialize in finding high-yielding rental property. Be careful about working with agents who don’t own rental property because they may not understand it. If you are new to real estate investing, consider working with someone who is highly experienced AND successful in what you are trying to achieve. You can download a free report, “7 Steps for New Real Estate Investors” at: www.RealWealthNetwork.com/411 And, while you’re there, join the network for free on-going real estate education, resources, market updates and referrals to leading agents, property managers and wholesalers nationwide. Kathy Fettke is the founder and CEO of Real Wealth Network “The Real Estate Investors Resource.” Members have access to free education, resources and referrals to turn-key rental properties around the United States. Real Wealth Network has over 8,000 members, so the shear power of numbers allows the group to acquire properties at huge discounts. Membership is free. Kathy is also host of The Real Wealth Show on KABC Los Angeles and on iTunes and is a regular guest expert on ABC, CNBC, CBS Market Watch and NPR.

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Who’s On the Radio?

3 Profit Centers, pg. 13

It’s the Real Estate Guys!

hey love real estate and have accepted the mission to share news, information, ideas, perspectives and strategies that will help their listeners become investing geniuses. Robert Helms and Russell Gray are hosts of The Real Estate Guys™ Radio Show, one of the most popular real estate podcasts of today. Their discussion topics, guests, events – even their sponsors – are all chosen with this mission in mind. Robert Kiyosaki, author of Rich Dad Poor Dad says, “If you’re serious about investing in real estate, listen to The Real Estate Guys™ – they really know what they’re talking about.”

Robert Helms and Russell Gray

education and expert perspectives in a fast-paced, entertaining style. The Guys talk investment strategy, economics, tax and asset protection planning, market and property due

“Live where you want to live, but invest where the numbers make sense.” – Robert Helms, The Real Estate Guys™ Radio Show The Real Estate Guys™ Radio Show has been broadcasting weekly on conventional radio since 1997 and is now heard worldwide on iTunes as the #1 downloaded real estate podcast. Plus, it’s free. When you tune-in to The Real Estate Guys™ Radio Show, you’ll hear from special guests including the likes of… • Robert Kiyosaki, The legend himself, author of Rich Dad Poor Dad • Donald Trump, real estate mogul • Steve Forbes, Forbes Magazine • Peter Schiff, economist and author of CrashPoint 2.0 • Rich Dad Advisors - Ken McElroy, Garrett Sutton and more • Success Stories (and Failures) of Real-World Investors The Real Estate Guys™ Radio Show hosted by professional investor Robert Helms and financial strategist Russell Gray, the show delivers no-hype Realty411Guide.com

diligence, international diversification, and much, much more! Gain valuable insights from interviews with notable experts, industry leaders and real-life investors. Discover proven strategies for making money with real estate in any market, how to avoid common and costly mistakes and what is working in the real world right now. Relevant topics, credible guests, upbeat delivery and no sales hype have made The Real Estate Guys, (www. RealEstateGuysRadio.com), one of the most listened to real estate talk shows in the world. There is a new episode released every week, so be sure to subscribe today by visiting their online network. — edited by Lori Peebles Bonus: SIGN-UP for their free e-mail newsletter at RealEstateGuysRadio. com. Be sure to also “LIKE” them on Facebook for the latest updates at Facebook.com/TheRealEstateGuys PAGE 15 • 2012

portunities in a third area of investing that relatively few get involved in (primarily due to the lack of expertise available): creative financing aka purchase options. Both wholesaling and rehabbing involve equity positions in the property, not so with creative financing which is the flip side of wholesaling. Sensei explains: “Say that a wholesaler is looking for a property with a minimum equity position of 20 percent. A property that doesn’t meet his minimum will make him walk away from it. But someone like myself will come in and structure a deal with that same property. Say that a property is upside down, most people at this point would go the short sale route. But if you don’t want that short sale to negatively reflect on your credit report, then you’ll want to use a different method like ‘subject to.’ I can take this upside down property and package it up and sell the paperwork to another home buyer or investor while leaving the mortgage in place. What ends up happening is the seller releases his right to the deed with the original debt remaining in the seller’s name and the new buyer starts making mortgage payments directly to the lender. This creative financing technique is called ‘subject to’ (purchasing subject to the existing financing).” While Sensei references “the saving of his credit rating” as the principal reason a seller would opt for ‘subject to’ financing, he cites other benefits as well. “Their biggest benefit is that they don’t have to get a loan. The loan is already in place.” A deal like this may not be obvious to a newcomer, Sensei points out that most real estate investment firms don’t do deals of this type. “They’re not multifaceted. They are mostly salesman working the cookie cutter method of simple transactions, and they work off commission, which is typically capped. As an investor, we (BBI) don’t just assist buyers and sellers; we present opportunities to homebuyers and investors and we don’t work off commissions. We work off profits, which are not capped.” So when it comes to creating cash flow in the coming year, Sensei and his colleagues at Black Belt Investing invite you to consider wholesaling, rehabbing, and creative financing.

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Inflation Isn’t Coming… IT’S HERE! Over the last five years, the growth rate between the two indexes is much closer, but the “all items” index is still growing approximately 17% faster than the “Core” index. Another point of comparison against the Consumer Price Index is the Profrom Jason Hartman’s Financial Freedom Report

t the Financial Freedom Report, we have been warning about inflation for quite a while. For a long time, the Consumer Price Index has shown what appear to be very benign levels of price increases, leading some to believe that the monetary expansion required to finance profligate government spending can be done without consequence. However, analysis of both the methodology that is used to create the core consumer price index and a handful of other price indicators tells a significantly different story. The most commonly quoted price indicator is the “Core CPI” that excludes food and energy. The stated purpose of this methodology is to show a less volatile price indicator. However, food and energy costs are very real and their absence from the prevailing index does not make them any less of a necessity. One of the more common index comparisons is the Core CPI vs. All-Items CPI. The disconnect between these two indexes is very stark across the last four quarters, and since Q4’08. Most of this is due to recent spikes in the price of energy. Realty411Guide.com

ducer Price Index or PPI. These two indexes differ in a very significant manner that makes their contrast even more telling. The Consumer Price index is based on a weighted basket of goods that is adjusted over time. The weightings of

different areas are steadily changed, and the weightings within categories are changed to reflect perceived changes PAGE 16 • 2012

in consumer preference. In contrast to this, PPI tracks specific products and commodities over time. Thus, PPI is a much less subjective index, since it tracks specific products and specific commodities, tracking their aggregated price changes over time. By adjusting the weightings and allocation of the CPI “Basket” it is possible to suppress the reported rate of inflation very significantly. Comparing the core CPI, all-items CPI, PPI for finished goods, and PPI for all commodities tells a very stark story. This unmistakable story is that over the past few years, products and commodities have been exploding in price while the reported CPI index has remained benign. Even when compared across a five year time horizon, the growth rate of PPI finished-goods and all-commodities indexes have been nearly double that of core CPI. This trend indicates that the price of real products and real commodities are growing twice as fast as we are being led to believe. This observation merits further analysis into the component parts of the Consumer Price Index. In order to provide a basis of comparison, it is useful to compare the growth rates of the Core CPI, Food, Housing, Medical, and Energy. Since Q4’08, the two aspects that stand out the most significantly are energy and medical costs. Thus, it is quite interest

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class or wealthy people. In short, inflation has been engineered by the government to transfer wealth from you to them, and also carries the effect of transferring wealth from the poor to the rich as their asset values and rents inflate. None of us possess the ability to singularly impact inflation. However, we do have the ability to singularly change the effect that inflation will have on us. By following the Financial Freedom Report system of prudent investing, it will place you in an advantageous position for the inflationary environment that has already arrived and is not likely to end at any time in the near future. Action item: Shift your personal and financial decisions toward defending

and more places. The only place where inflation seems to be absent is in the government reported price indexes. The

ing that Energy is completely ignored in the “Core” CPI, and medical is assumed to be a mere 6.6% of the “all items” consumer price index. This is where the subtle problems of reported CPI figures come into play. The index assumes that people spend less than seven percent of their income on medical care. However, it is interesting to note that health care represents approximately seventeen percent of the US economy. The dramatic growth rate of heal care costs is being hidden by suppressing the weighting of medical costs in the reported price index. One of the principal factors that is

reason for this is quite clear … the political authorities do not wish to be held responsible for pursuing financial policies that escalate prices and rob people

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 growth in the ‘housing’ segment of the index, which represents approximately 41.5% of the total index weighting, and reflects the ‘equivalent rent’ of a residence, instead of the market value. The obvious driver of the suppressed housing costs is financial crisis and ensuing recession that has softened the equivalent rent for primary residences. However, most people don’t live in the world of an index. They purchase a home with a mortgage that has a fixed payment, which doesn’t go down when the price of their home decreases. Other people sign a lease for a house or apartment that frequently lasts one year and doesn’t go down if housing demand softens. The summation of all these factors clearly points to one inescapable conclusion. Inflation isn’t coming, and it isn’t on the horizon; it’s here! The signs of price inflation are showing up in more Realty411Guide.com

against inflation with high quality fixedof their purchasing power. rate debt that generates rental income The extended impact of inflation is a and is attached to real assets. The illusteady confiscation of people’s purchassion of stable prices cannot endure ining power by the government. As the Federal Reserve continJason Hartman has been involved in several thousand real ues to print estate transactions and has owned income properties in 11 more money, states and 17 cities. His company, Platinum Properties Investor it dilutes Network, Inc. helps people achieve The American Dream of the supply financial freedom by purchasing income property in prudent of money markets nationwide. available in Jason’s Complete Solution for Real Estate Investors™ is the global a comprehensive system providing real estate investors with marketplace, education, research, resources and technology to deal with all and pushes areas of their income property investment needs. up nominal Contact him at www.JasonHartman.com or 714-820-4200. prices. The area where inflation definitely, and the façade will eventually lands first is in necessity items like food break. When it does, you do not want to and energy. Furthermore, it impacts be among the masses who are clamoring poor people the hardest since they for real assets … you want to own the spend a much higher percentage of their real assets that people are clamoring for. income on food and energy that middle PAGE 17 • 2012

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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 Mojica

wife Dolores donated 80 acres of land to be used for a future Palm Springs medical center. Most of their fortune, estimated at more than $500 million when Hope died in 2003, came from real estate holdings and sales rather than acting revenues. Miley Cyrus, an actress with her own accomplishments and also the daughter of Billy Ray Cyrus of “Achy Breaky Heart” infamy, started eyeing a second career as a real estate investor at the tender age of 17. She could not legally buy her first house until she was 18, but quickly caught up for lost time. One of her recent investments, a 5,173square-foot home on 1.15 acres of land in Studio City, quickly netted her about

ne of the perks of being a celebrity is the ability to buy mansions that even some doctors and lawyers can only dream about. Celebrities snagging prime real estate is definitely not new, but recently some savvy stars have caught on to the importance of developing multiple streams of income. “Flipping” houses is a growing trend among Hollywood stars, ranging from Miley Cyrus of “Hannah Montana” fame to iconic actress and singer Cher. Decades before the “Flip This House” trend became so popular in and out of Hollywood, acclaimed comedian and activist Bob Hope was an accomplished real estate investor. In the 1960s, he and his

$500,000. Now 19, Cyrus is earning a more than respectable second income from flipping similar properties throughout Studio City and Toluca Lake. Judging by her recent purchases and sales, she clearly prefers homes with unobstructed panoramic views of Los Angeles and spacious pools as well as hot tubs. Another famous real estate investor is Vanilla Ice, best known for his 1990s rap song “Ice Ice Baby.” Unlike many fellow celebrities who also invest in real estate, Vanilla Ice aka Rob Van Winkle has spoken publicly finding plenty of financial success flipping houses. Austin, Texas > 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: Dreamstime.com Realty411Guide.com

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rrive early or you may while worknot be able to find a ing regular seat at the popular jobs as real Investors Resource estateâ&#x20AC;&#x2026;apCenter of America (IRCA-Los praisers, Angeles). The only free club in but through Southern California serves up t h e i r â&#x20AC;&#x2020;i n delicious finger foods and showvestments cases some of the biggest names managed to in real estate (like Bruce Nor- Robyn Love, Peter Fortunato and Steve Love retire much ris, Dave Lindahl, Mike Cantu, earlier than Robyn Thompson, Bob Diamond, Vena anticipated. Now, they dedicate their lives Jones-Cox, Frank McKinney, Tony Alvato spreading their message of financial freerez, Jack Miller, Peter Fortunato and John dom through sound real estate investing.

possible to this incredible business of real estate entrepreneurship and investment, to train and inspire them to do their best and reach their own goals and, of course, to have fun while doing it.â&#x20AC;? He says itâ&#x20AC;&#x2122;s their way of â&#x20AC;&#x153;giving backâ&#x20AC;? and helping others in this wonderful real estate business that does so much for so many. Although Love admits that the first few years were challenging, the club grew in size and influence, at times accommodating as many as 350 people. Its reputation for credible education and serious networking attracts many, including other local club leaders.

So how did it all come about? â&#x20AC;&#x153;The club was actually co-founded eight years ago jointly by Ron LeGrand and ourselves. He chose us to run the Los Angeles area group because we were his most successful students in this area,â&#x20AC;? Steve Love recalls. â&#x20AC;&#x153;But after starting ten groups nationwide, heâ&#x20AC;&#x2122;d realized that heâ&#x20AC;&#x2122;d bitten off a bit more than he wanted to chew, timewise, so he backed out to spend more time on his many other business endeavors.â&#x20AC;? Love says the clubâ&#x20AC;&#x2122;s mission was simple from the start: â&#x20AC;&#x153;To introduce as many folks as

As a matter of fact, their good friend Phyllis Rockower, founder of The Real Estate Investors Club of LA (REIC of LA), asked them to join her to operate her monthly club too. After 17 years at the helm, Rockower wanted to scale back to devote more of her time to doing deals and one-on-one mentoring. As the longest-running club in Los Angeles, REIC also hosts hundreds of local followers every month as well. â&#x20AC;&#x153;So now we run two club meetings every

LA Clubs Host TOP Leaders

Schaub). Hosted by Steve Love and his wife, Robyn, the gracious couple extend a welcome so warm you feel as if you were invited into their home. Their hospitality and first-hand knowledge of real estate deal making rounds up hundreds of loyal followers into the Four Points Sheraton ballroom in Culver City on the first Tuesday of every month at 6:30 pm. The club recently changed its name to Prosperity Through Real Estate, which is a better reflection of the foundersâ&#x20AC;&#x2122; mission. The Loves began their career in real estate part-time

Continued on pg. 29

INVEST WITH CONFIDENCE MM ME ED D II A AT TE E C CA AS SH H F FL LO OW W II M D D

iscover the lowest-risk, highest-quality residential investment properties in the iscover lowest-risk, highest-quality residential investment properties in the country.the Using sophisticated methodology, the best investment properties are country. Using methodology, best investment properties carefully selected bysophisticated an experienced investor andthe rehabbed beautifully to secureare the carefully selected an experienced investor and rehabbed beautifully secure best tenants. Withbycompetent property management, and instant cash to ďŹ&#x201A;ow, yourthe best tenants.pays With competent property management, investment worry-free dividends from day one. and instant cash ďŹ&#x201A;ow, your investment pays worry-free dividends from day one.

