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real estate news FOREIGN BUYER VOLUME DOWN 36% FROM PREVIOUS YEAR The National Association of Realtors reported that the number of home sales to foreign buyers from April of last year to March of this year has dropped 36%. This drop is a caused by several factors that are outlined in NAR’s 2019 Profile of International Transactions in U.S. Residential Real Estate . According to Lawrence Yun the chief economist from NAR “slower economic growth abroad, tighter capital controls in China, a stronger U.S. dollar and a low inventory of homes for sale.” all of which add up to show less confidence in owning property in the US. China is one of the largest buyers of US Real Estate that also showed one of the largest pull backs in purchases. These cut backs are attributed to the Chinese government tightening controls on foreign expenditures in their effort to keep money inside their country. Read More MAREI.org/ForeignBuyer2019 ———-
HARVARD REPORT ON HOUSING The Joint Center for Housing Studies of Harvard University released its 2019 Housing Report. It covers all aspects of housing for both renters and homeowners. Rental Demand: The report shows a minimal Page 4
decline in demand, mostly in the larger more expensive metros, while the smaller markets show a few gains. Plus there was an increase in older rentals and higher-income households. Rental Construction: The report shows the construction of rental housing being strong in 2018 with an increase in upgraded amenities that helped boost rents. Existing Rentals: The report shows that the nation lost 338,000 units from 2016 to 2017 the biggest decline in 15 years. The largest losses were in single-family rentals. This loss was attributed to rentals converting to owner-occupied homes. Rental Rates: Rental rates continued to climb attributed to low vacancy rates. Despite higher rents and low vacancies, the cost of doing business has put the squeeze on landlords profits. At the same time, as housing gets more expensive, the number of cost-burdened renters is growing. Forecast: Baby Boomers are trending more to aging in place by modifying their existing housing instead of moving. Although some downsizing is expected. Millennials are expected to account for almost 2/3rds of household growth in the next decade with demand for entry-level homes and singlefamily rentals. Read more MAREI.org/Harvard-Report ———Grow Your Business
DEADLINE FOR JACKSON COUNTY PROPERTY TAX ASSESSEMENT APPEALS EXTENDED AGAIN When the Jackson County Property Tax Assessments came out this spring, home owners and news stations were baffled as to how the assessments were calculated. Investigations show that because of lack of access to the local Multiple Listing Service data provided by local Realtors, free generalized data was used. A class action lawsuit was filed, an extension through July 29th was granted and community leaders are still working to freeze the current process, to have the state investigate, and to change the process. This past Tuesday, July 30th, the Board of Equalization decided to extend the formal appeal deadline yet again to September 3rd. ———-
GRANDIEW TO REVIVE CRIME FREE MULTI-HOUSING INITIATIVE Grandview police just revived an old crime reduction program whereby tenants can be evicted for illegal activity. Taught by the Police Departments in many of the metro cities in conjunction with Mid America Crime Free Inc, this program gives the tenants the option to sign a lease addendum that says if they engage in criminal activity, they can be evicted immediately. To learn more about the program and its coordinators, and to sponsor or attend a future FREE Crime Free 8 Hour Seminar, go to KCCrimeFREE.com ———-
FROM THE FACEBOOK GROUP Daily discussion on real estate related issues. Bring your questions and your answers, and join the discussion at Facebook.com/groups/kcrei/
TREATING CEILING WATER STAINS Option 1 Bleach: Mix 3 parts water to 1 part bleach in a spray bottle. Mist the area, let dry. Repeat till stain is gone.
