CashFlow Express - Featuring FirstKey Lending by REALTY411

Ca$hFlow EXPRESS

Vol. 2, No. 2, 2014

Passive Income for Today & Tomorrow

PRICELESS

FirstKey Lending Offers Investors Unique Options

ou Asked, They Listened: FirstKey Offering More Ways to Finance Your Investments.

A year ago, New York-based FirstKey Lending was the first to step into a new financing space – making capital accessible to small- and medium-sized investors in one- to four-family residential rental properties nationwide. The financial firm’s Chief Executive Officer, Randy Reiff, says the firm purposefully positioned itself to “invigorate the small and middle markets” and to “empower smart, entrepreneurial investors to build and optimize their portfolios and businesses.” The financial backing of Cerberus Capital Management, L.P., one of the country’s largest private investment firms, gave FirstKey the opportunity to hit the ground running while focusing its attention on developing the products its customers needed. Following the successful introduction of its Conventional fixed- and floating-rate loan products for larger investors needing $5M to over $100M in funding, FirstKey launched its Express loan product for investors seeking loans of $5M or less in late 2013. That product has delivered in a big way. “We’ve been thrilled at the response of real estate investors to our Express product, which we were able to introduce in an affordable way by streamlining the documentation and closing processes,” Reiff said. These Express loans offer investors reduced borrowing costs and a much more efficient process than was previously available to these owners so that they can buy additional one- to four-family properties, refinance their existing debt or cash out. Reiff said that FirstKey has seen strong demand for its products and only expects that demand to increase.

“Our business is accelerating as more and more customers – most of whom have historically had only limited access to this type of financing – become aware of the variety of products FirstKey offers,” Reiff noted. “Historically, less than 25% of the borrowers we are targeting have availed themselves of financing of any type. We’re very excited to see that number grow as the rental finance market continues to expand.” Reiff also pointed out that FirstKey offers products to accommodate a number of different types of investors. “There’s been a lot of focus recently on the very large investors in the one- to four-family residential rental properties, but it’s important to remember that the largest segment of this market is represented by the more entrepreneurial owners who may own as few as 10 properties or less,” Reiff said. “These owners typically have strong ties to their communities and are looking to grow their portfolios in a disciplined fashion over time. We’re here to make sure that these local investors have the opportunity to grow and develop their investments.” FirstKey couldn’t have had better timing in coming to market with a lineup of new mortgage loan products aimed at the small and middle market. Looking to fill the void in affordable investment housing financing, FirstKey has provided the fuel for real estate investors to make it happen. In addition to the successful launch of the Express loan product, FirstKey continues to be the market leader in Conventional loan products geared towards larger investors as well. What’s more, CEO Randy Reiff shared an exciting new loan program being rolled out for small- and medium-size investors in an exclusive interview with Realty411 magazine.

Randy Reiff, CEO of FirstKey Lending

FirstKey Lending closed dozens of Express and Conventional Transactions recently.

$1,659,000

41 Properties located in TX, OH, GA

$4,000,000

76 properties located in NC, SC

$9,750,000 85 properties located in CA

$18,500,000 340 properties located in FL, GA

$32,00,000

450 Properties located in FL, IN, MD, MN, NC, TX

FirstKey Lending Bridge Loan Features: Loan Amounts: $10M+ Rate Type: Floating Loan Term: Up to 18 Months Property Type: 1- to 4- family residential Loan-to-Cost: Up to 65%* Amortization: Interest only Interest rate: Competitive pricing *Higher on a case-by-case basis

FirstKey Lending Express Fixed Loan Features: Loan Amounts: $500,000 to $5M Rate Type: Fixed Loan Term: 5 and 10 year Property Type: 1- to 4- family residential Loan-to-Value: Up to 75% Amortization: 20 to 30 year Interest rate: Competitive pricing For more information, please contact Bill Ruiz or Scott San Fillippo at: 1-855-299-1944

Continued on pg. 21

INSIDE: Strategies to Increase Your Wealth • PLUS: Highlights from Our National Expos