PROFILE OF YOUR FUTURE PORTFOLIO PROFILE OF YOUR FUTURE PORTFOLIO Ä?Ć&#x2039; %#$!/0Ć&#x2039; /$Ć&#x2039; (+3

Ä?Ć&#x2039; %#$!/0Ć&#x2039; /$Ć&#x2039; (+3 Ä?Ć&#x2039; +3!/0Ć&#x2039; %/'Ć&#x2039; .+,!.0%!/Ć&#x2039;Ä&#x2018;Ć&#x2039; %0%!/ Ä?Ć&#x2039; +3!/0Ć&#x2039; %/'Ć&#x2039; .+,!.0%!/Ć&#x2039;Ä&#x2018;Ć&#x2039; %0%!/ Ä?Ć&#x2039; ))! % 0!Ć&#x2039; -1%05 Ä?Ć&#x2039; ))! % 0!Ć&#x2039; -1%05 Ä?Ć&#x2039; 1 (%05Ć&#x2039; !3!.Ć&#x2039; .% 'Ć&#x2039; +)!/Ć&#x2039; * Ć&#x2039; 0 (!Ć&#x2039; !%#$ +.$++ / Ä?Ć&#x2039; 1 (%05Ć&#x2039; !3!.Ć&#x2039; .% 'Ć&#x2039; +)!/Ć&#x2039; * Ć&#x2039; 0 (!Ć&#x2039; !%#$ +.$++ / Ä?Ć&#x2039; 1.*'!5Ć&#x2039;ÄŚĆ&#x2039; (! .Ć&#x2039; %0(!Ä&#x2039;Ć&#x2039; !$ ! Ä&#x2039;Ć&#x2039; ! /! Ä&#x2039;Ć&#x2039; * #! Ä?Ć&#x2039; 1.*'!5Ć&#x2039;ÄŚĆ&#x2039; (! .Ć&#x2039; %0(!Ä&#x2039;Ć&#x2039; !$ ! Ä&#x2039;Ć&#x2039; ! /! Ä&#x2039;Ć&#x2039; * #! Ä?Ć&#x2039; +)!Ć&#x2039; .. *05 Ä?Ć&#x2039; +)!Ć&#x2039; .. *05

Typical Property Price $139,000 Price: $110,000, renovated, built 2005 Rentfully $1,395 Currently Rentedfully for $1,195 Price: $110,000, renovated, built 2005 2001 Currently Year RentedBuilt for $1,195

â&#x20AC;&#x153;Contact me for a â&#x20AC;&#x153;Contact me for a free cash flow analysis.â&#x20AC;? free cash flow analysis.â&#x20AC;?

TOM WILSON, President TOM WILSON, President 408-867-1867

Mention REI Voice Magazine and receive one-year of free Mention REI Voice Magazine andyour receive one-year free Mention Realty411 or reWEALTH and receive 1 of year property management with ďŹ rst purchase. premium home warrantywith withyour yourďŹ rst firstpurchase. purchase. property management Realty411Guide.com

PAGE 19 â&#x20AC;˘ 2012

TomKWilson@earthlink.net 408-867-1867 TomWilsonProperties.com TomKWilson@earthlink.net TomWilsonProperties.com

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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 experienced 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 properties 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 distressed 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 marketing which puts them in direct contact with

Richard Edrosolan & Anthony Patrick of Whiterock Capital, Inc.; Photos by John DeCindis

Whiterock Capital Offers Clients a

Solid Foundation

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 investors. 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. When a property is purchased, improvements are planned immediately. “Just putting in granite counter tops, stainless steel appliances, and knocking out a wall or two can make or break an investor’s exit strategy,” Edrosolan explains.

* How does one get access to discounted properties? * If stable monthly income is needed, which property should be purchased and where? * Is commercial real estate to risky for a newcomer? * Should I buy for cashflow our appreciation? In California or out of state? Realty411Guide.com

PAGE 20 • 2012

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For the buy-and-hold investor simple staging and curb appeal is important because it can equate to a lower vacancy by attracting a longterm tenant.

Education is a Pillar for Success in Real Estate

Edrosolan and Patrick know that the right education and training makes a difference. In fact, both of them met many years ago at a bootcamp seminar. While discussing their mutual interests and philosophies on real estate, they realized that they had much more in common than just investment strategies, and they soon began working as a team. Disillusioned with the grandiose promises offered by many of the educators at the time, they formulated their own techniques and a system model based on their past investing experiences. After purchasing hundreds of properties already, they are also on pace to double current holdings and volume during the next year. Whiterock Capital, Inc. is also expanding their client base to include others who are also interested in taking advantage of purchasing distressed assets in either the California or Arizona marketplace. Edrosolan and Patrick have simplified the investing process for their clients. Patrick explains: “Clients receive wholesale buyer lists, in-house programs, financing (no credit is required),

Richard Edrosolan Realty411Guide.com

3 Ways to Find Funds for Deals Finding money to invest in real estate is one of the most cited obstacles. The challenge of having to scrape money by saving can be a painstaking chore.While it can take years of discipline to accumulate funds, many investors may already have access to the resources they need without even knowing it. Whiterock Capital, Inc. shares three often bypassed ways investors can find the money they need to expand their portfolio.

• HIDDEN HOMEOWNER EQUITY

Are you a home owner with a fair amount of equity? Is so, you should consider obtaining a home equity line of credit (HELOC), as the rates have never been lower. Additionally, by establishing such a line of credit, you can use the equity in your home (or equity in an investment property) to invest as you choose. Once established, your line of credit is usually good for up to 10 years. Most HELOCs only require minimal monthly interest payments on your outstanding balance. You can repay the balance at any time without a prepayment penalty, and the interest paid is generally tax-deductible.

• HAVE YOUR BOSS CHIP IN

If you are a participant in your company’s 401(K) retirement plan, you may be able to borrow money (not withdraw as that might create tax penalties) from your 401(K) plan. Recently, a Whiterock Capital investor borrowed the maximum $50,000 from his 401(K) plan, citing financial hardship as his reasoning for the loan. Because of his reduced hours at the company, the hardship loan was granted. He then purchased a bank REO in Riverside County for $56,000. He spent $5,000 to rehab the home and subsequently sold it to an FHA first time buyer for $100,000. At the close of escrow he repaid his 401(K) loan in full, but he was over $25,000 wealthier than he was before the loan.

• INVEST WITH A SELF-DIRECTED IRA

If you have not heard about a self-directed IRA (Individual Retirement Account) as of yet, not to worry, most people haven’t, either! The vast majority 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 results 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 knowledgeable 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 personally involved in your success,” Patrick adds. A Whiterock Capital mentor is with the investor from the beginning of the program, > PAGE 21 • 2012

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Richard Edrosolan and Anthony Patrick of Whiterock Capital, Inc.

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 investment in their area of preference, all the way to a successful close of escrow. “Your Whiterock Capital personal service continues with quick telephone and email responses to your questions and inquiries, seven days a week, 365 days a year.” Patrick explains. Portfolio risk management is the utmost goal. The principals of Whiterock Capital, Inc. are experienced rehabbers and property managers who continuously focus on ways to improve quality and the bottom line. Patrick explains: “We are actively on site at these properties looking over everything in an effort to save our client’s money and increase cashflow.” This type of attention to detail with a proactive team inclines investors to build a long-term relationship with the company, and some clients have been doing business with Whiterock Capital, Inc. since the formal inception of their company three years ago. Realty411Guide.com

Empire. Price points are very attractive, but proceed with caution. With interest rates at a historical low, it is very tempting to acquire properties fast without thinking of the responsibilities that real estate brings. Without a team and mentors to guide overleveraged, overwhelmed investors, their exuberance can get them into trouble. Patrick is an experienced inspector and property manager who is continuously focusing on ways to improve quality and the bottom line. The company’s inventory of properties is worth a private viewing for those looking for startto-finish customer service. Whiterock Capital, Inc.’s mantra of “You choose the opportunity — we do the work” gives investors simple answers and easy solutions. It’s a refreshing concept to an industry once plagued with complexity and mistrust. Visit www.whiterockcapitalinc.com or contact them toll free at: 877-228-6060

Besides having a direct pulse on their investments Edrosolan has managed various ways of capital raising and arranging project funding over the years. His efforts maintain Whiterock Capital, Inc. with a stable and ready funding for expansion of its current assets and holdings. Currently, the principals invite submissions of houses and mortgage notes up to $200,000, as well as commercial apartment complexes up to $5 million. These professionals understand win-win structures, and the number of joint venture projects increase daily.

Whiterock Capital is Focused

While many investment firms spread their holdings among several cities and states, Whiterock Capital Inc. prefers to focus on limited markets and instead become experts in those areas. For the past few years, their attention has been captivated by Phoneix and an area in Southern California known as the Inland PAGE 22 • 2012

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The Tale of Two Turnkeys

by Tom Wilson

Some providers call their offerings turnkey, et me tell you but are missing some or about two great all of the four essential real estate deals elements. If the compafor the busy prony selling you the propfessional. Both erty does not possess the are single family homes that deed, it is not a turnkey. have been renovated and are If the seller has yet to offered as turnkey rental inTom Wilson complete renovations, vestments. Investor Special the property is not turnkey. If the prop#1 is priced at $100,000 and rents for $1,200—a 1.2% rent ratio. Investor Spe- erty does not have rent paying tenants, the cial #2 is priced at $100,000 and rents for property is not turnkey. If the seller offers $1,050—a 1.05% rent ratio. Which prop- to “look after” the property until you find a property manager, the property is not erty do you choose? One really is a better deal than the oth- turnkey. Now that you understand the four eser and I’ll let you know why later. However, if instead of choosing, you thought, sential elements that define a turnkey “I can’t make a decision based on such property, how do you evaluate the myriad limited information,” then you’re in the opportunities available to you and get to top 50% of real estate investors. In a mo- the top of the class? By analyzing how ment, I’ll help you get to the top of the each deal rates in four major categories: class by understanding the crucial data Location, Property Condition, Provider, required to properly analyze a turnkey and Property Management. deal. Your test will be to use this informaAnalyze the Location tion going forward to make investment Location will make or break a deal, and decisions based on information gathered, not on the slickest presentation or the per- we’re not just talking about corner lot or cul-de-sac. Understand what is going on sonalities involved. First, why turnkey investments are in the region as well as the neighborhood. not created equal. To the top tier turnkey The best long-term holds have the followproperty providers, turnkey means that ing in common: all the elements of the investment are in • Broad based economy with many differplace so that all the investor has to do is ent employers “turn the key” on their bank vault and • Growing population watch the money flow in. Clearly there is • High income, high education, young more to it than that, but not all that much families more. By our (and I mean the top pro- • Low vacancies, lower than average foreviders) definition, a turnkey investment closures property has ALL of the following attri- • Stable home prices year-to-year (no big butes: 1. The provider is in possession of swings) the deed, 2. The property has been care- • Business friendly and landlord friendly fully selected and renovated with renters local government in mind, 3. The property has been leased, Understand the Property Condition 4. A property management company is acMake sure you are getting what you tively engaged in managing the property. After the investor purchases the property, pay for. Really nice properties attract rethe property manager simply redirects the ally stable renters. Pay close attention to the quality of the renovation. High quality rent checks to the investor. Realty411Guide.com

PAGE 24 • 2012

equals less maintenance and more money in your pocket. Great properties share these common traits• Built within the last ten years • No structural problems • High quality carpet, flooring, tile, fixtures, and appliances • Nice landscape • Good floor plan, usable back yard, 3 or 4 bedrooms, at least 2 baths, 2 car garage • Architecture that fits into the neighborhood and appeals to tenants and future buyers Reference Check the Seller Do you really know who is providing this turnkey? Handshakes make me feel good, but a reference check makes me feel better. Do not hesitate to ask for references, to check the provider’s on-line reputation, and to screen for lawsuits and bankruptcies. A reputable provider will happily answer all your questions and has dozens of happy customers ready to sing their praises. If you come across any of the following, beware! • The person you are dealing with is an agent or referral service • Any part of the deal seems to-goodto-be-true • You don’t get a firm answer about how many of their investors get loans and how often they fail an appraisal. A reputable provider will seldom fail appraisal. • You are asked to take over a contract for a raw property and cover all of the unknown expenses for conversion to a rental. The seller says that with a little carpet and paint the property will be rented in 3 weeks. • The provider does not own properties in the same area that they are recommending to you • The provider does not own clear title to the property (check the county records!) Interview the Property Manager Do you really want to question whether you’re being overcharged to fix a leak? Do you want to worry about a lease not

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... how do you evaluate the myriad opportunities available to you and get to the top of the class? being renewed because the property man- that needs replacing because the seller ager did not respond to your tenants? It painted over rotten wood, the hot water is maintenance costs and occupancy that heater needs replacing (and there is no will make or break positive cash-flow. warranty), and the HVAC needs repair. This is why competent property manage- His bill is greater than the net income that ment is essential. Just as when selecting a was predicted for the first year. The city provider, check the references of the prop- he purchased in has only one industry, and within a year, the one new UK manufacerty manager. Look for the following• Endorsed by the turnkey provider and turing plant that was scheduled to come to town and employ 2,000 people gets postmanages the providers own properties • Many years of experience and ample references • Fees no greater than 10% for up to 4 properties with full service and half of one month’s rent for new leases • Experience managing the same type of property you are purchasing (houses, not apartments or commercial) • Many other rentals in the same area so they do not need to make a special trip to check up on your Sam’s Property: Mobile, Alabama property Built: 1962 Yes, there’s a lot that goes into Purchase Price: $100,000 analyzing a turnkey property, but Down Payment: $20,000 it is YOUR money. Ask questions Closing Costs: $2450 until you are satisfied, and by all Prepaid Taxes & Expenses: means, visit the property before $2200 you buy. Additional Closing Funds: $5000 Back to the Beginning Rent Estimate: $1200 Back to the two investor specials Rent Actual: $1000 at the beginning of this article, Repairs Year#1: $3600 which are real case studies. (Names have been changed to protect the Cash out of pocket Yr#1: duped!) $32,850 ROI: Yr#1: -3% Investor Special #1 priced at $100,000 and rents for $1,200, purchased by “Sam.” During the loan poned indefinitely because of economic process the appraisal for the property uncertainty in Europe. Adding salt to the came in short and Sam shells out another wound, Sam’s tenant fails to renew his $5K to close the deal. After closing, Sam lease. Sam experiences another 3 month finds out that the rent was a “market esti- vacancy and he has to drop the rent to mate” and after waiting for 3 months and $900 because of the now weaker rental dropping the price twice, he finally gets it market. Sam is very sorry he didn’t do his homework. rented for $1,000/mo. Investor Special #2 is purchased by Within 6 months Sam is notified that the 50 year old house has exterior trim “Mary” for $100,000 and rents for Realty411Guide.com

PAGE 25 • 2012

$1,050. The house is only 10 years old, comes with a premium home warranty, is already leased and the appraisal came in at value. The employment in the state is the highest in the country, the city has 25 Fortune 500 companies with diverse economies, the population is growing, rents and values are appreciating. Mary’s first tenant leased for three years. When it did turn over, the property required mini-