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Option 2 Kilz: Spray Kilz Upshot lightly. Feather it in as you spray to blend it in. Option 3 Ceiling Texture: Buy popcorn ceiling texture and sift out the popcorn part. Mix with remaining powder with water to paint consistency, then use as paint. Option 4 Paint: Paint the entire ceiling ———-
HOW MANY VIEWINGS TILL YOU GET A DEAL The Gurus tell us you must look at 100 properties before you get that deal, but is that correct? Newbie Investor: Should view at least 100 deals and analyze them so they actually know what a deal is. Wholesale Investor or Marketing Investor: Would probably send out 1000 letters or get 1000 online views of a paid ad that would result in 100 leads. Out of those 100 leads, a small portion would be motivated enough and qualify as a potential deal. Then the investor might look at 10 deals, to make 2 or 3 offers, to get 1 deal. Experienced Investor: That is established as a player that knows a good deal when it is put in front of them, who is known for making full price offers and closing as planned, gets deals handed to them. Relators and Wholesalers who have a good deal and don’t want to waste time and money call these experienced investors with their deals who look at one deal and buy it. Establishing a good reputation as a buyer gets you deals. Often you are the only person who ever sees or gets the chance to make an offer on the deal. ———-
MAKING YOUR BID STAND OUT WHEN IN MULTIPLE OFFER When you are making an offer on a home and the listing agent tells you that they are in multiple offer situation, what can you do to make your offer stand out? Make Your Best Offer: No matter what anyone else does, make your best offer in price, terms, inspections and closing dates, that way you know you put your best foot forward.
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Cash is King: If you can actually pay cash, make an all cash offer. If you are using a Hard Money or Private Money lender, make sure that you include how fast the lender can close in your contract. Be sure to include proof of funds or letter from your lender noting their time to close. No Inspections: This is not a good idea for all buyers, but if you know what you are looking at and have no intentions of making an inspections, make sure to include “no inspections” in the contract. Fast Closing: The sooner you can close, the sooner the seller and the seller’s agent gets their money and the less time you have to back out. For a very motivated seller, like a person with a vacant house, the less time for something bad to happen to the house and lower the value the better. Large Earnest Money Deposit: Forget the usual $500 to $1000, make it $20,000 or even the entire purchase price, placed in escrow at the title company. You fully intend to close and you get it back if the seller can’t perform. Good Reputation: Investors who buy a lot of properties get a good reputation for doing what they say they will do. A seller who sells a lot of properties may take your offer despite it being less than others because they know you will close. Get a bad reputation and no one will ever take your offer. ———-
REALTORS CAN NOW USE RPR TO BUILD MAILING LISTS Realtors Property Resource®, a nationwide data platform and a wholly owned subsidiary of the National Association of Realtors®, is pleased to introduce Mailing Labels as a new feature within its array of products and programs exclusively for Realtors®. RPR users can now create readyto-print mailing labels for farming, prospecting or direct mail marketing within custom geographies. Realtors can generate up to 2,000 pre-formatted labels per month for mailings to residential or commercial property owners based on any RPR search. The easy-to-create labels are available in popular formats and users can choose to export results into a standard CSV file.
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SUMMER 2019 REAL ESTATE JOURNAL The nationwide source for news & information about the real estate investor industry, is published quarterly by the National Real Estate Investors Association and circulated to over 40k real estate investors across the country. Get your copy today at RealEstateInvestingToday.com/Real-EstateJournal ———-
KCRAR MARKET UPDATE JUNE 2019 As was widely expected, the Federal Reserve did not change the target range for the federal funds rate – currently set at 2.25 to 2.5 percent – during their June meeting. Although the economy is still performing well due to factors such as low unemployment and solid retail sales, uncertainty remains regarding trade tensions, slowed manufacturing and meek business investments. Closed Sales decreased 5.3 percent for existing homes and 17.6 percent for new homes. Pending Sales increased 1.5 percent for existing homes but decreased 9.4 percent for new homes. Inventory decreased 10.9 percent for existing homes and 1.1 percent for new homes. The Median Sales Price was up 9.5 percent to $219,950 for existing homes but remained flat at $365,000 for new homes. Days on Market decreased 8.8 percent for existing homes but increased 24.8 percent for new homes. Supply decreased 8.7 percent for existing homes but increased 9.3 percent for new homes. In terms of relative balance between buyer and seller interests, residential real estate markets across the country are performing well within an economic expansion that will become the longest in U.S. history in July. However, there are signs of a slowing economy. The Federal Reserve considers 2.0 percent a healthy inflation rate, but the U.S. is expected to remain below that this year. The Fed has received pressure from the White House to cut rates in order to spur further economic activity, and the possibility of a rate reduction in 2019 is definitely in play following a string of increases over the last several years. http://kcrar.com/statistics
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The 5 Key Marketing Elements to Move Your Real Estate Business from Friction to Flow From Tom Zeeb If you don’t have a successful framework for Deal Flow you waste both time and money on unqualified or worthless leads, expensive failed marketing campaigns, botched negotiations that don’t convert to deals, and contracts that fall apart under closing pressure or worse, leave you legally vulnerable – all of which means your business is stalled out and stuck at the starting line.