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Diana Nyad

Author & World Record Holder

Bruce Norris Ben Gay III tony Alvarez

July 18-20, you’re invited to a life-changing event: the Millionaire Maker. It will take place only once, will be followed by 60 days of mentoring, and I guarantee it will break the “box” in which you’re living. What does “try” mean to a world record breaker? Millionaire Maker dares you to look in the mirror and realize you have more inside than you know. On Friday night, together we’ll watch a very special documentary about the inspiring story of worldrecorder holder, Diana Nyad. At the age of 61, what motivated her to be the first person ever to swim from Cuba to Florida in shark infested waters? You’ll find out first hand when she joins us live on Saturday, challenging you to rethink what “try” in your life really means. How do you break out of the “box”? I’ve hand-selected over 15 guest speakers and panelists to join us. Prepare to be motivated as we explore first-hand how these successful real estate investors and business pros realized their untapped potential. Then, challenge yourself to discover your personal formula to take that same rigid discipline you have in your best areas of accomplishment and use it to improve every other area of your life. 60 days of Mastermind Mentoring? That’s right. After the live event, you’ll join me and one of our speakers weekly for Mastermind Fridays. For 60 days, we’ll explore additional reading materials to keep you motivated and committed to the goals you set. We’ll also keep you updated on personal goals we speakers have set for ourselves. We’re all just one habit away from living a very different life. We’ll be doing this together. Millionaire Maker asks you to commit 60 days to attain the next level in whatever is important to you now! Is it about realizing financial success via real estate investing? Yes! Will it be about learning a step-by-step process to attaining your specific personal goals? Yes! Is it about learning that the “box” you’ve chosen to confine your life to can be replaced by iron will and new-found skills? Yes! Please don’t hesitate, commit right now to attend. There is limited seating due to the nature of the mentoring piece after the live event. Change the trajectory of your life by joining us in July for this one-time-only event!

Mike Cantu

Also FeAturING: Danica Patton, Jennifer Shenbaum, Andrea Esplin, Holly McKhann, Rick Solis, Doug Van Soest, Steve Landis, Bill Tan, Silvio Brigliadoro, Iris Veneracion, Jack Fullerton, Ward Hanigan, and Randy Grigg.

DAte & loCAtIoN:

Friday, July 18 – sunday, July 20 Westin South Coast Plaza Costa Mesa, CA

www.thenorrisgroup.com/millionaire or call (951) 780-5856

$1,797 until 6/16 $2,297 after Event includes Friday evening movie snacks; breakfast, snacks, and lunch Saturday and Sunday; all seminar materials during live event; web portal access with additional content and recordings from live session. Mentoring books materials will be responsibility of attendees so each can choose preferred format.

Sincerely,

P.S. I so strongly believe in this event I’m offering a money back guarantee. If after the first full day you’re unhappy, hand in your manual and I’ll refund admission. In addition, use The Norris Group as your hard money lender on a Socal deal within two years after the event and I’ll rebate the cost of the event 0.5% per loan until you get it back in full. See the web site for full rebate details and to register before we sell out. See you July 18th!

11x15-411Mag.indd 1

5/13/2014 12:28:11 PM

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Ca$hFlow EXPRESS

FREE

Contents - 2014 Learn How to Create Stock Investors Manifest a 12 & 18 AttractMindset Private Lenders FirstKey MarketLending WealthOffers TodayOptions “Cashflow” Passive Income for Today & Tomorrow