Mary’s Property: Dallas/Ft.Worth Built: 2002 Purchase Price: $100,000 Down Payment: $20,000 Closing Costs: $2500 Prepaid Taxes & Expenses: $3300 Additional Closing funds: $0 Rent Estimate: $1050 Rent Actual: $1050 Repairs Year#1: $0 Cash out of pocket Yr#1: $25,800 ROI: Yr#1: 9.5%

mal make-ready. It was leased again at $1,125 before the current tenant moved out. The cash flow exceeds Mary’s expectations. Mary earns an A+ because she purchased in a top, low-risk, metro and from a reputable provider. For more information about Tom Wilson, be sure to visit his website at: www.TomWilsonProperties.com

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Goodby e Corpor ate America

Hello Financial Freedom!

t was fourteen years ago that Missy McCall Hammonds found herself tiring of Corporate America. As she considered new employment opportunities, she set down a number of criteria: 1) the replacement of her corporate income, something she could succeed at, no gender limitations, and no limit on the amount of money she could earn. It wasn’t too long before the real estate industry piqued her interest. She looked at the various niches available and decided that the rehabilitation of properties was just the ticket for her. “I liked taking up new things and making them pretty.” She says and warns: “However, I fully understood that rehabbing was a lot more than making things look pretty; it’s updating the electrical and plumbing [systems] and knowing how a toilet works. It’s a full process of the mechanics and the carpentry. It meant learning a lot more than painting and making it look nice.” Missy’s escape from the 9-to-5 grind was successful because she researched the industry for one year. She strongly suggests individuals starting a new business to begin with a plan and budget. “Coming from corporate, we had it drilled into our heads that with every transition we wanted to make we had to find out all the possible obstacles and then found solutions for them.” That business plan served Missy in good stead as she navigated the many challenges of her nascent business. Her real estate business began with sales to homeowners. When the financing completely evaporated, she was able to move seamlessly into the investor mode. “Your willingness to change and adapt to your environment…is the key to your success. Who I was when I started my business was someone that sold retail to homeowners,” she says. “If that was the only busi-

by Isaac Newkirk III

ness I had in 2007, when all financing went away, I would not be in business today.” Missy refers to the market in Butler County as linear, which means it doesn’t have the highs and lows that are present in so many other areas. “Property values in some areas have decreased, but in many areas they’re actually on the rise. We have a number of new businesses moving into our area and we have a growing population, which means an increased demand for properties.” A professional person who understands that real estate is a good investment is the kind of individual who typically comes to her enterprise. “My investors understand that real estate is an important part of their portfolio but, as busy professionals, they don’t want to manage it; they just want it to act like stocks and have a return on their investment and for it to be hassle-free. My typical investor is 40 plus. At that point in their lives, they’re looking more towards their retirement and thinking long-term.” Is America on sale? Missy believes that it is. She suggests that you come to Butler County, Ohio. “I think we have another three years of foreclosure inventory. And that’s because of government intervention in slowing down the flood of markets.” It is readily apparent to those in the industry that the job market will play the principal role of success in the industry, and Missy is no exception. “Without jobs, people can’t make their house payments. And the job losses across America were staggering the last three years.” Although total bleakness may exist elsewhere, Missy says that job market is not so glum in her home county. “Our unemployment is typically one percent below the national average.” Missy believes that the stability of the marketplace — along with demand for properties — would be the primary reason for investors to include Butler County properties in their portfolio. With an occupancy rate hovering at 98 percent, an investor would be hard-pressed to find a more stable investment. Visit Missy’s website: www.RetireWithRealEstate.biz

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PAGE 27 • 2012

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Why the Real Estate Industry has Seriously

Dropped the Ball! by Marck B. de Lautour, BBA MBA Owner, SBD Housing Solutions

the ones able to buy and properly manage rental property. The fact that Financial Advisors have ingrained themselves in American culture to the point that anyone wanting to put some money aside for retirement is naturally going to do it through mutual funds or stock investments says a lot about their customer service. Not that investing in the stock market is

he Real Estate Industry has seriously dropped the ball! Africa and Hong Kong. Most have never And this is not a recent ocseen the assets that they own, and yet are currence…. cashing the monthly rental checks every The big winner through the month like clockwork. past few decades has been the financial As an all-inclusive real estate investservices industry. People have to invest their money somewhere and when real estate agents, brokers, ...the fact that the RE industry has languished behind in and property managers made it allowing the average John Doe an avenue to invest his FAR TOO complicated to invest in houses, they turned to the hard earned money in Real Estate is a real shame. sophisticated and finely tuned model of the stock market. This ment firm, we specialize in building well-oiled machine has done a great job of a bad thing! Not at all…..but by comparison, the fact that the real estate industry wealth for our clients. Taking a leaf from catering to those in their wealth accumuhas languished behind in allowing the the Financial Planners book, we actually lating phase of life. And it seemed that average John Doe an avenue to invest his take the time to sit and discuss a plan of only those real estate investors that were hard earned money in Real Estate is a real action with our clients; where do they ‘hands on’ with their investments were shame. want to invest, what cash do they have Now dawns a new age of investing….. available, do they plan on leveraging their where geography and physical presence assets, when will they be looking to use mean nothing. In the same way the cash flow as an income source for that you don’t need to drive to retirement, all of which are just pieces of a Atlanta and tour the Coca very personal and unique puzzle. Cola plant to feel comfortAt SBD Housing Solutions we handle able investing in Coca the entire operation for our clients. From Cola stock, SBD Houstargeting properties, the acquisition, utiliing’s detailed 9-page ties, construction estimates, project manInvestment Prospectus agement, remodel, bill payment, leasing, more than prepares and property management. Our clients an investor to make know that the ‘value added’ is in the an informed buydetails. Being able to invest in Real Estate ing decision.SBD with the same ease as the stock market has Housing Solutions always been the goal. is a Kansas City Although I am not naïve enough to based operation think I can change an industry single but has clients handedly, I believe that we in the Real from as far as Estate services industry can all do our part Brazil, the U.K., to bring some credibility back to the sound Australia, South investment option that is…..housing.

LA Clubs Host Top Leaders pg. 19

month,” Love explained. It’s interesting to training seminars, personal real estate note that the clubs are less than a mile apart deals, two actives sons and even speaking and yet both of them draw large numbers of on up to five one or two-week cruises per investors consistently. year, the Loves are certainly busy, yet they REIC of LA is normally held on the sec- always manage to have time to encourage ond Tuesday of each month at 7:30 pm at the Double For more information about IRCA-LA Tree Hotel in Culver City, (now Prosperity Through Real Estate) but it’s always best to call or REIC of LA, contact: 818-217-4630 first as they sometimes have to move the location www.irca-losangeles.com due to large conventions. www.prosperitythroughrealestate.com REIC of LA, founded by www.realestateclubla.com Phyllis Rockower, has a modest fee of $197 per year, which covers the cost of a more ex- and motivate others to not give up on their pensive venue and other membership ben- goals and dreams of financial freedom by efits too. Between juggling two successful investing in real estate. clubs, a weekly radio program, monthly — article by Linda Pliagas

Realty411Guide.com

PAGE 29 • 2012

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Short Sale Investors Receive an Edge For 10 years Bill and Dwan Twyford have been leaders in the world of short sales. Their mission of helping distressed home owners who are under water have led them to a life of success and acclaim.

Bill and Dwan Twyford

eal Estate is cyclical; therefore, certain niches may work better than others during given markets. One thing that is NOT cyclical is Bill and Dwan Twyford, the Nation’s most sought after real estate investing experts! Bill and Dwan have devoted 20 years to helping people: Investors and homeowners alike. They help investors become wealthy and distressed homeowners get a fresh start. One strategy that has worked especially well the past few years has been negotiating short sales. A short sale is when a house is sold for a lower amount than the mortgage owed on it. Many properties currently have large loans that are valued for far less,resulting in negative equity. While short sales are nothing new (it has been prevalent since Dwan started the trend back in 1996 — she actually wrote Realty411Guide.com

the very FIRST short sale program all the other guru’s use today), a sea of information and a ton of confusion exist on this topic. Due to the complex and sensitive nature of short sales, it’s important to learn from experienced educators who have been negotiating short sales for many years. Bill and Dwan use a THREE-STEP PROCESS that gives them and their students an average 75% closing ratio! That is unheard of in this crazy industry, yet they make it happen year after year! > Bill Twyford,a former paint contractor and single dad to two children, went through a divorce and a foreclosure and learned this business through his own personal experience. > Dwan Bent-Twyford,a single mom and former waitress at Denny’s, also went through a divorce and a foreclosure and PAGE 30 • 2012

by Bonnie Laslo learned the business the same way — through a direct experience. They met at a REIA group, fell in love, got married, raised three amazing children together, and turned their personal struggles into their business. They joke, “Our MESS became our MESSAGE!” They believe their success is partly due to the fact that homeowners can relate to them because Bill and Dwan “get it.” Soon after they began helping homeowners they started teaching real estate investors how to do what they were doing. Next thing you know they wrote two-best sellers, were guest speakers on many TV shows like MSNBC and Fox & friends, as well as speaking on stages with Donald Trump, Robert Kiyosaki, SuzeOrman, and many others. Assisting as many people as possible in these economic times is a purposeful way of making money. “Sharing short sale information to everyone who needs it will help families sleep better at night,” Dwan says. “It’s a two-fold event, helping the homeowner also helps you and your family.” “Short sales give struggling families a fresh start, which resonates with the couple because they both know what it’s like to need a second chance,” adds Bill. When I interviewed Dwan she shared a funny story with me, “She was singlehandedly raising a child and struggling at a string of dead-end jobs. She knew real estate would create a sense of stability for her daughter. She often took her daughter along and Aylawould play while mom fixed-up the properties. Dwan’s daughter (who is now 23) became so fascinated with fixer-uppers that when she was a child she went exploring a boarded up home nearby with three of her nine-yearold friends. The neighbors called the

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authorities as they could see movement in the vacant property. Upon arriving, the police were shocked to find that the intruder was a child claiming to be an investor. “My mom and I do this all the time,” the 9-year-old said innocently. “We look at the houses and buy them.” Dwan giggles as she recalls this story as she was so proud of her daughter while the other mothers were horrified! Dwan says that in order to balance her limited time she made investing a family affair. While she worked in the homes rehabbing them, her daughter would be by her side playing and painting. One of the things Dwan loved about Bill is that he was doing the same thing: Allowing his kids to paint and play while he rehabbed his own fixer-uppers. The Twyfords went through the trials and struggles that many people in a short sale situation are currently in. It is for this reason that they both approach their investing and short sale education from the perspective of the homeowner.“The homeowners know and can tell if a person cares for them or not,” Bill says, adding: “Always do what is right for the

as most have never closed a real estate deal and most of the ones who claim to have closed deals have closed less than five before they wrote a program. In fact one guru actually took Dwan’s original program and photo copied her testimonials (with the page numbers and all) and placed them in his own program. Another shows copies of his checks from speaking events and claims they are real estate deals! The Twyfords have closed over 2,000 documented deals and feel

to their website: www.InvestorsEdgeUniversity.com. They specialize in all areas of real estate investing: • Wholesaling • Short Sales • Rehabbing • Rentals • Bulk Buying • Subject To’s • Rent to Owns • Forensic Audits • And so much more.

Due to the complex and sensitive nature of short sales, it’s important to learn from experienced educators who have been negotiating short sales for many years. homeowner. They have one chance to start over while investors have hundreds of opportunities to make profit.” Bill advises investors to keep in mind that the banks loss mitigation departments could result in tight margins. It’s important to look at the big picture and press forward with getting deals complete. This tenacity, he says, is the key to being successful. The Twyfords offer their #1 tips to new investors: Stop buying every program that comes down the pike that promises to do all the work for you, make you millions while you sleep, and allows you to never speak to a bank or distressed homeowner. They say to stick to ONE person who has a proven track record and let that person teach you to run the same multi-million dollar business that they themselves are running. They say to “beware” of many of these guru’s Realty411Guide.com

These are just a small sample of the incredible programs they offer to make you the best investor possible. I have interviewed MANY investors over the years and I have to honestly say that Bill and Dwan are top-notch! Their love of the business, their ethics, their desire to truly help others is absolutely second to none! Although I am a writer, after speaking to the Twyfords I’m going to give real estate investing a crack myself! I’ll write a follow-up after Dwan helps me close my first deal…!

with that kind of experience they are your absolute BEST BET for success because you will do exactly as they do every day – MAKE MONEY! IN OTHER WORDS – WORK WITH THE TWYFORDS! An investor should educate themselves as much as possible before even attempting to negotiate a short sale, wholesale a property, rehab, or invest for long-term wealth. In the spirit of sharing valuable information, the Twyfords have created hundreds of videos sharing their real estate investing knowledge which can be seen at www.youtube.com/ DwanBentTwyford. You can also get a FREE real estate investing program by heading PAGE 31 • 2012

To speak to Bill or Dwan personally Bill has given me permission to give our readers his CELL phone number – 303-870-8851. He said to tell him that Linda sent you and that he will give you a once-in-a-lifetime deal on his programs and some FREE coaching to ensure your success!

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Itâ&#x20AC;&#x2122;s a Ladyâ&#x20AC;&#x2122;s World San Diegoâ&#x20AC;&#x2122;s Newest Club Caters to Female Investors by Linda Pliagas

eal estate investing is a diverse business. A savvy investor can make money in a variety of ways from flipping to land banking. Jasmine Willoisâ&#x20AC;&#x160;and Jason Kennedyâ&#x20AC;&#x2122;s main strategy for success is buying and holding rental properties out of California, which is a niche that was rarely touched upon at the groups they frequented. So in February of 2010, Willois decided to start the Lady Landlords of San Diego with Stacy Kennedy, to educate others on how they could maximize their dollars and generate more cash flow outside of the Golden State. Willois says that many investment groups emphasize rehabbing for profit, however

she feels this route is risky for new investors to take. She admits that she is not â&#x20AC;&#x153;flip happyâ&#x20AC;?. Instead, the club founders want to emphasize the message that true wealth is built by holding assets long-term. â&#x20AC;&#x153;Slow and steady wins the race every time,â&#x20AC;? Willois says. She adds: â&#x20AC;&#x153;The club has at its core the know-how to build foundations of adequate cash flow.â&#x20AC;? Even though the clubs name has â&#x20AC;&#x153;Ladyâ&#x20AC;? in it, men are welcomed to the group. Currently, men make up about 40% of the attendees and 50% of their online community. As fate would have it, in January 2012, Jasonâ&#x20AC;&#x2122;s wife, Stacy, was scheduled to speak at the monthly event, but she was eight months pregnant at the time and realized she had over committed herself. So Jason

Jasmine Willois and Jason Kennedy

Kennedy filled in for her and spoke about investing out of state, and at that very moment Willois knew she had to approach him with the opportunity to lead the club. Jason Kennedy joined in March of 2012. Willois describes Jason as a perfect fitâ&#x20AC;&#x2026;because he is a â&#x20AC;&#x153;true gentleman,â&#x20AC;? one who is sensitive in fostering a non-competitive environment where ladies can reach their maximum potential. He too realized that the ladies of San Diego needed a gentler club where women could let down their hair without feeling intimidated. When one enters through the clubâ&#x20AC;&#x2122;s doors, a sea of femininity awaits. The color pink is so boldly displayed in a variety of shades throughout the room: Pink balloons, pink table cloths and pink flyers. > Continued on pg. 52