Enter the Rapid Cash Generator SystemTM The Rapid Cash Generator SystemTM has 3 essential pieces and The Deal Flow CheatsheetTM is part one of the 1st step “ Find the Deal” and it is detailed in this article. This 1st Step is all about building and running a solid and consistent marketing system that Finds the Deals and sorts, sifts, and separates out the
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motivated sellers from the tire-kickers and time waters. This lets you find the deals that will make you the most money quickly. Second, when you have leads coming in, then you’ll need to heat them up. Face it, leads come in luke-warm at best (good marketing skips the cold ones entirely) and then you need to Make the Deal by negotiating correctly to turn up the heat and get them from saying “no” to saying “YES!” to you. Third, once they say “Yes!” you’ll need to Make the Deal by confidently locking the deal up properly using a solid legal contract. This protects your deal from outside interference and allows you to control what happens next: whether you buy and hold it, buy-rehab & sell it, or whether you quickly assign your contract for a rapid cash profit. Done right, these 3 steps mean more deals, more profits and more freedom. Investors who implement The Rapid Cash Generator SystemTM get a higher volume of qualified leads, negotiate better deals with higher profits, and move ahead confidently as they are secured
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by bulletproof legal contracts. In today’s article are the 5 key elements you need to have to maximize the deal flow from your marketing campaigns. Step #1: Properly identify WHO you will mail. You are looking for MOTIVATED sellers. People who “need” to sell their house even more than they “want” to sell it. What makes a seller motivated? PROBLEMS Money problems. Family problems. Health problems. Job Problems. Aging problems. Problems with the condition of the house. Problems with keeping up on the payments. And the list goes on and on . .
propriate matching message for each group, now you need to articulate that message with understanding. Be sensitive to the situation the person is in. Think of how they want to be talked to and what they want to hear. No matter what the motivating situation is, if you articulate your message to them with understanding you will bond better with them, stand out from other competition, and build the right rapport that sets you apart as the consummate professional who is the logical choice to do business with. Step #5: Repetition, Repetition, Repetition. Finally, it isn’t enough to just send out one single round of mailings and then think that is enough.
Where do you find these motivated sellers?
It takes repetition to be successful.
By identifying the situations that cause their problems and then researching how to contact them based on these problems.
People often don’t respond until they have seen that you have been around a while.
Step #2: Understand their “itch” Why would a motivated seller want to sell quickly? And why would price not be their #1 issue in the negotiation? Because of the itch they have. And that itch needs to be scratched. It isn’t enough to just send them a letter or postcard that says “We Buy Houses”. You need to speak specifically to the problem you know they have. This will massively improve your response rate. The key is to put yourself in their shoes and think through the problems, concerns, and motivations that they have due to their situation. Then address those problems, concerns, and motivations in your marketing. Step #3: Get the right “Message-to-Market Match” Don’t mix your messages. Each different type of motivated seller needs a different message sent to them. This is called “Message-to-Market Match”. What you say to each type of motivated seller needs to match and address the problem they are actually having. Step #4: Articulate that message with understanding Now that you have identified the motivating situation you are targeting and have developed the ap-
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Persistence also conveys professionalism. It tells them that you are serious and makes them trust you more. It’s also just a practical matter that people won’t respond on the first round. Then once you have the Five Steps, it’s time to Implement and Execute . . . ———— If you would like to get my complete, 9 page, The Deal Flow CheatsheetTM Guide, you can request a copy at TractionRealEstateMentors.com/the-dealflow-cheatsheet/ that fits into Step 1 “Find the Deal” of The Rapid Cash Generator SystemTM I will be in Kansas City at the August 13th MAREI meeting talking about how to Wholesale a house in the next 60 days and part of that process includes attending my August 17th Workshop in Kansas City. Wholesaling: The Rapid Cash GeneratorTM Master Class: This is a one day class hosted by MAREI, I will be covering the Five Basic Frameworks you need to understand (1) Mastering Marketing (2) Negotiating to Seal the Deal (3) Determining Property Value (4) Analyzing the Deal (5) Using the Right Contracts. I hope you can join me. Find the details and reserve your seat at www.MAREI.org.