No. 1 / Vol. 1 2012

4 Publisher’s Welcome Note 5 The Millionaire Maker Returns

13 Investing in Texas Land

estate investing, trading stocks, building a strong MLM business, etc. You will not succeed. It’s like trying to grow corn in a field of sand. The seeds will not germinate and you’ll end up with next to nothcan remember my first time playing to harvest in the fall. ing Robert Kiyosaki’s Cashflow How, you ask, does this relate to the board game about eight years Cashflow game? ago and how it Well, after playing started a chain the game a bunch of events that continues of times, I learned to this day. What stuck the “how to” of with me most was not the getting out of the “how to” of playing the rat race, but I still game but the people that was not able to I met at the event. These take what I learned were not like the normal from the game and people in my life that Doug Carver (left) and Chris Hanson disapply it to my realwould tell me I was crazy play the Cashflow game to group members. life financial situfor trying to start my own ation. However, I real estate business or realized that the time I was spending with that financial freedom was impossible my new Cashflow friends was changing without a steady well-paying job. The the way I thought about money and my people I met were excited about learnfinancial future. I no longer viewed the ing and expanding their knowledge on stock market as a giant rigged system for how to achieve financial freedom. They losing money. I began to see the tremenwere active investors in real estate and dous opportunities in the sinking real esthe stock market. They were small busitate market even as many people I knew ness owners with a passion and vision were losing money on deals that had gone for creating more financial success in bad. Overall, I saw for the first time optheir lives. Overall, they had a mindset portunities all around me to create wealth for prosperity that I like to call a “Casheven as the newspapers talked constantly flow” mindset. of the “Great Recession.” A lot of people complain that Kiyosaki Today as a result of my ongoing indoes not provide the specific details on volvement playing and organizing local how people should implement his stratCashflow events in Southern California, egies to create financial freedom in his I have a thriving real estate investing books and programs. Truth is he never business. It was after speaking with one spells out a step-by-step “how to” for of my Cashflow friends who was a real building long-term financial freedom. estate investor that I was encouraged to What he does teach is far more imporstart wholesaling distressed properties. It tant, and that is how to create a “Cashturned out to be a great decision. More flow” mindset. Kiyosaki describes it in recently, I’ve begun to learn how to suchis book Cashflow Quadrant moving cessfully trade in the stock market using your mindset from the E (employee) and options. As a self-proclaimed real estate S (self-employed) side of his Cashflow “zealot”, I never would have dreamed of quadrant to the B (business owner) and investing in the equity markets. HowevI (investor) side of the quadrant. In layer, after playing Cashflow 202 with my man’s terms, it’s the mental shift from Cashflow friend ,who is an active trader, someone who seeks financial security at and learning about his trading system, I all costs to someone who can confidently was able to see the opportunity before and knowledgeably take measured risks. me. I now fully expect that investing in This is a simplistic definition but a very the markets will be a huge part of my fuimportant one to understand. Without the ture financial success in addition to my correct mindset, it really doesn’t matter how much you learn the “how to” of real By Doug Carver Organizer Pasadena and Burbank Cashflow Meetup Groups

15 The Investment Lab is Open

6 Management Tips by Pam Texas

16 Incorporate a Business

7 Out-of-State Investment Advice

21 & 23 CashFlow Resources

9 Rehab with Andrew Cordle By Tyrone Jackson TheWealthyInvestor.net

Yes!

You can be rich from owning real estate and trading stocks. We’ve all heard the story of the little old lady who lived modestly and worked as a school teacher for 40 years. She never earned more than $35,000 per year, owned a modest home, and shared her life with two cats. Once she died, her relatives discovered a $150,000 life insurance policy and $1.5 million in stocks that she left to the elementary school’s scholarship fund. The national media loves to air these stories. It seems there are several old ladies who fit this seemly unique profile year after year. How could that be? Investing in stocks is not the world’s most challenging task. In fact, at its core, it’s very simple. The truth is that the stock market creates millionaires every year. Investing in stocks, with wealth in mind, is easier than you think.

companies and products with which you are familiar. If you’ve ever opened a can of Coca Cola on a hot summer day and felt refreshed and invigorated, why not own the stock? It’s a product you know with a story you understand. When I say “a story you understand,” I mean to say that you understand how the Coca Cola Corporation makes money, or to express it in Wall Street terms, you understand how the company earns revenue. The more bottles and cans of Coke that Coca Cola sells around the world each day, the larger the company’s profit. Over the past ten years Coke stock (symbol KO) has risen from around $40 per share to a high of $71 — $1000 invested in Coca Cola stock ten years ago would be worth $4,100 today; $10,000 invested in Coca Cola stock would be worth $41,000 today. If you spend more than $100 per year eating fast food, why not own the stock? Over the past ten years McDonalds stock (symbol MCD) has risen from a low of $15 per share to a high of $95 per share.