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FRQWDFW#HTXLW\JURXSRQOLQH FRP ZZZ (TXLW\*URXS2QOLQH FRP -XVWLQ +DUULVRQ Justin Harrison - AL 205.616.3761 &KULV 'RQDOGVRQ Julie Harrison - MS 601.291.0689 PAGE 32 â&#x20AC;˘ 2012

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There’s Big Money in Conquering Your Fear:

And Here’s How to Do It! by Matt Theriault

“Show me the money!” You say, Ok, I will.

learn how to conquer it, the big money you virtually eliminated from a person’s life. seek will forever exceed your grasp. Then why does fear still stop us? The anThrough my own personal experiences swer is simple. Whether a threat is real or and now through several years of coach- imagined, the mind will not automatically ing others in their real estate investing, I’ve make the distinction. The mind will initialcome to know fear for what it is 99.9% ly categorize everything as a saber-toothed of the time: False Evidence Appear- tiger, and unless you ignore that initial asing Real (F.E.A.R.). Although sessment and consciously re-categorize I can’t think of any fear at the your fears for what they really are... False moment that I’ve experi- Evidence Appearing Real, you will forever enced as being real, I’m fall short of your personal potential. Simply sure there’s an excep- put, the fear we experience today is strictly tion, so I left the .1% psychological. It’s imagined. It “appears” open to satisfy that ex- real and dangerous, but it’s not. ception. Whether it’s the lack of time, money, Fear, literally, is a distressing credit and/or knowledge that’s hinderemotion aroused by impending ing your real estate investing, you’ll want danger, evil, or pain. Fear is a basic sur- to know that it’s not those things that are vival mechanism related to the behaviors stopping you. It’s the fear, or the unknown, of fight, flee, escape, or avoidance. The around those circumstances that stop you; capacity to fear is a And this is our clue as to how part of human nato conquer fear. The “fear conture. This emotion is queror” is action. Not only will both learned and inaction produce your results, it herited; it is a lesson will conquer and cure your fears. that has been passed Conversely, inaction, indecision, on from generation to and procrastination fertilize fear generation beginning causing it to grow. millions of years ago Simply put, take action in the when humans initialface of your fears and your fears ly learned to fear the will disappear. likes of saber-toothed But! Easier said than done, tigers and hungry right? Indeed. But, there’s an exMatt Theriault ercise you can use to make takwolves (now that’s what I call impending ing action in the face of fear easy. danger, evil, or pain!). The last I checked, Yep, easy. Imagine what your income, or threat from these beasts did not interfere your life for that matter, would look like if with my last attempt at closing a deal. How taking action in the face of fear were easy. about yours? Probably not, but everyday The sky is the limit! fears that seem just as daunting do. In the interest of helping you reach the What is important to understand is that sky, I’m about to introduce to you the the vast majority of fears we face cannot “easy” way to conquer fear so you can be categorized as impending danger, evil, take actions that will produce the results or pain. There are few things out there that you desire. I call this easy exercise the will kill us or cause us physical harm. As False Evidence Test. When executed with long as we look both ways when crossing integrity, the test flushes out the false evithe street and steer away from dark alleys Continued on pg. 61 at night, most danger, evil, and pain can be

t’s actually in plain sight and yours for the taking, if it weren’t for that one thing that stands between you and it. That thing is fear. Fear is what stands between the money you’re making right now and the money you want to make. Just on the other side of that fear exists an abundance of wealth, freedom and happiness. Big money! If you could only figure out how to conquer that fear, that big money would be yours. Such a simple concept, but it almost seems insurmountable, doesn’t it? What? You’re not afraid of anything? Fear isn’t your problem? Well... if the lack of time, money, credit and/or knowledge has stifled your real estate investing progress, fear is your problem. The reason most would not admit that fear is their problem is because fear comes in so many different shapes, sizes, names and intensities that they don’t recognize it for what it really is. It’s not always called fear, sometimes it sounds like: •I’ll call that FSBO tomorrow. •There aren’t any deals out there right now. •I can’t qualify for a loan. •The REO agent won’t call me back. •The market is saturated with other investors. •I’ll wait until the election is over. •The market hasn’t hit bottom yet. Fear, or any variation of the word, isn’t mentioned in any of the above examples, but they are all founded on fear. Until you recognize fear for what it really is and Realty411Guide.com

PAGE 33 • 2012

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The Scoop on the California Market with the So Cal “Property Flip Pros” by Isaac Newark III

he California market is as hot as its deserts and as high as its mountains. The foreclosures are getting scooped up by savvy allcash investors who then rehab them and sell them for a quick profit. The distressed market is creating phenomenal opportunities for investors. But now that inventory is shrinking will we see the market rise even more? Is their Shadow Inventory still yet to be released? To get a view on the state of real estate in California we talked with seasoned veterans Ruth Ortiz and Christian Yepez. They are the principals in the firm USA Real Estate Group, LLC, and they specialize in the rehabilitation of properties in southern California. They are known as the “Property Flip Pros” for their unique ability to find deals and turn a profit for their investor partners in seemingly non-existent situations. Currently, Chris and Ruth flip about four to five properties per month throughout Southern California. A recent deal they rehabbed was a property on La Verne Avenue in East Los Angeles. They purchased the two bedroom, one bath house for $136,000. It was a pocket listing brought to them by another broker. The total rehab costs were $25,000. The property was put back on the market at $249,500. Within three days it received ten offers and went for the asking price The ‘Property Flip Pros’

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of $255,000. Ortiz says the outcome was fantastic because they invested in a quality rehab, which included a full kitchen and bath remodel, new floors, interior and exterior paint, landscape, plus new appliances and high-end fixtures. This sample deal is just one of the success stories that Christian and Ruth can share from their nearly 20 year real estate business. Ruth got her real estate license right out of high school. At the beginning of her career, she said she was doing property rehabs without really knowing what they were. Early on, while taking classes in real estate, she met Christian. They decided to go into business together and their business relationship progressed into marriage. Eighteen years later, both partnerships (marriage and business) are booming.

Coming Back to California Chris and Ruth may be slam-dunking deals now but two years before the crash, they voluntarily left the California market to seek greater return elsewhere. “We felt that properties were over-inflated. We sensed that something was going to happen,” Ruth recalls. They recognized that the high prices that forced them out of the market were artificially created. “Prices were ridiculously high. As an investor, you wondered how long this was going to last and how were you going to make money. We got nervous and that’s why we decided to get out of state.” Christian and Ruth ended up going out of state and working the Texas market (San Antonio) for awhile. “Whatever it took to get the job done, we did it because we just didn’t feel there was enough room to make money in California.” Whereas others took a bath trying to force deals in a constricted market, PAGE 34 • 2012

Ruth and Chris used their accumulated knowledge and gut instincts to know when to get out. “I had already experienced the crash of the ‘’90s when I was fairly new in the business.” When asked how this crash compared to the others, Ruth replies: “The current crash was totally different. This crash was more like a tsunami, a totally different animal.” Ruth and Christian believe that, a key to understanding where we are today in the California real estate market is knowing what precipitated the recent market crash. “I think the artificially high prices were caused by government and political manipulation,” Ruth admits. “It’s an attempt to escalate prices so people will go out and refinance and build up lines of credit.” Christian says he remembers a time when “If you were breathing and not in prison, the banks would make you a loan and hand you the keys to a home.” Ruth and Chris believe the real estate industry nationwide continues to be manipulated by the powers that created all this. “The crash is being handled not as a quick elevator ride to the bottom, but more as an elevator ride with intermittent stops on various floors on the way to the bottom.” These expert investors say the market is still shaky and they caution novice rehabbers to be careful when buying for profit. “We still have a way to go. We’re almost at the bottom, but we are not there quite yet.” In the meantime, Christian and Ruth will continue to take advantage of the distressed California market by doing as many deals as they can before the market changes yet again. For more information on rehabbing with Christian Yepez and Ruth Ortiz, contact: 562-304-7787 or visit online www.CaliforniaHomesRepos.com

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^ŽƵƚŚtĞƐƚ ĂƐŚŇŽǁ ŝƐ ĐŽŵŵŝƩĞĚ ƚŽ ĚĞůŝǀĞƌŝŶŐ ŝŶǀĞƐƚŽƌƐ Ă ƚƵƌŶͲŬĞǇ ƐŽůƵƟŽŶ ŝŶ ƌĞĂů ĞƐƚĂƚĞ͘ South West Cashflow is committed to delivering tĞ ŚĞůƉ ĐƌĞĂƚĞ ƉĂƐƐŝǀĞ ĐĂƐŚ ŇŽǁ͕ ƚŚƵƐ investors a turn-key solution in real estate. ƐĞĐƵƌŝŶŐ ǇŽƵƌ ĮŶĂŶĐŝĂů ĨƌĞĞĚŽŵ͘ We help create passive cash flow, thus securing your financial freedom.

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market analysis

by Bonnie Lalso

ith the low cost of living, expanding finance and technology infrastructure and good climate, the Charlotte, North Carolina market is projected to have increased investment opportunities. Forbes magazine rated it as one of the top cities to stretch a paycheck, which means even more families will move into the area, increasing the amount of people looking to rent and purchase properties.

know what is.” They both have worked with a wide range of levels of experience: From the novice buying their first investment, to the seasoned investor buying their 100th property. They strive to make things as easy and informative as possible. Burrell and Franks say their goal is to educate buyers on their market and allow them to invest at their pace, knowing that once they see their returns, they will continue to buy additional rentals.

Alex Franks and Kevin Burrell

purchasing now will be selling for $5,000 to $10,000 more.” Investors should take note that Charlotte is currently number two in the nation for appreciation and Finish it with Finish it with thisthis line:line: 9th for growth. Charlotte is in the 5th consecutive month for Please add their contact info too:home appreciation. On Please add their contact info too: average, for the last five months “Charlotte has already madeLiquidator, the shift Carolina LLC. the city has gone up 1% per Carolina Liquidator, LLC. month. back into a retail market,” Burrell ex454 South Anderson Road plains. “Builders areSouth back inAnderson full blast, Road“ New developments are going up 454 BTC 507, literally everywhere,” according to Burit’s a great market right now. Values are BTC 507, Rock Hill, SC 29730 rell. As the city’s economy expands so not going down, and I can assure you Rock Hill, SC 29730 are the city’s greenway projects, which in a few months theToll sameFree homes you’re 1.800.754.2911 Toll Free 1.800.754.2911 helps residents and families experience well-rounded living spaces. Currently, the city of Charlotte has an extensive * 9th in the nation for growth trail system called the Carolina Thread * 2nd in the nation for appreciation Trail. It’s a regional trail network that * 6th for the most affordable cities connects 15 counties and more than * Ranks among Top 10 best places 2.3 million people. The volunteer and to live community partnerships have helped * Charlotte Airport under going a create over 93 miles of trail threading one billion dollar expansion open space, trail ways, riverbeds, and * 17th Largest City in the US. urban areas throughout the Carolina * Home of the Panthers, Charlotte region. Bobcats and the Nascar Hall With many number Fortune 500 of Fame companies making their business base * 2nd largest banking center in the in Charlotte and the amount of new US behind NY, and home to construction taking place, Charlotte Bank of America will continue to attract residents from * City has 11 Fortune 500 companies around the nation seeking a better life, * Ranked #1 Least Expensive City as well as investors from around the for Business Travel. nation in search of secure returns on * Ranked #1 for “Happy Young their investments. Professionals”

Charlotte, North Carolina: ” rolinaLiquidator.com Cash Flow with Southern Hospitality

3-325-1925 Due to the city’s existing growth trend, Charlotte was able to handle the downturn in the economy better than most other cities. It was is also rated as one of the fastest-growing cities in America, according to the Charlotte Observer, Forbes, and 24/7 Wall Street. Carolina Liquidators, a boutique real estate firm in Charlotte, is helping investors capitalize on the burgeoning local market. The owners, Alex Franks and Kevin Burrell,, have over 35 years combined experience in real estate and have been helping investors connect with the opportunities available in their area. “Charlotte is in the spotlight now, it used to be the investors’ hidden gem. But that’s no longer the case,” Burrell says, adding: “The secret is out, and the savvy investors are coming in from around the world.” Sales have quadrupled in the last few months for Carolina Liquidator. Burrell says the numbers speak volumes “If that’s not a sign that Charlotte is the new market that everyone is heading to, I don’t Realty411Guide.com

MARKET HIGHLIGHTS:

* Strong rental market, 40% of the population rents * Increasing Rental Demand with job and population growth

PAGE 36 • 2012

For more information about the Charlotte area market, please call Carolina Liquidators at: 803-325-195 or email: info@carolinaliquidator.com

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LISTING LISTING

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CAROLINA LIQUIDATOR has CAROLINA has ananinvestment investment opportunity that works for for everyone. everyone.

Wehave haveoptions options that that work work for for everyone We everyone from from the passive investor to the person looking to the passive investor to the person looking to aggressively build their portfolio. aggressively build their portfolio.

Carolina Liquidator and its affiliates are priCarolina Liquidator and its affiliates are primarily a real estate investment company that marily a real estate investment company that works with buying, selling and holding real esworks with buying, sellingcombined and holding real estate. With over 34 years experience tate. With 34 years combined in the Realover Estate and the Mortgageexperience industry inwethe Real Estate and the Mortgage industry are able to help you achieve your real estate we are able to help you achieve your real goals in ways that otherwise may not have estate been goals in ways that otherwise may not have possible. We specialize in the metropolitan been areas of Charlotte, NC; and Rock Hill, SC. possible. We specialize in the metropolitan areas of Charlotte, NC; and Rock Hill, SC. Carolina Liquidator, LLC. Our Rental Homes are Turnkey Ready by Strict Standards: Carolina LLC. 454 South Liquidator, Anderson Road Our Rental Homes are Turnkey Ready by Strict Standards: BTC 454 507, South Anderson Rock Hill, SC Road 29730 1. New heating and air system with 10 year warranty BTC 507, Rock Hill, SC 29730 Toll Free 1.800.754.2911 1.2.New and airwith system with 10 year warranty Newheating Water Heater 5-year warranty Toll Free 1.800.754.2911 2.3.New Heater withfridge, 5-yeardishwasher, warranty microwave with 5 year warranties NewWater appliances, stove, 3.4.New appliances, dishwasher, microwave with 5and year warranties Tile first floor of stove, home,fridge, including living area, kitchen, baths laundry rooms. 4.5.Tile first floor of home,exterior, home, including living area, kitchen, laundry rooms. Paint interior if needed We strive baths to buildand real estate portfolios Replace plumbing and electricalifasneeded needed 5.6.Paint interior of home,exterior, We portfolios one strive house toat build a timerealforestate our clients! New carpeting in the 6.7.Replace plumbing andbedrooms electrical as needed one house at a time for our clients! Tile or granite counter tops 7.8.New carpeting in the bedrooms MISC, door stoppers, 8.9.Tile or granite countersmoke tops detectors, light and coversdetecetc. 9. MISC, doorswitches stoppers, smoke 10tors, Newlight lighting and/or ceiling fans switches and covers etc. 10 New lighting and/or ceiling fans ** Complete turnkey properties set for retail standards **

** Complete turnkey properties set for retail standards **

www.carolinaliquidator.com www.carolinaliquidator.com

Market Your Self Storage Facility at

Maximum Velocity! by Kevin Rollings, CSSM©

Wow, you have the keys! NOW WHAT?

ing? Flyers, newspapers and signs. •Community sponsorship; i.e., churches, community sports, parades...