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Master Marketing:
The Numbers:
From Marketing Tumbleweeds to Marketing Stampede
How to go from Uncertainty to Clarity
Cut through the noise, destroy the competition & get sellers contacting you!
Learn to Identify the 3 critical numbers & how they work together
Strategies that work in today’s market (the economy has changed things.
Determine these numbers with ease
How to become a magnet for
What to do if you get stumped on the num-
Seal the Deal:
The Right Contracts:
Getting the Seller’s from “No” to “Yes”
From Legal Ignorance to Legal Precision
The special techniques that get sellers to drop their price fast
Learn the key clauses your sales contracts must have
Learn the frameworks to negotiate with ease (even if you fear it)
Finally understand the tricky legal lingo so you don’t get yourself in trouble
How to get the best price & best terms to
Property Value: From Uncertainty to Certainty When it Comes to Value The three keys to a property’s estimated resale value The best resources to get a property comparable value MAREI.org
How to protect yourself so you never get
Join Tom Zeeb: Saturday August 17th To Learn these 5 Frameworks At the Master Class Get a jump start on your first 60 days at the Tuesday Meeting on the 13th Page 9
‘Every real estate investing business should have a plan’ Whether you are just starting in the real estate industry or you are looking to scale your business, having a plan of attack is vital. If you haven’t taken the time to sit down and map out a strategy for your business, download this FREE guide specifically designed to help real estate investors narrow their focus and create a business plan. Template Includes: Executive Summary, Business Description, Competitive Analysis, Building Credibility, & Marketing Strategy
Request FREE Download at MAREI.org/CarrotBusinessPlan Page 10
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up) And that is exactly what I did. My journey was normal in many aspects to most Americans. I went to college, overpaid for information that had almost zero practical use in my life, joined the Army, and bought my first property in Tacoma, WA December of 2005. (best time ever to buy a house! Please note the heavy sarcasm)
One Real Estate Investor Family and their Journey to Success By Dan Krupa "It was the best of times, it was the worst of times...it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us.... – in short," it was time to leave our W2 jobs and focus solely on real estate investing. Time to invest in Real Estate (RE) and shameless rip off a classic novel to entice people to read an article. This is a story of an Army officer Dan and his wife, Michelle, who decide to ditch the rat race, leave behind their advanced degrees, and focus on real estate investing full time. I am Dan Krupa, a real estate investor and owner of Reveille Homes. Like many others I found my way into real estate accidentally. I was told: “Go West young man, Go West...and buy a house when you get there. Plus find a safe, good-paying job.” (I might have made some of that
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Over the course of my 12 years in the Army I met and married my beautiful wife and we acquired three properties. We had: house hacked, bought-rehabbed-rentedrefinanced (BRRRed), completed an advanced flip in two weeks and sold that property for 10k over asking price, been long distance landlords, got ripped off by property managers, and discovered that real estate is our passion. We’ve done quite a bit more since then. After 12 years in the Army, 24 months in Iraq, an operational deployment to West Africa, and missing out on the first six months of my son’s life I decided it was time to stop working for “the man.” The purpose of this article is to share with you the lessons my wife and I have learned over the years, help fellow investors overcome the obstacles they face when starting out in RE investing, motivate others to take action, and create better homes in our communities. Ok, enough with backstory, let’s get to the real estate stuff. Below are five actions that will help you grow your investment portfolio faster than Michelle and I did
One: Get Educated, Stupid.