10 Q-n-A with Zinc Financial

24 Scenes from Our Expos 26 How to Avoid Capital Gains

From the Publishers of Realty411 Magazine

PUBLISHED BY FOUNDER Realty411 Linda Pliagas ADVERTISING pliagas@msn.com 805.693.1497 EDITORIAL STAFF EVENTS & EXPOS Hannah Ash Teri Burke Lori Peebles Suzanne Lilly Stephanie Mojica Lawrence Ruano COPY EDITOR WEBSITE Lori Peebles Invest In What You Know Maria Victoria PHOTOGRAPHER Wanna be a good stock market inTO REACH US, CALL: Continued on pg. 12 DeCindis vestor? Keep it John simple and start with Continued on pg. 2 310.499.9545 PRODUCTION Personal Finance News from the Publishers of Realty411 Magazine - www.Realty411Guide.com We provide complimentary copies Lori Peebles for your CashFlow Group or REIA Augusto Meneses

CashFlow Express is published in Santa Barbara County by Realty411. © Copyright 2013. All Rights Reserved. Reproduction without permission is strictly prohibited. The opinions expressed by writers and columnists are not endorsed by the publishers and/or editorial staff. Before investing in real estate, stocks, bonds, mutual funds, gold, or securities, seek the advisement of a trusted financial advisor, attorney or tax consultant. Investing in any asset and market sector is risky business and may result in the loss of capital. Please invest responsibly. PRINTED IN THE USA ~ GOD BLESS AMERICA

Connect to our virtual network ~ Search for us here:

f you are reading this issue then most likely you have attended one of our live events. When I first began to host real estate gatherings back in 2008, we attracted a handful of people in Los Angeles who were interested in learning and talking about real estate. Some people already had experience and we shared ideas and tips, some guests were newcomers who came to observe and absorb. My guests and I would often meet at the Marina del Rey library right on the water at the quaint coastal city in California. It was the perfect place, as the library’s benefactor Lloyd Taber was a wealthy real estate mogul who bequeathed millions to the building’s renovation years ago. Next, we started hosting larger educational gatherings at the Veteran’s Hall in Culver City. Fast forward to the present and our company, Realty411, has hosted events in San Diego, Indianapolis, Los Angeles, San Jose, Scottsdale, Pismo Beach, Seattle, Atlanta and even New York City. It’s a dream come true, and we plan on hosting many more expos and mixers around the nation, including upcoming events in Florida, Missouri, Ohio, and Texas. Our largest expo has attracted up to 300 people and our smaller events regularly unite an exclusive group of veteran real estate leaders. We plan on expanding our events even further. My goals are lofty: I envision some day hosting international real estate conferences — this is precisely how much I enjoy and believe in the power of networking. It is a pleasure and privilege to meet the readers of our numerous publications. We produce our quarterly glossy Realty411 magazine, with Real Estate Wealth as an alternate cover. We have separate distribution and websites for each. The 100-page glossy is available at no charge at selected grocery stores, and will soon be available in bookstores across the country. Next, we have our REI Wealth Monthly, a digital and interactive issue specifically designed for online enjoyment. It was created for the Apple Newsstand by Noland Araracap, a San Diego-based technology enthusiast. Next, of course, is our newspaper CashFlow Express, which is directly distributed at our live expos and mixers, and at selected real estate events that we support and sponsor around the country. For the rest of the year, in addition to expanding our calendar of live expos, we will continue to expand our media and marketing company with special print supplements and new online websites. We just completed our first Private Money 411 Special Supplement and are starting the second! It is our mission to be an all-encompassing resource of information for investors. In closing, I’d like to add that if we can assist you in any way, or if you have any feedback on our publications or events, please let me know. Your suggestions and comments are always welcomed.

LindaPliagas

Contact us: 310.499.9545 or info@realty411guide.com Be Social and Receive Regular Updates from Me on: Facebook, Twitter, LinkedIn, Pinterest, Google+ Disclosure and Information for Readers and Expo Guests The publications, events, expos and mixers promoted by Realty411guide.com and/ or their owners, employees agents and affiliates (collectively “411”) are for informational and entertainment purposes ONLY. The information and presentations provided therein do not constitute an offer or solicitation to buy or sell securities or real estate. Please be aware that real estate investing is VERY RISKY. 411 is not responsible for any of the information provided and/or statistical data presented, and do not reflect the opinions, advice or research of 411. You personally are 100% responsible for your due diligence, for all investment information and for all decisions with respect to any potential investment or transaction. 411 strongly recommends that you seek the advice of your trusted attorney, broker, CPA and/or financial adviser before investing.