You are at YOUR self storage facility. Even though occupancy is lower than you want it to be, suddenly you feel your excitement level building. Why? This is your dream; you are an entrepreneur now. You see the future, your dream, and are ready to make it happen. What does the average renter think about when they think self storage? Downsizing? De-clutter? Too much stuff, but want to keep it? Think about how often you see self storage facilities. It must be a busy business with people storing their treasures, because self storage is everywhere. It would be nice if those of us in self storage had a magical self storage wand to wave and “Voila, we have 100% occupancy!”. Unfortunately the average is 76% occupancy. Why? Because we do not use everything available to us. So, how do I promote my facility? What will make my place stand out and above the rest? Owning or managing a self storage facility will allow you to get to know the customer service industry up and close and personal. BUT, it goes beyond that!!!

•Media: do you have a Facebook or Twitter account? Air spot on the radio, TV news commercial? •Your current clients: Did you let them know that there was a change in management, have you asked them to tell friends? Have you let them know you appreciate them? •Are you promoting it: car wash, free dump day, customer appreciation day? Typically when visiting a self storage unit facility, you will be greeted by the self storage manager or owner. First impressions are always the BEST! Customer service: That’s a huge key to success in this industry. We go through a checklist in our training, it goes something like this: •Find out the needs: large vs. small, long term vs. short term •Why do they need self storage? Then appeal to them on that level: moving, business, divorce, downsizing, college student.

How do you spread the word about your facility? Do you do any of these?

•Have you told them about the discounts, perks and added advantages you offer? 24 hour security, easy rental payment, temperature controlled units.

•What is your web presence? Do you have a website? Is it accurate? Does it do what you want? Have you tried local advertisRealty411Guide.com

•Don’t forget to tell them about how they can save money: referrals, upgrading, first month free, savings for auto pay. •Let them know about extended services: need a truck? How about a business center? Boxes? No problem we offer those here. Let them know everything that they can do in your one stop location.

PAGE 38 • 2012

•Have them fill out a visitor’s card and the show them around, let them know the units available in the size they want. **Extra tip: follow up with them if they leave and reach out asking if they found what they needed. If not you are still there to help. You can bet that “in the day of the life” of a self storage owner or manager, it will rarely be a dull one. It takes patience and the outstanding ability to communicate well with both agencies, your staff and your tenants. Your potential hinges on happy tenants. With the right tools and the right education or coaching, your experience as a Self Storage Owner or Manager can be the start of a rewarding career in the self storage industry. Kevin Rollings, CSSM© is the owner and CEO of Alcatraz Storage, Hoosiers Self Storage, and Self Storage Facility Management. Whatever the situation is Kevin and his team have the answers! Visit online at: www.selfstoragefacilitymanagement.com and get your 30 minute evaluation FREE!

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Do YOU Need a LAND TRUST?

by Randy Hughes Mr. Land Trust

hat is a land trust? Why do I need to use land trusts? Both are very important questions. But let’s be straight forward with this article. You have worked very hard to accumulate property for investment. You put yourself, you family, and your children’s future at risk investing in real estate. Do you realize that one false move with just one of your properties can cause you to lose all of your hard earned investments? One careless tenant can be injured on your property and the world will fall all around you. Ask yourself the following question “Can you control what is happening in all of your properties right now – this minute?” Is it possible that a careless tenant can be injured or die tonight in your rental property? This happens every day in America. You need a land trust for each property. You need to “insulate” each property from Realty411Guide.com

the others. You need the knowledge that your attorney doesn’t have on this asset preserving technique. Why work so hard to have one uncontrollable tenant event cause you to lose all of your properties? Come on! You are working very hard to build your asset portfolio. Why lose it now? Land Trusts are the first line of defense to insulate you from the millions of lawsuits happening in America every year. The most dangerous terrorist of the 21st century that you need to fear is the contingency fee lawyer! Do you want protection from the contingency fee lawyer or would you rather have a bare knuckle fight with him without any defense guards in place? You have probably noticed that it is VERY difficult to find any information about Land Trusts and how they operate. That is why people from all over the United States come to my website to find accurate information about Land Trusts. Most attorneys do not know how to set up and administer a Land Trust (they receive only three hours…if any, of trust education in law school). Many attorneys have purchased my home study course or attended my seminars to educate themselves on land trust law.

BEÊTHEÊBANK.

SAFETY.ÊSECURITY.ÊDOUBLEÊDIGITÊRETURNS. EarnÊconsistent,ÊpassiveÊincomeÊinÊ yourÊportfolioÊutilizingÊPRIVATE LOANSÊandÊTAX LIENS. Ê OurÊfreeÊgiftÊtoÊyou:ÊTheÊMMGÊCapitalÊ GuideÊtoÊTrustÊDeedÊInvesting Ê LogÊontoÊMMGInvestors.comÊforÊ moreÊinformation.

Continued on pg. 60

PAGE 39 • 2012

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by Lamarr Baxter

ecent statics show that up to 10,000 Baby Boomers per day will turn 65 for the next 19 years. Sadly, up to 80% of the that population either lack a retirement account or have an underfunded retirement account to sustain them in their retirement years. Part of this problem is attributed to the economic downturn that occurred in 2008, which is still haunting many of us in the present. Over the past 50 years the population has been taught to fund an IRA or 401(k) along with other miscellaneous retirement related accounts and all that would be fine at the age of retirement. Another segment of the population had depended on the equity in their real estate to serve as their primary, additional and/or supplemental retirement savings vehicle to serve as their income source in retirement. Unfortunately for many, that plan is no longer a viable plan based on past retirement planning practices with declining returns in the stock market and declining real estate values resulting in negative equity for a vast majority of the population whom purchased properties prior to the 2008 economic meltdown. This can all be reversed by

by the crash, it could have resulted in losses not as great as those realized in having all their money in the stock market. While I believe stocks, bonds, mutual funds, money market accounts should be a part of your retirement portfolio, others alternative asset classes should also be included such as: • Real Estate • Secured Private Notes • Private Placements/Private Shares • Precious Metals • Business Investments • Secured Business Loans • Accounts Receivable Factoring • Seed Capital For Starting • Your Own Business The above listed investment options are just some of many options available to you using a self directed IRA. The list also reflects the type of investments that are in demand for capital that could grow your retirement accounts faster and more securely than some of the traditional investments in which you have invested in the past. With a self-directed IRA, your only two investment restrictions as it relates to asset classes are life insurance and collectibles. Outside those two investment class restrictions, you have almost unlimited investment options available to you using a selfdirected IRA. It’s almost a certainty taxes will increase in 2013 based on the current economic affairs of our country. Therefore, anticipate higher income taxes and capital gains taxes on investment in 2013. In order to reduce and/or avoid taxation in these two areas would be to consider establish a self-directed IRA, in particular a self-directed ROTH IRA in 2012. Making your investments with a self-directed IRA funds versus private capital allows you the ability to defer taxes on your gains or not pay taxes at all on the gains with a selfdirected ROTH IRA. The rules are as follows for avoiding taxation on growth within a self-directed ROTH IRA: The ROTH account must have been established and funded with for at least (5) years; The account holder must be 59 ½ or

The ability to TRULY diversify your retirement portfolio is key to growing and securing your retirement nest egg. incorporating the use of a self directed IRA into your retirement planning strategy by allowing you to take control of your retirement funds, choosing a wider array of alternative investment options outside of the stock market and having the ability to TRULY diversify your investment portfolio. The ability to TRULY diversify your retirement portfolio is key to growing and securing your retirement nest egg. The historic rule for a sound investment strategy has always been “diversify”. Unfortunately, many of us were not diverse enough in 2008 when the stock market crashed. The reason being is that ALL of your funds were invested in a single investment engine, the stock market. Imagine if you had the opportunity to invest in other asset classes outside the stock market that weren’t affected Realty411Guide.com

PAGE 40 • 2012

Continued on pg. 52

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It’s Your Future. Take Control. Open an IRA Account online now.

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Let us teach you how!

BRIAN DAVIS

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BRYAN CALDERON

Director of Business Development (Orange County/SOCAL) Irvine Towers ϭϴϭϬϬ sŽŶ <ĂƌŵĂŶ ǀĞ͕͘ ^ƚĞ͘ ϴϱϬ Irvine, CA 92612 Bus (949) 705-4554 Cell (949) 233-5866 Website: ŚƩƉ͗ͬͬǁǁǁ͘ĂĐĐƵƉůĂŶ͘ŶĞƚͬ^ ͬŝŶĚĞǆ͘Śƚŵ EFax (949) 242-2730 ŵĂŝů͗ďƌǇĂŶΛĂĐĐƵƉůĂŶ͘ŶĞƚ Website: ŚƩƉ͗ͬͬǁǁǁ͘ĂĐĐƵƉůĂŶ͘ŶĞƚͬK ͬŝŶĚĞǆ͘Śƚŵ

LAMARR BAXTER

Director of Business Development (Northern California) 9245 Laguna Springs Dr. #200 Elk Grove, CA. 95758 Phone: (916) 509-7150 Direct: (916) 708-0235 Fax: (916) 405-4000 Email: lamarrbaxter@accuplan.net Website: ŚƩƉ͗ͬͬǁǁǁ͘ĂĐĐƵƉůĂŶ͘ŶĞƚͬŶŽƌĐĂůͬŝŶĚĞǆ͘Śƚŵ

Mixing Business with Pleasure Dr. Michael Newton discovers a tropical paradise with a fantastic ROI

which is essential for any good investment. He doesn’t just rely on Google Earth, he physically goes to view each investment before he buys it (key word: before!). His most recent acquisition even took him outside of our nation’s borders . It is an investment opportunity few years ago, Michael Newton that excited him so much that he contacted our publicaarrived at our magazine’s investtion with an urgency to share it with our readers. ment mixer held in West Los Let me set the stage: Imagine having an ocean-front Angles. He was eager to learn home with a private dock leading you to the pristine and sparkall he could about real estate and was already way ahead of the ing Caribbean Ocean. Imagine feeling a cool breeze through class due to his emphasis and years of real estate education. your hair and being able to hear the seagulls and wind sing be“ My parents have owned rental property since I was a teenager,” admits Newton, “but the beginning of my own journey because there is silence in the air. Imagine having a beach just for gan with my company 401(k) administrator recommending two you and your loved ones to enjoy without having to worry about privacy or security? books, The Millionaire Next Door and Rich Dad Poor Dad.” While ocean-front property is the U.S. is a luxury that only Newton says that Rich Dad Poor Dad opened his eyes to celebrities and CEOs can afford, tranquil and clean beach living another way of thinking that he had no exposure to prior. can be a reality for the rest of us in beautiful Belize. After his financial awakening, Newton was eager to take ac“Belize is gorgeous, fun and friendly to foreigners,” Newton tion. He purchased his first rental, a single family home, in North Las Vegas. Shortly after that he purchased three rental homes in says, adding, “It boasts white sandy beaches, turquoise 80 degree Kansas City, MO. Next, he closed on three more rental homes in water, rain forests, Mayan ruins, and has the largest living barrier reef in the world!” Dallas. Surprisingly, Belize is closer to most of the U.S. than Hawaii, “All three Dallas homes are brand new construction rentals and it is the only English speaking country in Latin America. with great terms, 5% down and 95% financing,” he explains. Newton finds great deals because he focuses on research,

Continued on pg. 55

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strategy

19 Cents on the Dollar Inside a Note Deal with Tony Martinez, President of Asset Ventures, LLC

otes provide multiple benefits for investors, the key is you can buy non-performing notes for pennies on the dollar. In addition, Tony Martinez, president of Asset Ventures LLC, says notes offer many more options to create a positive return.

“We want to make sure our investors are protected,” says the founder and president who has over 18 years in the industry. He adds: “We have multiple avenues for a successful investment. That’s one of the advantages of investing in notes as opposed to investing in properties. When you invest in properties, you’re limited to the options of the marketplace. With notes, you have exit strategies.” Martinez entered the industry as a builder back in 1989. During his early years in the profession (dealing with a lot of REOs and short sales) he became particularly aware of the banking industry’s desire to rid itself of delinquent properties through the short sales arena. As he became more knowledgeable of the process, principally by acquiring short sales notes (non-performing or delinquent notes) directly from banks, he also came to realize how he could help people retain their properties, at the same time. Asset Ventures are negotiating about 400 notes and have an additional 700 notes in the pipeline. Their goal is to acquire about 100 notes a month and Martinez says they’re on pace to meet or exceed that goal for the current year. Based in Redondo Beach, Calif., Asset Ventures has three primary responsibilities: resolution (helping owners stay in their house); acquisitions (helping investors make a positive cash flow return on their investments); and teaching and mentoring in the industry. The notes that Asset Realty411Guide.com

by Isaac Newkirk III

Ventures selects go through rigourous research. “What we do in the research phase is we have contact with the banks and lenders and they’ll give us a pool of notes that’s limited to address, the amount of the loan, the fair market value, and just a limited amount of information,” Martinez explains. “Then we have to do our due diligence, our data mining. Every note is then researched against a one hundred point checklist to see if we want to purchase it and move on to the next level.” Each pool of notes obtained by Asset Ventures from their network of banks involves anywhere from 50 to 500 notes. The pool would be packaged with very similar types of notes and an initial assessment would be done on a small sample (say, 25 to 50 out of 500) to get a feel for that particular pool. Asset Ventures has specialized researchers who perform this task. Tony says that “Researchers don’t do any analyzing, they just gather the information pursuant to the checklist. Then it goes to the next level where management analyzes the data. They go through about 500 files in a week.” We asked Martinez to show us the inside mechanics of one of his recent deals. Our case study involves the Arrezo Deal. Begun in February of this year, the Arrezo Deal was completed in mid-August. Martinez says “Once we completed the research phase of the deal, we began the acquisition process. We looked at the numbers on the Arrezo Deal; we bought it for 19 cents on the dollar. It was a non-performing second mortgage. The biggest positive, when we bought this was – combined with the first [mortPAGE 43 • 2012

gage] – we had equity in it. The Arrezo Deal had a second lien with an unpaid balance of $86,000. We paid $9,600 for it. When the owner stops paying on the loan, the bank has Tony Martinez delinquent debt. They benefit from selling it off. As a non-performing or toxic debt, the bank would package it up and sell it to someone like myself for pennies on the dollar because it doesn’t have face value to them anymore.” Of utmost importance, Martinez believes that it must be understood that “In the acquisition phase, we don’t buy the property, we buy the paper. So we’re the bank now. What we do is, we’re buying the collateral paper, which is a bank note. So, if it was owned by Chase or GMAC or Wells Fargo for example, it’s now owned by us and we’re the bank. We don’t necessarily need to take ownership of the property but we’re still going to make money because they’re obligated to pay us. So we’ll go to the borrower and create options for them to get back on their feet. This is how we help people while creating positive returns for our investors. Where they may have paid $500 a month before, they may now pay us $200 a month. In the Arrezo Deal we actually settled the note for the homeowner at $22,000. So they paid us $22,500 and we wiped away $80,000 worth of debt. The investor just made $13,000 profit, which equates to 235 percent return on their money. Everybody wins.” And that is the main goal for Asset Ventures — that the investor and also the homeowner are successful. For information, visit Asset Ventures online at: www.assetventuresllc.com

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Straight Talk with the

Investment Property Experts By Stephanie B. Mojica

n the midst of one of the most economically challenged times in history, the Phoenix, Arizona real estate market is helping some investors yield significant financial returns. As people shift from placing stocks, bonds, and certificates Daniel Butterfield of deposits into their 401(K)s or IRAs for retirement, they often need professional expertise. That’s where a company such as AZ Investment Property Experts, or IPX, comes in. The firm, owned by seasoned real estate investors and business entrepreneurs Steve Taplin and Daniel Butterfield, has been helping seemingly average people earn an 18 percent or higher return on investment. In a supposedly down economy, such yields are nothing short of remarkable.