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Have you heard the story of the Charles Steinmetz and Henry Ford? Ford engineers were trying to fix a gigantic generator. After exhausting all options the Ford engineers called in Charles Steinmetz from General Electric (GE). “Upon arriving, Steinmetz rejected all assistance and asked only for a notebook, pencil, and cot. Steinmetz listened to the generator and scribbled computations on the notepad for two straight days and nights.” During the second night Steinmetz climbed onto the generator and made a chalk mark on a panel. The Ford engineers were instructed to remove the panel and replace sixteen windings from the field coil. The Ford engineers were skeptical but completed the task. After the repairs were completed the generator performed to perfection.
out your goals every day. Goals focus us. They give us a sense of purpose and when used properly force us to action. My goals are reviewed twice daily, written out at least once a day, and are always drafted in a manner in which I have already accomplished. Example - “I spent my fortieth birthday in Australia with my family.” Personally, I break goals down into four categories: six months, 1-2 years, and 3-5 years, and someday. Your someday goals are akin to your bucket list.
Henry Ford was thrilled until he got an invoice from GE in the amount of $10,000. “Ford acknowledged Steinmetz’s success but balked at the figure. He asked for an itemized bill.
Your goals should build on each other. Your six-month goals should help you accomplish your 1-2 year goals, 1-2 year goals help accomplish your 3-5 year goals, and so on. Always start with the end in mind, though. Where do you want to be? Then work backward. Create a roadmap in your mind of how you are going to get there and then write it out.
Steinmetz responded personally to Ford’s request with the following:
Your goals should act as landmarks on the roadmap you created.
Making chalk mark on generator $1.
Finally - REACH! Don’t settle. Our society tells us not to strive greatly. That is is better to gain a little then come up short. That, my friend, is a lie. Make your goals big and scary. They should shock you into action. They should seem far out of your reach. Big, scary goals are the kind of goals worth getting up early in the morning for, staying up late at night for, and forgoing watching The Walking Dead for.
Knowing where to make mark $9,999. Ford paid the bill." (http://www.smithsonianmag.com/ history/charles-proteus-steinmetz-the-wizard-ofschenectady-51912022/#iJ2uKwS8ZHHk8uhv.99) The moral of the story is not that you should go it alone, but that knowledge is power. You don't have to be, and shouldn't be, an expert to begin investing in real estate but one should do preliminary research. Have a general idea of what type of investing that want to focus on. Then do everything in their power to research and learn about that niche. Read books. Listen to podcasts. Watch webinars. Read the forums. Attend local REIA meetings. Find a mentor who specializes in the RE niche you want to participate in. Do everything in your power to get smarter. No one ever died saying “I wish I had spent more time working.” or “I wish I hadn’t become so educated.” (Education does not equal formal education)
Two: Stop Wasting Your Time. Everyone has 24 hours in a day, and only 24 hours. That is a fact my friend. So why do some people get so much done and others don’t? Productive people don’t waste the majority of their time on social media, watching television, or other pursuits that are purely leisure. The average American watches more than FIVE HOURS of TV a day. Let me repeat that, FIVE HOURS! Yet, some people can’t “find the time” to work out or learn about RE investing. If you are focused enough to avoid the time wasters and devote the majority of your free time on RE investing, in six to twelve months you will be light years ahead of the average American.
Three: Write Out Your Goals Every Day! No, that wasn’t a misprint. I want you to sit down and write
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Four: Don’t Be Scared of Your Own Shadow. The unknown is always scary. That includes real estate investing at first. After the collapse of the housing market in 2008/09 we were all told to never trust real estate again… How did that work out for the naysayers? Don’t believe the lies, the fear, or the self-doubts you might have. We all have it. Someone telling you not to invest in RE because it is risky, shouldn’t be allowed near you. Crush that inner voice that tells you that you will fail or lose your money. (You might lose your money by the way. But at least that is an education worth paying for and you can use in the future) Nothing is gained without venturing out and trying new things. I wish I could tell you that everything will be okay, you can invest and be safe. But we all know that is a lie. All investing has risks. Just as life inherently is risky and dangerous. So, break free of the doubt and fear. Surround yourself with people who are successfully investing. Ensure your friends and partner/s will cheer you on, not hold you back. Get educated, ask lots of questions, and learn from other’s mistakes. Whenever I worry about failing, I think of the Man in the Arena quote by President Theodore Roosevelt:
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“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
Five: Take Risks, Not Gambles. We have a saying in the Army when it comes to combat. “It is always ok to take risks in combat but NEVER gamble with your soldier's lives.” What is the difference you ask between a risk and a gamble? Simply this. A risk is a: calculated yet dangerous action. You weigh the pros and cons. Understand the possible outcomes of your situation and know what and why you are taking the risk. Then act and act boldly. Sure, you could still fail but you won’t fail due to a lack of knowledge or understanding of your situation. A gamble, by definition, is when you take a risky action in the hope of a desired outcome. Hope is not a strategy. When you gamble you aren’t sure of all the perils you face. You don’t fully understand the situation or potential pitfalls. Yet, you acted and acted aggressively anyways. That is also called acting foolishly and we all know what they say about a fool and their money. Take risks when it comes to RE investing but never gamble. (Please note - I am not saying to not take chances or not be bold. I am a firm believer that life favors the bold. However, it also punishes the ignorant/stupid.) Now get out there, take some action, and change your lot in life. Join me at the September MAREI meeting to talk rehabbing and flipping houses.
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Don and I went on a 5 day Cruise a few years ago with 150 of the country’s top real estate investors who are almost all experts in utilizing their Self Directed IRA. This trip was packed with people doing all sorts of real estate deals, but we learned early on that we needed to find the Old Dogs as they had this real estate business figured out. Not to say the young pups didn’t have a lot to contribute. Most of these people had the same techniques as the older folks, but they had added technology to the mix to make the work involved easier and faster. So to whet your appetite, let me tell you one story we learned over drinks, not in the presentation portion of the cruise. This is something that every American needs to know and understand – you need to know it and understand it and then Page 15
teach it to everyone you know. The power of the Roth IRA and having Tax Free Income for Life after the age of 59 ½. So here is Awesome Trick #1 . . . . $10,000 Tax Free Income Monthly. One person on the cruise of a certain unknown age told us that he had started a Self-Directed Roth IRA and put in his initial contribution, invested that initial contribution over and over and over, never adding another contribution to it and today, he can pull out $10,000 a month from the Roth IRA without paying any taxes. And past the initial contribution, he had not put in any more contributions. So let’s look at this. I don’t know exactly what his initial contribution to his Roth IRA was, but be it $100 or $3,000, really
does not matter. What you need to know is that he earned this money, paid taxes on it and contributed it to his Roth IRA. Next he started using some of the techniques we talked of on the cruise and grew that initial investment over the year. How many years? Again is really in-material as one transaction in the Roth IRA could earn $10,000 for one deal and others that earned $100,000 for a deal. The point being, that he kept investing that first investment over and over to grow his Roth Nest Egg and continues to invest it today and gets the same returns today on a transaction that could be $100 return or $100,000 return. So from some of the example transactions we saw on the cruise let’s see how YOU could go open a Self-Directed Roth IRA with say Grow Your Business