Butterfield, who has more than 15 years of real estate investment experience, says education for investors is now even more important than ever. He and Taplin not only hold complimentary monthly events for current and prospective clients, but also they co-host a popular weekly talk radio show, “Real Estate – STRAIGHT TALK.” The program airs on Money Radio 1510 AM, which is Arizona’s premier business and financial talk radio channel. Also, the network’s management has publicly lauded Butterfield and Taplin as leading real estate investment experts. “We feel an educated investor is a knowledgeable investor, which also sets accurate and obtainable expectations,” ButterRealty411Guide.com

field says. “We are seeing a record number of investors use their 401(k), IRA and Roth to invest into single family home real estate. Many of these investors have never purchased real estate before, thus they are looking for a full service turn-key provider to assist them.” But even investing in one or two single-family properties is not a foolproof proposition, Butterfield warns. “Most investors are scared of the Steve Taplin stock market due to the volatility, but they are also not educated enough to invest in real estate,” Butterfield says. “It is very difficult to find the right type of real estate deals in this current economic situation.” Some beginning real estate investors hire a property management company to assist with matters such as collecting rent and arranging for repairs. However, most beginning investors do not have an “exit strategy” planned, which eventually gets them into financial trouble, according to Butterfield. “Try to focus your efforts on making the least amount of mistakes,” Butterfield says. “The best way to do this is to work with a turn-key professional that can help you identify, buy, renovate, rent and even sell your first real estate investment.” At IPX, which has team members in Phoenix as well as the Philippines, experienced investors work closely with all clients. Some clients are not interested in a proactive role, but Butterfield and Taplin provide plenty of opportunities to turn novice investors into experts in their own right. Phoenix is certainly not the only hot spot for real estate investments in the United States, but it has many advantages over other geographic locations. Single-family investment real estate in Phoenix generates a minimum of 8 to 12 percent cash-on-cash returns during the rental period and about 20 to 30 percent profit when the investor sells the house, according to Butterfield. Also, Phoenix has mostly attractive neighborhoods and low rental vacancy rates. “Granted there are cities such as Memphis that could potentially yield similar returns but they also have extremely high vacancy rates and these types of rental neighborhoods do not have a high potential for resale,” Butterfield says. “Investors may certainly find nicer homes in Venice Beach, however the cashon-cash returns are extremely low or even negative in some cases with financing, thus as an investor you would be relying on pure speculation to make a return on your investment.” To schedule a complimentary investment consultation with IPX, visit www.ipxcompanies.com or call (602) 254-6244.

PAGE 44 • 2012

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resources built. It’s imperative that you go to networking events and expand your relationship base. Real estate is a team sport so if you do not go network you cannot build your team.

hen dealing with real estate investments, one must go through many steps of due diligence. Here are my top 10 keys to a successful real estate investing. (1) EDUCATION - If you are not experienced in real estate investments the very first thing you should do is to get educated. Take the time to

(4) BUILDING YOUR TEAM – In order to make your investments work you must build

(6) PROPERTY MANAGEMENT – Property management can make or break your investment. If you do not have a competent property manager that actually cares about your investment and your success you will have a losing investment. We went through about five different property management companies before finally starting our own company and bringing the management in-house. Most managers are bad at some of the basic management functions such as accounting, rent collection, tenanting, leasing and background

10 Keys for Successful Investments Mathew Owens, CPA teaches us the tricks of the trade. Learn tips that helped this California investor escape from Corporate America by investing in real estate. find out what all of the risks are in the investment type you are interested in. Find others that can help educate you on the investment type, which are not involved in the transaction you are doing specifically, so there is no conflict of interest. Buy books, tapes, and go to multiple seminars in order to continue your education, and don’t buy the $5,000 plus books and tapes sets from the gurus. Buy your educational material from the bookstore and save thousands of dollars. (2) GOAL SETTING – If you do not have a goal lined out for your real estate investments how do you plan on getting there? Most investors buy one property, or invest based on emotion rather than having a set goal in mind. For example, you could have a goal of obtaining $30,000 per month in passive rental income from your investments through buying single family rental homes and apartment buildings. Your goals should be clearly defined and should include protections and risk mitigation techniques to make sure it is a stable viable plan that can be obtained. (3) BUILDING YOUR RESOURCES– You WILL NOT become a successful real estate investor without resources. In real estate, resources include capital investors, property leads, team members and much more. For this you must go to networking events if you do not already have your Realty411Guide.com

your team. Some of the team members you need are real estate agents, brokers and bankers, private lenders, appraisers, CPAs, attorneys, affiliates, inspectors, property managers and contractors. There are much more but it’s pretty impossible to name them all. It takes quite a bit of time to develop your team and to make sure they can be relied upon. I have found that building a team is the most important aspect of investing other than your due diligence on the investment itself.

checks, repair calls and taking care of the tenant. By far the most important and biggest problem is communication with the owner of the property. Communication is crucial because without communication the investor cannot make decisions regarding the investment and lack control. Property management also needs to be structured based on performance, meaning they get paid if it’s occupied only, not when it’s vacant. Incentives need to be in place to optimize performance.

(5) DUE DILIGENCE – Before investing in any real estate asset your due diligence is crucial. You need to analyze the market you’re investing in, the market timing relative to that market, the specific neighborhood, the market value of the investment, the cash flow it produces, the rental income it should bring in, all of the expenses related to the investment and much more. Inspections should be done as well as a review of all of the backup documentation such as leases and contracts. Think like an auditor, review all of the backup information provided by the seller and verify it with an outside source as much as possible. I hear horror stories all the time about how people lost money in real estate. After inquiring as to what happened I can say that 99% of the time the investor did not do or know how to do the right due diligence on the investment in the first place.

(7) MARKETING – If you do not know how to market for property, capital, property sales and resources, you will not be successful in real estate. Marketing and sales is one of the most important parts of any business. During economic problems and recessions most companies cut back on marketing, that’s when it’s most important to increase your marketing efforts. If there are fewer investors, buyers, and resources available because of the economy, there is more competition going after your resources. So in order to attract those resources before your competition, you have to market more. Marketing and sales is a business all in itself so getting educated on marketing strategies is imperative to your success. When most people think marketing they think of posting classified ads, sending out mailers, coupons, bill boards > Continued on pg. 55

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wo years ago, a seasoned investor named Ben Rao envisioned starting a community to help people share knowledge and get better pricing with major retailers. With that mission as a foundation Community Buying Group (CBG) was born. The organization of nearly 10,000 members now offers individuals the ability to buy like larger companies. Through relationships with their Premier Supplier Network, they offer special incentives and pricing on products that members use every day. In addition to improved customer service and pricing from their Supplier Network, members also gain visibility with other investors who may be able to use their products or services. Their

value to their members. Group organizers are often spread so thin running their own business in addition to running an i n v e s t m e n t g r o u p or meetings that it becomes difficult to grow their groups. Our approach is that Ben Rao if we help everyone succeed, our success will follow and it has proven to be true. Q: Are you an investor as well, tell us about your experience in this field? A: I have been a real estate investor for over 10 years, flipping properties in addi-

professionals in their community or across the country. Q: How many clubs are a part of Community Buying Group thus far? A: We have clubs or associations in almost every state and have grown to over 10,000 members over the last 18 months. We have had double-digit growth for the last six months straight. By the end of 2012 we expect to have over 15,000 members. Our long-term goal is to continue to add more suppliers and grow the membership to over 50,000 members in the next 24 months. Q: Tell us how our readers can receive awesome discounts from the CBG Suppliers like Lowe’s, Sherwin-Williams, Sears and other CBG Suppliers? A: They can join a real estate investment

Community CommunityBuying BuyingGroup GroupHelps HelpsInvestors Investors Network, Network,Plus PlusSave SaveTime Timeand andMoney Money membership is made up of contractors, property owners, investors, landlords and property management companies. We met Rao during our Mid-West Expo in Kansas City, Missouri, and had the opportunity to interview him about CBG. Q: When did you decide to organize Community Buying Group? A: I had the idea about four years ago, but it really didn’t come to fruition until 2010. I am a real estate investor and a landlord and started CBG because I believe we can help a huge number of investors and group organizers do business better, and build a better bottom line by having access to the tools and buying power that the strength of our numbers deserves. Q: Why did you see a need in the marketplace for this? A: To help the small to medium real estate investor, property manager or landlord, (small business owner) have access to programs to save them money on material they were buying everyday and gain exposure to new ideas and products and to help them do business more efficiently and to network and share information with other real estate investor and landlords. Our second objective is to help real estate investor groups and landlord associations grow their membership by providing more Realty411Guide.com

tional to managing and owning 40 residential rental properties. I really enjoy helping other people getting into the business and passing on my experience to save them time and money. Q: Are you a long-standing member of any real estate groups? A: I have been a member of NARPM and National REIA for years as well as serving on the board of Kansas City Investment Group (KCIG), a member of Mid-America Association of Real Estate Investors and currently on the Eastern Jackson County Landlord Association Board. Q: What are the benefits investors receives for being a member of Community Buying Group? A: The obvious answer is saving money on materials they are purchasing for a real estate project. In addition to saving money on materials and gaining exposure to new products, services and ideas, our members also have the opportunity to get connected to an entire community of real estate investors, landlord, property managers and rehabbers/contractors. We want every member to feel like there is someone on the other end of that phone that cares and that can help them solve a problem, help them do business better or get them introduced to other like-minded PAGE 48 • 2012

group, landlord association or national trade organization that participates in the CBG Program or they can join as an individual. We always encourage people to join a local participating group as they will get the benefits of the CBG program and the ability to connect with other like-minded professionals for networking and on-going education. Please contact us to find a group in your area or if you are interested in signing your organization up with a group membership. Our customer service representatives are available to personally answer questions or guide members to maximize their membership benefits by calling 816-282-6310 x 202. A good place to start would be to look at our website: www. communitybuyinggroup.com or to contact me at: brao@communitybuyinggroup.com. Q: What is your vision for the real estate investment industry? My vision is to share as much information as we can with each other and move the industry forward together. It’s a giant market place and there is so much opportunity from wholesale, retail, rehab, education, technology and legislation. If industry entrepreneurs, leaders, groups and associations would work together, it would be amazing what we would accomplish. — article by Lori Peebles

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strategy

Analyze the Deal - A Case Study in Strategy { Chris Dannenfeldt Discusses One of His Most Extensive Rehabs }

With thousands of transactions under his belt,

5. Exit Strategy - Please tell us specifics of the exit strategy as well as what you learned from this deal? We managed the building for the owner and then sold all of the eight condo units to the tenants for a $23,000 profit on each unit. This is a standard project for us. We buy and rehab the property and then sell to an investor. We also manage for the landlord/owner and then sell to the tenants for a capital gain for the investor. Then, we service the owner financed loans for the investor and then manage the process for the credit rehab and drive the process to get the

1. Research Phase - How you came across your deal? We purchased over 1,000 properties from the city and we bought this particular multifamily building for only $2,500. We finished the vacant project and then sold it to an investor. 2. Acquisition Phase - What were the terms of the deal? We purchased all the properties with all cash. 3. Rehab/Maintenance - Was the property rehabbed? The property underwent a complete rehab, which included all new plumbing, electrical, new kitchens, baths, sheetrock, lighting, flooring, and windows. Essentially everything was done to the property to make it livable. 4. Management - How long was the property held? Was it managed in-house or was the management hired? We are still managing the building for the new owner.

new owners (owner financed buyers) able to get a traditional bank mortgage. Seventy percent of our tenants qualify for and exercise their option to purchase. We have had 100% success in getting these buyers qualified for a refinance loan to retrieve our investors their cash outlay back, plus the profit from this sale. Our goal is to have the investor out within a five year period. 6. What returns did the investor make? The client made a guaranteed 10% cash on cash return monthly. He purchased the property for $560,000 and we sold it for him for $760,000, a profit of $200,000. In addition, he made a guaranteed income of $56,000 per year, net after all expenses, also guaranteed during his term of ownership as the landlord. â&#x20AC;&#x201D; article by Lori Peebles

Chris Dannenfeldt has undertaken many challenging deals, but this by far was one of the most extensive rehab projects of his career. Dannenfeldt represented the buyer in acquiring this decrepit multifamily building for the outlandish price of $2,500! Next, he supervised his rehab team to complete a miraculous transformation. Dannenfeldt turned this neglected eyesore into a trophy property worthy of any investorâ&#x20AC;&#x2122;s portfolio. Dannenfeldt recently discussed the details of this incredible transaction.

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It’s Hard to Make a Living, But It’s Easy to Build Wealth, pg. 9

Why Should You Consider an IRA? pg. 40

older to withdraw gains without penalty nor taxes Many may not feel it’s worth establishing a ROTH because of the low contribution limits of $5k/$6K and/or may not meet the requirements to contribute based on too much income. Keep in mind, you are able to convert from your tax deferred IRA, 401K or retirement plans to a ROTH. There are no income restrictions on a conversion, full or partial and you are the amount you are allowed to convert has no limits. So take advantage of these tax advantages before they become subject to change in the future. The objective of using a self-directed IRA is to take more control over your investment choices and invest in what you know and understand. The use of this investment tool requires the necessary due diligence to be performed on any investment you choose. Arm yourselves with the required information and education for the investment choices you choose to prevent the potential for losses. Remember, this is your retirement account we’re talking about here, so become diligent and proactive to protect it. It’s a Lady’s World, pg. 33

“Our mission was to create an environment in which our members can build camaraderie, share tested investment techniques, and promote responsible investing through networking, and referral-based partnerships,” Willois says. The price of admission to their live club held on the last Tuesday of every month is $20, however members can receive a $5 discount if they pre-pay online. The Lady Landlords of San Diego also educate their members via seminars, workshops and live presentations. If a buy-andhold strategy is your game or you’re curious about opportunities in other states, then it’s time to step into the pink domain of the Lady Landlords of San Diego. CLUB DETAILS: Lady Landlords of San Diego When: Last Tuesday of every month Location : Holiday Inn 3805 Murphy Canyon Road San Diego, Calif., 92123 Realty411Guide.com

n e e d e d t o invest. They were busy years and we were handsomely and surprisingly rewarded w h e n w e managed to buy a home with no money down in one of the most high-priced areas of the nation. How? We found a seller willing to carry a portion of the note and we used private money to get into the deal. Since we didn’t need any of our own funds to buy our home, we used our nest egg to purchase a small apartment building in 1994. It was then that everything began to change. Within a few short years, our net worth skyrocketed. Things were appreciating steadily and the equity in the properties was rising much faster than our ability to earn a paycheck by working in our professions. This is the beauty of real estate. A property can appreciate either due to market conditions or by adding value through a rehab. Profits can come quickly, much faster than a person’s ability to “earn” a living. The average national salary in America is $41,673.83, according to U.S. Social Security administration. Having a job can provide for the basics just fine, but what quality of life can that type of salary provide for an average family of four? In the real estate world, $40,000 is not an astronomical number. One can do a deal and make that much per transaction either by buying and holding for cash flow, or buying and flipping for profit. I even personally know someone who made $30,000 on one wholesale deal, and she did not even own title to the property! One of my favorite deals was when my husband and I purchased a small multifamily property in Hawthorne, Calif., a bluecollar area of Los Angeles. The market was really hot in 2004, and it was tough getting the deal because there were five other offers, but I wrote a personal letter to the seller assuring him that I would make the best landlord to take over his building and he sold it to us, even though another offer came in higher. Upon purchasing the property, we did slight renovations, PAGE 52 • 2012

one unit at a time. Nothing major, just new carpet, new paint a n d I think we changed the cabinets in the kitchen of one unit. The most challenging part was managing the property, which I chose to do myself, but we just had the typical leaky faucet issues. About one year and half into the deal, we decided to cash out. We purchased it for $425,000 and in 18 months sold it for $659,000. A gross profit of $234,000! How many people can make that amount of money punching a clock for 18 months? And what do they have to go through to “earn” that money? Get up at the crack of dawn, commute hours to work, put up with bad tempers, bad attitudes, constant deadlines and job stress. On the other hand, we created wealth by simply buying, managing, upgrading, then selling an asset. Can it get any easier than that? This is exactly why I get so excited about sharing the benefits of real estate with people because wealth can be created much faster and easier than by “working” at a given profession. After being in the work force for 20 plus years now, I’ve come to realize that more wealth can be created by focusing time and energy into finding and buying properties than by climbing the corporate ladder. Buying one property a year, or every few years, can really make a difference in your life and in the legacy you leave behind. The time has never been better to get started or to expand your portfolio. Never have we had a combination of so many distressed properties to choose from coupled with the low interest rates of long-term financing. The moves you make now can determine your family’s future. So don’t make excuses about how busy you are. Be sure to take time off from “work” to concentrate on building “wealth”. Email the publisher at: pliagas@msn.com or connect with Linda Pliagas at: www.facebook.com/lindapliagas

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901.598.9458 email:GosserBighaus@guildmortgage.net 901.598.9458 • Ph. steveb@guildmortgage.net Address:3500-188th Street SW,#121,Lynnwood,WA 98037 3500-188th Street SW, #121, Lynnwood, WA 98037 *The information contained herein shall not be Stephen Bighaus construed as a guarantee of a loan approval. Loan Officer All loan approvals subject to Underwriter Individual MLSare#112825 approval. Equal Housing Lender. Company TN MLO-57558 NMLS #3274. Branch NMLS#37801. WA Branch WA MLO-11285 CL-37801. TN Branch 4470-4315

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10 Keys for Successful Investments, pg. 46

Mixing Business with Pleasure, pg. 42

more but the most important and under utilized marketing strategy is internet marketing. Internet marketing is revolutionizing the way most companies advertise. If you do not understand it or start to learn about internet marketing, you will not gain the market share you deserve and will not be as successful — 85% of buyers go online first for investment information. It is an online world whether you know about it or not.

obtain additional umbrella insurance or put your assets into a proper entity so that you are not liable in frivolous lawsuits. Generally for tax purposes you want to keep passive investments (investments like rental real estate that produce income you do not work for) in an LLC and active investments (investments you actively work for) in an S-Corporation or similar entity. Please consult your individual tax advisor to go over your specific situation as it is impossible for (8) TREAT YOUR INVEST- this advice to relate to every MENTS AS A BUSINESS situation. Also be sure to keep – Most investors buy one yourself separate financially real estate investment and from the investment or entity do not fully utilize all of its you hold the investments in so capabilities from a business that you do not pierce the corperspective. If you own one porate veil. If you commingle property or 50 plus properties your funds there is a very real you should be treating it as a possibility that in court your business. Be sure to keep track legal entity protection that of ALL of your expenses reyou worked so hard to setup is lated to the investment, the due worthless. diligence you did, travel costs you incurred, etc., so that you (10) INVESTING IN SUScan get a deduction for those TAINABLE INVESTMENT items against income from TYPES – Invest in asset other sources. These types of types and real estate investexpenses can happen annuments that are sustainable in ally and a percentage of your the long run. Look closely at personal expenses can be used the cash flow included in the as a tax loophole in order to de- investment. If it’s negative, duct more against your active unless you are flipping, do not income from your job. Your invest. Flipping can be much biggest expense in life is your more dangerous than investtaxes. It is the government’s ing for cash flow because you job to find more creative ways typically have a payment on to tax us. It is our job to find a flip investment that is not creative ways to legally not pay covered fully by the rental taxes. If you are not winning income. If you get stuck with against the government, start the property, you find yourself to educate yourself on key tax in a negative cash flow situasaving strategies. tion and you can only sustain it as long as you have money in (9) LEGAL PROTECTION the bank to make that payment. AND TAX STRUCTURING Many people lose a lot of mon– It is crucial to protect yourey trying to flip property, not self from financial predators. knowing fully what they are There are people out there that doing and the risk they are takwill sue anyone they possibly Continued on pg. 61 can. It’s really important to

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Belize is an undiscovered paradise and as investors we know how important it is to be the first one to tap into a great deal. Newton wants to share what he’s discovered. “Just south of San Pedro on Ambergris Caye, there is a scenic and affordable 400 plus lot development project . The development is the largest and first full gated community in all of Belize and easily accessible from the airport in San Pedro. Each lot is fully developed and ready for construction. Each one comes * Only English-speaking country with its own private in Latin America dock, water access to * U.S. Dollars are readily the Caribbean Sea and accepted parking spots for golf * Closer than Hawaii from most carts.” U.S. cities It sounds heavenly * Fee simple title, real estate but does it make finanownership is exactly like in the cial sense? Newton, US and based on British who is an oral and maxcommon law illofacial surgeon, thinks * Belize has strong privacy bank so. “There is no debt ing and asset protection laws on the developed land * Rental income is taxed at and if the properties are 1.75% and there are NO capital gains tax placed in the rental pool, * Small and stable government the projected returns are * Undiscovered paradise with 10% plus.” vast growth potential - a perfect Currently each unit combination for appreciation starts at $100,000. Why is the price so affordable? Because investors are getting in at the ground floor level. “I relate Ambergris Caye to what Hawaii was before it got ‘discovered’ by the world,” Newton says. “Why not be ahead of the crowd and combine real estate investing with a lifestyle that incorporates spending time in a world-class resort destination?” Newton believes so much in the project that he is now involved with the Belize Commerce Alliance to promote Discovery Trips to Belize. In the past few years, Newton has created a passive income stream and now he is ready to combine investing with pleasure, which leads to an even more rewarding ROI. — article by Lori Peebles For information about Belize and the opportunities in Ambergris Caye, please contact Dr. Michael Newton via email at: jawdocassets@gmail.com or at 805-405-3183.

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ne of the most exciting things about being a real estate investor is knowing what markets will produce the greatest longterm returns — especially while in the middle of a challenging housing market. In a down market, savvy real estate investors are eager to find out how they can best leverage their resources. And expert forecasts are some of the best tools they can use to back up their strategies. A good example comes from

home values to appreciate by 37.9 percent in five years. In addition, property values remain relatively affordable with the median sales price around $100,000. Aside from this Texas residential investment area, our report reveals other real estate markets with great potential including two from Colorado (Colorado Springs and Denver-Aurora), as well as California (Sacramento-Arden-ArcadeRoseville, and Oxnard-Thousand OaksVentura). Other markets that made the Top 10 include North Port-Bradenton-

Cash flow investment properties are indeed your best hedge against the negative impacts of a down market. Take it from Morgan Stanley’s “Housing 2.0 The New Rental Paradigm” report. The financial services company observes that gross rents are “historically attractive relative to current distressed prices. Adding to this attractiveness is the fact that multifamily data shows rents continuing to rise.” More so, it favors single-family homes as the most ideal form of real estate investment in the

by Marco Santarelli real estate consulting firm John Burns Real Estate (JBRE), which has recently predicted that homeownership will fall from 70.0 percent to 62.1 percent by 2015 due to a weak economy, weak consumer confidence, limited mortgage availability, higher rates of foreclosures, and short sales, and other factors. The JBRE forecast, although based on broad market conditions, points out that we are going to see an increasing number of renters and therefore a greater demand and need for rental housing. Savvy real estate investors choose investment properties that are located in markets with the greatest long-term growth potential. This allows them to invest wisely today while hedging their bets on the future growth and appreciation of their chosen markets. Our 2012 Housing Market Forecast lists the Top 100 Metropolitan Markets based on future job growth and projected price appreciation. If you are interested in finding growth markets with strong appreciation potential, then the McAllen-Edinburgh-Mission, Texas metropolitan area may be your first choice. We project its 10-year future job growth to surge by 32.3 percent and Realty411Guide.com

Sarasota, FL; Las-Vegas-Paradise, NV; Hartford, CT; Springfield, MA; and Phoenix-Mesa-Glendale, AZ. These areas have a five-year appreciation forecast well above 21 percent. And what does this mean for real estate investors? There’s a gold mine out there waiting for you to take full advantage of it! A fall in homeownership means a rise in rental units to accommodate the surge in demand from those who have recently lost their homes to foreclosure, those who cannot afford to buy property, and those who are still saving up for a new home. Last October 2011, the National Association of Realtors (NAR) reported that the number of rental homes had gone up to 38 million units in 2Q11 and the vacancy rate of single-family homes and multifamily units was at an all-time low rate of 9.2 percent. Investors never think twice about snapping up bargain properties with positive cash flow. As NAR chief economist, Lawrence Yun, puts it, “The dynamics of falling rental vacancy rates mean increased landlord pricing power. Naturally as a result rents have been pushed higher... Rising rents mean a better rate of return for real estate investors.” PAGE 56 • 2012

market today owing to their huge rental potential. JBRE’s forecast also reveals that homeownership will not be on an upswing until 2025 at 67.1 percent on the back of foreclosed homes returning to ownership, improved economic conditions and normal mortgage credit, and an increase in the propensity of households to own a home. That may signal the time to consider selling your portfolio and taking a profit, or trading up into more real estate using the IRS 1031 tax deferred exchange. There are plenty of investment opportunities out there today. Be sure to take action, do your homework and invest wisely. As JBRE puts it, “The American dream of homeownership is still alive and well...” Marco Santarelli is an investor, author, and the founder of Norada Real Estate Investments – a national real estate investment firm providing investors with turnkey investment property in growth markets nationwide, visit online: NoradaRealEstate.com for a FREE membership.

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n todayâ&#x20AC;&#x2122;s DIY and finance crippled real estate world, SAMPLE DEAL Jeff Ader and his team at +WV\IK\ =[ <WLIa 2029 Goodlet Ave Price $45,000 InvestIndy are a rarity. They -4;-?0-:- +75- ;-- =; 16 16,A Downpayment: Indianapolis, IN know long-distance investors $13,500 6HFXUH 7HQDQWV Â&#x2021; /HVV +HDGDFKHV Outstanding property management is essential for success and with over yearsextra experience, need35that special service No Closing 30% Downcompany Owner Financed Purchase man Property Management is the industry leader in Indianapolis. The family-run has owned Costs! toPurchase be successful. Property Price: $45,000 stment properties since 1960. Jeff Ader, a Dorfman executive, tells us why the company is so special. Annual Gross management and seller financ70% Loan Amount: $31,500 Income: $8340common mistakes are purchasing in a high Ader: 30% Down $13,500 First ofthe all,Payment: itâ&#x20AC;&#x2122;s always important to us a bit about Dorfman Property ing are two key elements Call Us for and diversify x 12 your investment portfolio. Havcrime Price: or undesirable neighborhood ment, how did the $695 company come Purchase $45,000 Closing Costs: $0 set InvestIndy.com apart. Their $13,500 track not doing a thorough rehab.Latest ingthat different asset classiďŹ cations, such as Our Annual PITI: $2,774 30% Down Pymnt: $13,500 Total Investment: real estate, stocks,real bonds estate and precious met- speaks er: Dorfman Property ManageDEALS!!! record success *Loan$1,028 Amount: $31,500 *Annualfor Gross Income: $8,340 Annual Taxes: s founded 35 years ago by Martin Q: Do you have many clients from out of als, helps reduce risk in your overall invest*8% Interest 30 Year term *current rent 695/mo 12 Insurance: $650 volumes: â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve beenXdoing this for 36 state and other countries? ment portfolio. and his daughterAnnual Miriam Ader 10 Year balloon payment A d e r : Ye s , w e Annual Principal Interest: ($2,774) Secondly, peoplebefore can&build ge family Annual Management: $834 years even itwealth was and being advertised high net worth by buying service many cli- accumulate properties Annual aTaxes: ($1,028) Vacancy Factor: $667 asAnnual the thing to do, anda Iperiod believe we do($650) it holding rental properties over ents from Cali- and as provide Insurance Estimate Maintenance Reserve: $584 time. Here is a simple example of why d property than anyone else.â&#x20AC;? 3 Bedroom 1 Bathroom fornia as well as ofbetter Annual Management Fee: ($834) Annual Net Income: $1,803 Arizona, Florida, rental properties can be such a powerful ment ser825 Square Feet Vacancy: Ader operates InvestIndy differ- ($667) generating investment: IndianapCash on Cash Return* 13.36% Hawaii, Illinois, wealth Maintenance: ($584) New York, Ohio, stors. ently than most conventional investment Annual Net Income: $1,803 Georgia and many Exhibit A: $20,000 lump sum @ 5% interFor equals one $32,578 thing, clients of 13.36% more. In addition, estbrokerages. at the end ten years an invesSeller-Financing Available! Cash on of Cash Return* we have clients managers InvestIndy donâ&#x20AC;&#x2122;t have toonguaranteed. worry about *All figures projections only and are not B: are $20,000 cash outlay a Austra- Exhibit view, what InvestIndy.com inlia, Italy, whether they can which qualify for a bank loan. rental property, leaves France and $100,000 e common 827 North Capitol Japan. $80,000 ďŹ nanced with 5% appreciation per that inâ&#x20AC;&#x153;Our company provides the loan for year at the end of ten years equals $82,889 make? Indianapolis, IN 46204 the buyer to acquire the property without think people should have verpaying for a property and not Q: Why do|you InvestIndy.com 317.507.4323 Continued on pg. 16 earch about rental amounts. Other rental properties in their portfolio? them having to qualify with a bank. This lessens the need for the buyer to have V U spotless credit,â&#x20AC;? Ader explains. D \H QHVV Investors can expand their portfolio L 70 EXV with as little as a cash outlay of $13,000. +RPH 5HQWDO &RQQHFWLRQV60 The buyer takes over an existing turnkey rental with a stable tenant already in Rent your property FASTplace. Ader provides the perfect option for people with spotty credit or those who HIRE Dorfman Property Management cannot qualify or any more loans. Time is PDQ 3URSHUW\ 0DQDJHPHQW LV D UHVLGHQWLDO SURSHUW\ PDQDJHPHQW also of the essence, Our Available Services:he can close the deal PDQDJLQJ ,QGLDQDSROLV UHVLGHQWLDO UHQWDO SURSHUW\ :H SURYLGH D in a week, whereas a conventional lender Rent Your Property FAST, Â&#x2021;7HQDQW 6FUHHQLQJ QDO WRXFK WKDW RQO\ D IDPLO\ RZQHG EXVLQHVV FDQ 2YHU can take months. UWLHV 8QGHU 0DQDJHPHQW 0RVW RI 2XU &OLHQWV DUH 2XW RI 6WDWH HIRE the Dorfman Team Â&#x2021;7HQDQW 3ODFHPHQW RUV -XVW /LNH <28 Â&#x2021;5HKDEV â&#x20AC;&#x153;I own every house that I sell. Iâ&#x20AC;&#x2122;ve Â&#x2021;5HJXODU (PHUJHQF\ 0DLQWHQDQFH PDQ 3URSHUW\ KDV \HDUV RI H[SHULHQFH DQG FRQVLVWHQWO\ VWULYHV WR owned some of them for one year and Â&#x2021;0RQWKO\ 6WDWHPHQWV G RXU FXVWRPHUV H[SHFWDWLRQV 2XU JRDO LV WR SURYLGH RXU FOLHQWV ZLWK others for ten years; which means the inUW\ PDQDJHPHQW VROXWLRQV WKDW ZLOO VDYH \RX WLPH DQG PRQH\ 2XU Â&#x2021;2QOLQH <DUG 6LJQ 5HQWDO $GYHUWLVLQJ HQW PDUNHWLQJ DQG VFUHHQLQJ V\VWHPV DWWUDFW DQG UHWDLQ TXDOLĂ&#x20AC;HG Â&#x2021;2XWVLGH 1HWZRUN 2I /HJDO 3URSHUW\ 7D[ vestor receiving them will get substantial Our Services Include: V :KHWKHU \RX RZQ VLQJOH IDPLO\ KRPHV DSDUWPHQWV GXSOH[HV RU $QG 'HEW &ROOHFWLRQ 6HUYLFHV equity in that investment,â&#x20AC;? Ader says. V 'RUIPDQ 3URSHUW\ ZLOO OHDVH \RXU SURSHUW\ )$67 â&#x20AC;˘Tenant Screening &RQWDFW 8V 7RGD\ 0LULDP $GHU RU 5KRQGD 6WHHOH # The biggest advantage of seller financâ&#x20AC;˘Tenant Placement Rehabs ing to the buyer is credit worthiness. 1RUWK &DSLWRO Â&#x2021; ,QGLDQDSROLV ,1 Â&#x2021; Â&#x2021; ID[ Â&#x2021; ZZZ JRGRUIPDQ FRP â&#x20AC;˘Regular/Emergency Maintenance Banks donâ&#x20AC;&#x2122;t want to talk to you if your â&#x20AC;˘Monthly Statements credit score doesnâ&#x20AC;&#x2122;t exist at a certain â&#x20AC;˘Online & Yard Sign / Rental Advertising level. But a seller with the available â&#x20AC;˘Outside Network of Legal, Property resources, like Ader, is often willing to â&#x20AC;˘Tax and Debt Collection Services make a deal. This process has another advantage for the potential buyer in that Family-Owned Business, Over you can often get a lower monthly down 1,000 Properties Under Management payment. Jeffâ&#x20AC;&#x2122;s deals are amortized for 30 years. â&#x20AC;&#x153;The reason that works so well ph: 317.634-5955 or visit for the client is that it creates a very low www.GoDorfman.com