$1000 today and be earning $10,000 tax free monthly too. You have several options of starting a Roth IRA, you could start it with $100, $1000 or more or if you have a Traditional IRA or 401k somewhere, you might want to convert all or part of it to a Roth IRA and pay taxes this year on the amount you convert. The starting of the Roth IRA is the easy part; it’s the getting the $10,000 tax free a month that you really want to know about. So let’s say you open your Roth IRA today, you can’t start taking out money until you are over the age of 59 and the Roth IRA has been active for 5 years. (Or you could inherit a Roth IRA from a friend or family member and immediately start investing the funds in the Inherited Roth and pulling out tax free, but that is an article for a different day) Once you meet the age requirement and the 5 years, you are golden. So what are some examples of how your Roth IRA could make money? Well this person offered up one idea to us. Non-Recourse Financing. Knowing that we know real estate and know how to structure profitable deals he had this idea for us. First we go out and doing what we do today, find a nice little house deal that we could have our Roth IRA purchase with $100 earnest money deposit from our Roth IRA and obtain a Non-Recourse Loan from his IRA for the purchase price and the rehab. Then we fix up, sell, and split the profit. So to put some real numbers to this deal, say we found a nice south Kansas City that worth about $60,000 all fixed up. We can buy it for $20,000 (we just bought one like this) and it needs $15,000 in repairs. Our Roth IRA writes the contract to purchase the house and puts down the $100 earnest money deposit. Mr. Old Dog’s Roth IRA that would lend the $20,000 purchase price and the $15,000 repair price for 50% of the deal. Our Roth IRA would contribute the deal and our oversight of the rehab and resale for the other 50%. We sell it to a cash buyer and profit
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$25,000 with ½ going to Mr. Old Dog’s Roth IRA and ½ going to Our Roth IRA. Mr. Old Dog can then pull his ½ out of his Roth IRA – his $12,500 to live on this month TAX FREE and go on a vacation with his Wife and our brand New Roth IRA just went from our initial $100 Investment to now having $12,500 in balance. We had another idea from one of the Young Pups: Buying upside down houses subject to the existing financing. This person marketed to Pre-Notice of Default Lists to find people who were very motivated to sell because they could not make their mortgage payment and they owed too much to be able to sell their nice house the traditional Realtor Route. He was looking for houses where the monthly Principle, Interest, Taxes and Insurance Payments were less than what the typical rental payment for the home would be. He also wanted houses that needed very little work. So for his example, he found a house that had a value of $150,000 where the home owner paid $1100 a month PITI on a $110,000 home loan. The home rented for $1600 a month and they were $4500 behind on payments and facing foreclosure. His Roth IRA put a contract on the home to purchase it subject to the existing financing and took over the house, the existing mortgage and rented it out for cash flow. His Roth IRA invested $4500 to bring the payments current and rented the house out for $1600 a month. The IRA paid the $1100 mortgage payment and pocketed $500 a month in cash flow. In less than a year the Roth IRA would have earned back the initial $4500 and then have zero money in the deal and still be earning $500 a month in cash flow PLUS the property was in a nice area where values were appreciating AND the mortgage was going down a bit each month. With this example starting with about $5,000 a Roth IRA could do one deal like this a year and in 5 years be earning $2500 a month tax free and have all of its initial $5,000 back. If the Roth IRA own-
er had reached the right age, they would now be able to keep doing one deal like this a year and adding another $500 to the monthly cash flow tally each year plus pull the monthly cash flow out – TAX FREE to live on. Let me talk about one more deal that was presented: Option on property in the path of development. I don’t know the exact particulars on this deal as I did not write them down and a deal like this does not happen every day, but it is a very spectacular deal concept that you need to see.
In this transaction, the investor stumbled across a house on an acreage that his Roth IRA actually purchased for about $40,000. Just as easily one might have had their Roth IRA contract with an Option to Purchase at a future time. This house was in the path of development so the Investor held for several years and rented out the $40,000 house for cash flow. As the city grew to where the house was located, commercial interests became interested and purchased the land for a lot more. I heard several similar examples here – one investor purchased in the path of progress and held for a few years to sell for $150,000. And another investor who was in the know about commercial developer looking for a particular type of property stumbled across a similar acreage that he was able to have his Roth IRA purchase in the $40,000 range and then resell for over a Million to the commercial developer a short time later. Does a deal like this come around for everyone? No, but . . . . . if one did, wouldn’t you want your Roth IRA all set up and ready to go so it could earn the $100,000 or the $1,000,000 and never have to pay taxes on it? Article provided by Kim Tucker with www.KCInvest.com.
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