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PAGE 58 â&#x20AC;˘ 2012

payment. Sometimes as low as $200 a month, which allows for a great return on investment.â&#x20AC;? Many stock-weary investors are now taking advantage of self-direction by purchasing real estate with their 401(K) or IRA Jeff Ader (Individual Retirement Account). Ader says that instead of getting a paltry one to two percent return from certificates of deposit â&#x20AC;&#x201D; or taking huge risks with the volatility of the stock market. Ader and his team are equally known in real estate circles for their property management. Since they have been in business serving local and out of state investors for more than 35 years, Ader and his wife, Miriam, have learned a thing or two. â&#x20AC;&#x153;Our style of property management is based on being a very good mediator in terms

INSIDE INDY: The metro area of Indianapolis. was just ranked #1 nationally in housing affordability by the prestigious Wells Fargo Housing Opportunity Index. Plus, the unemployment rate is lower in Indianapolis than the national average. of communication levels between us and tenants. This sends a message to the tenant that lets them know weâ&#x20AC;&#x2122;re listening to what they have to say, which makes them want to stay longer.â&#x20AC;? Since Ader and his family own a substantial real estate portfolio themselves, they know tenant turnover is one of the biggest expenses in landlording. â&#x20AC;&#x153;It can cost up to $1,500 to get the property rent-ready after a tenant moves out. If the tenant feels theyâ&#x20AC;&#x2122;re being treated fairly, theyâ&#x20AC;&#x2122;re much more likely to stick around.â&#x20AC;? But itâ&#x20AC;&#x2122;s not only the tenant thatâ&#x20AC;&#x2122;s the focus of the Dorfman property management style, itâ&#x20AC;&#x2122;s the owner-investor as well. Jeff says, â&#x20AC;&#x153;We foster great communication with the owner of the property, 50 percent of whom are out-of-state. Investors get their reports on time, as weâ&#x20AC;&#x2122;re their eyes and ears on the ground. We do virtually everything for the owners so that itâ&#x20AC;&#x2122;s a hassle-free operation for them.â&#x20AC;?

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Market Spotlight: Kansas City, MO LOCATION: Kansas City, MO COMPANY: eas are incredible. We truly Kansas City and surHome Solutions have one of the best rental rounding areas. We’re CONTACT: markets in the country in able to pick up homes Ryan Tebbenkamp terms of Return on Investfor incredible prices. ph: 816.682.3998 ment (ROI). It’s an area web: IBuyKCHouses.com Q: What is the best investors from around the part of being an infter Ryan Tebbenkamp completed vestor in your area? world are buying in. his degree in real estate appraisal A: Our market is Q: How do you handle from the University of Kansas, he steady. Real estate here property management? began to work doesn’t fluctuate upward and downward A: My company has had a relationship for in the industry a long time with a great property manager. like other areas of the United States. helping set comQ: Currently, how is the rental market? They handle everything for me and our parables for his A: It is really good right now. The typical clients. Their service is wonderful and it c o m m u n i t y. I t vacancy rate is low and stands around 5%. makes our life as investors stress-free. was during this Q: When did you start your real estate Q: Is there anything else you’d like to time he observed add? Can you leave our readers with investment career and how? the benefits of buying rentals for passive A: In 1996, I received my degree in real es- some advice that can help them? income. Since 2001, Tabbenkamp has been tate and real estate appraisal, I saw the op- A: The best thing I can emphasize is for not only pricing properties, but also provid- portunities in the rental market and started investors to be patient. ing outstanding rock-bottom priced deals buying properties to hold for cash flow. Sometimes as investo investors in Missouri as well as out of Q: What makes IBuyKCHomes.com tors we may hit bumps state. We spoke with Tabbenkamp recently unique in the Kansas City marketplace? in the real estate rental to get the scoop on the market in this Mid- We focus on aggressively marketing vacan- market, but we have to Western city. cies and proper screening to procure good remember that in the quality tenants in the rental homes, which long run, it will work Q: What type of opportunities are you results in less turnover. out. Our rewards in seeing in Kansas City right now? Q: Tell us why investors should take a this business are long-term, so let the tenA: Right now, we are seeing fantastic op- look at Kansas City real estate? ants pay off your debt, as the house appreportunities with great cash flows in the A: The cash flow for properties in good ar- ciates over time.

Celebrity Real Estate Moguls, pg. 18

Most of Bob Hope’s fortune, estimated at $500 million when he died in 2003, came from real estate holdings and sales rather than acting revenues. Realtor Jim Nyquist, who specializes in helping celebrities and non-celebrities make money flipping houses, says the rapper’s public statements along with a buyer-friendly real estate market is increasing interest in this arena of investing. “It is nice to have a celebrity offer backing to the process of house-flipping,” Nyquist says. “Because while some Americans still think of it as decidedly unglamorous work, the truth is that many

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adventurous investors make a ton of money doing this.” Van Winkle said in a CNBC interview that he started flipping houses in the Palm Beach, Florida in 1997. His success even in a time of serious economic challenge garnered him a reality show called “The Vanilla Ice Project.” “The short sales, the foreclosures are great, but tax auctions are even better,” Van

Photos, left to right: Celebrity icon Bob Hope courtesy of USPS; actress/singer Cher and hip hop mogul/actor Drake.

Continued on pg. 60

Within 24 hours of listing the units with Coldwell Banker, Drake’s properties had netted him a half a million dollars.

PAGE 59 • 2012

reWEALTHmag.com

Do YOU Need a Land Trust?, pg. 39

Celebrity Real Estate Moguls, pg. 59

Winkle says. “I just bought the Season Three house on a tax auction. If no one’s bidding against you and it’s an absolute auction, you can steal the homes for pennies on the dollar.” Cher, one of the biggest celebrities in the world, sometimes has appeared as the queen of re-inventing herself. With the help of architect Steve DeChristopher Jr., the actress-singer tried her hand at renovating a Palm Springs house that she bought for $650,000. She then sold it for $2.5 million. Rapper Audrey “Drake” Graham took a risk and spent about $1.9 million of his $11 million fortune on two side-by-side condos in Miami. Within 24 hours of listing the units with Coldwell Banker, Drake’s properties had netted him a $500,000 profit. While it’s not necessary to already have access to millions of dollars to become successful in the art and science of flipping houses, true horror stories are well-publicized on “Flip This House” and created into fictional plots on prime time cartoons such as “Family Guy.” It is all too easy for an inexperienced investor to get seduced by the potential profit and not realize that the home was never really a good investment to begin with. “For anyone interested in flipping a house and avoiding the horrors, the important thing is to do some research up front,” Nyquist says and adds: “Paying for a good home inspection is a sound investment, and will help ensure that the property in question really can be flipped for a handsome profit.”

The problem is that most practitioners do not know how to set up and administer Land Trusts so many of them consequently advise people not to use them. You may have been told by someone (an attorney, accountant or friend) that you need a Land Trust, but nobody told you how or where to find information to help you get started. The point here is do not trust someone who does not have direct active knowledge of Land Trusts and their benefits. I have been using Land Trusts in my full time real estate investment business for over 30 years. I have found that many times advisors tell their clients, “You cannot do that” with a Land Trust. Most of the time they are wrong! You may have heard about the little known technique of using a Land Trust for privacy and profit in this unique real estate market. But, do you really need to learn

Join our magazine’s Facebook Group and Mingle with Investors!

Or, We Can Do Advanced Tax Planning for You RetireEarlyWithRealestate @groups.facebook.com

ABW Tax & Consulting, Inc Glenn R. Wilson, EA, ATP, ATA, ABA

Call now at 805-898-3177 • www.abwtax.com Learn from THE National Expert on how to use Land Trusts for privacy & asset protection. Visit Randy's website for FREE Land Trust information or call him now @ 866-696-7347 with your questions.

Attend his next Land Trust and Note Queen Seminars on Oct. 27th-28th in Culver City.

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how to set up your own Land Trusts? Yes. Is it expensive? No. Is it easy to learn? Yes. And, to prove it, I will send you my booklet, “50 Reasons To Use A Land Trust” for FREE. Just send me an email at: randy@ realestateforprofit.com On October 27th,2012 I will be teaching my nationally acclaimed Land Trusts Made Simple Seminar in Culver City, CA. As a bonus day, Dawn Rickabaugh, The Note Queen, will offer her one day Pumping Paper For Profits seminar October 28th, 2012. Dawn and I will teach at both seminars and show you how to combine Land Trusts and real estate notes for dy-no-mite Privacy, Asset Protection and Profits! Don’t miss this one-of-a-kind two day event. You can register for one day or both days at: www.realestateforprofit.comor call 866-696-7347.

PAGE 60 • 2012

reWEALTHmag.com

And Here’s How to Do It, pg. 33

dence within the fear that stops us. When the false evidence is revealed for what it is... “false,” taking action becomes much easier. I use this exercise regularly in my investing workshops to get people over the fear of submitting purchase offers for real estate, but it will work for any fear. To demonstrate how it works, I’ll lead you through the exact exercise I do with my students. Go to www.FalseEvidenceTest.com for a short video demonstration of this easy exercise. The sooner you do this, the sooner your fears will disappear so you can start making that big money.

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Solid Investment-Great Returns

10 Keys for Successful Investing, pg. 55

ing only to lose a significant amount of money. On the other side when you are investing for cash flow only invest in quality assets. Typically if you invest in low end assets in your market you get low end tenants also. Instead, you need to invest in quality long-term assets that are going to produce positive monthly cash flow and make you a great return on investment based on conservative numbers. I truly believe if you do these things, along with increasing your financial IQ, you will be successful if you work hard for it. Most of the wealthy individuals in the world work hard for their money and are constantly evaluating their financial situation and investment goals. Putting a personal budget together and reviewing it monthly, creating additional income sources, implementing tax savings strategies, protecting your money from financial predators, and constantly educating yourself are the keys to becoming wealthy. For more information about Mathew Owens, CPA, please visit his website: www.ocgproperties.com

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by I Terica Kindred has real estate in her blood. Ä&#x17E;Ç&#x20AC;Ä&#x17E;Ĺś Ĺ?Ć&#x152;Ä&#x17E;Ä&#x201A;Ć&#x161; Ĺ?Ć&#x152;Ä&#x201A;ĹśÄ&#x161;ĹľĹ˝Ć&#x161;Ĺ&#x161;Ä&#x17E;Ć&#x152;Í&#x2022; Ä&#x201A;ĹŻĹŻ Ć&#x2030;ĹŻĹ?Ä&#x17E;Ä&#x161; Ć&#x161;Ĺ&#x161;Ä&#x17E;Ĺ?Ć&#x152; Ć&#x161;Ć&#x152;Ä&#x201A;Ä&#x161;Ä&#x17E; the age of 19, and she never looked back. He Ä?Ĺ˝ĹľÍŹÍż i Ä&#x17E;Ć?Ć&#x161;Ä&#x201A;Ć&#x161;Ä&#x17E; ÍžĹ&#x161;Ä&#x17E;Ä&#x201A;Ä&#x161;Ć&#x2039; Ć&#x161;Ä&#x201A;Í&#x2022; ' Í&#x2022; hould one buy a property to hold or just flip? Ä&#x201A;ĹŻĹ?Ä¨Í&#x2DC;Íż Ĺ˝ The answer is complicated because it depends on many from n factors, including finances, risk tolerance and individual Ĺ˝Ć&#x2030;Ć&#x2030;Ĺ˝Ć&#x152;Ć&#x161;Ćľ Ć&#x161;Ć&#x152;Ä&#x201A;Ä&#x161;Ĺ?Ć&#x;Ĺ˝ goals. To help readers understand both strategies, we asked

â&#x20AC;&#x153;Fix and Flipâ&#x20AC;? versus â&#x20AC;&#x153;Buy and Holdâ&#x20AC;? Tips from Terica

Terica Kindred to share some insight on the differences Fix and Flip (20K Down)

between the two. Kindredâ&#x20AC;&#x2122;s company, Out Estate InvestmentsThis (www.OutEstate.com, model requires the investor to acquire the property at below mark

ue, refurbish the property by making strategic repairs, and selling the p

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reWEALTHmag.com

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