CashFlow Express • Page 4

The Millionaire Maker Returns

by Bruce Norris

was my goal nine years earlier, make a $1,000 a year for every year I was old. What a big “box” I now lived in! ur first speaker for our first Millionaire Maker since 2006 wet Then one day, the bar was raised his bed until eighth grade. During yet again. In one 3-hour meeting, Jim high school he attempted to go out Rohn embedded a new concept into my for baseball but quit before he ever brain; millionaire. He challenged the got to the baseball field. During the first three audience to stop kidding themselves years of his work career he was fired five times. about the level of their commitment to Somewhere during that time frame he was on their dreams. As I listened to him, I felt food stamps. His wife went without a car for the he had made some discoveries that had first seven years of their marriage. changed his life and once again, my life’s trajectory changed in one day. Our co-speaker, on the other hand, is a multimillionaire. He has bought, sold and funded I arrived home that night and I wrote purchases on over 3,000 properties. He correctly a series of audacious goals. When predicted both the boom and bust cycles in Cali- reached, these goals would allow me fornia. His company has won national awards to live in a “box” I had never dreamed and he is trusted with millions of dollars of other possible. Imagine having a choice of people’s money. He was invited to address Fanwhat to do with my day, whatever I nie Mae and FHA in Washington D.C. He has wished! Imagine having enough money earned a reputation as an honest and successful or cashflow so that I never had to business owner. And at an age when most men work, but did so anyway because I love look forward to retiring, he became a black belt what I do! in karate. Until that night, I had never dreamed What you may not realize is that these two of a “box” that big. very different men I have just described are Is it possible to change your life in a one and the same person. Me! What changed an day? Yes, I truly believe that’s how it eighth grade bed wetter afraid to step up to the works. You don’t get a black belt in kaplate into a man that thousands trust for advice? rate in a day, but there comes a moment when you I’ll tell you this; it’s something you have accommit to do whatever is necessary to reach your cess to. goal someday. It is in that moment of commitment that the course of your life changes. The first version of me had a very limiting self-image and very low expectations. I had In July, I’m so pleased to bring an event back placed my life in a very small “box.” The “box” that we haven’t produced since 2006. Decide I had assigned to my life was that of a person right now to attend. The experience will change who would barely scrape by; an average guy who your life by expanding the “box” you are living would certainly never accomplish anything amaz- in, I guarantee it. At every Millionaire Maker, we ing. invite a special guest speaker. In 2005, our guest

What changed me from a man barely able to feed his family into a millionaire? What changed me from a man barely able to feed his family into a millionaire? It started with my first mentor at age 20; a hardware store manager. While I was working for him making $2.00 an hour, he was making $100,000 a year working the same amount of hours! One day he chewed me out for using such a small portion of my talents and trying so little on behalf of my family. That pissed me off! I decided to work hard just to show him he was wrong. He laid a challenge before me to become more than I was. When I accepted that challenge, it immediately changed the trajectory of my life. His influence gave my life a bigger “box” to operate in. Nine years later, I was pretty happy with myself. I lived in a new 1,400 square foot house. I had a steady job as a salesperson and was making nearly $1,000 for every year old I was. That

speaker was Jim Rohn. In 2006, it was Rudy Ruttiger (Notre Dame Football fame and inspiration for the movie Rudy). This year, I’m thrilled to announce, we’ll host one of our most motivational speakers ever, without a doubt! On the first night, we will watch world record holder Diana Nyad’s documentary together. I’ve watched it three times and cry every time. I’m humbled by the effort she made attempting to do what no human before had ever done. Watching this documentary will challenge you to ask yourself this question: “Have I really ever tried my absolute hardest at anything?” Every speaker has been hand-picked for this event, and every speaker or panel participant has escaped the “box” they were assigned to and now live life on their own terms. That’s what this weekend will be about. You will leave with the desire to break free from previous notions of what CashFlow Express • Page 5

life should be, and replace it with new goals and dreams for you and your family. Featured speakers include Diana Nyad, Tony Alverez, Mike Cantu, and Ben Gay III. I will personally moderate panels that will include Danica Patton, Jennifer Shenbaum, Andrea Esplin, Holly McKhann, Iris Veneracion, Rick Solis, Doug Van Soest, Steve Landis, Silvio Brigliadoro, Jack Fullerton, Ward Hanigan, Randy Grigg, and Bill Tan. From local real estate legends to up-and-coming rock stars in our industry, the content will be unlike any event you’ve attended before. 60 Day Mentoring Millionaire Maker includes 8 weeks of follow up mentoring. After the live event, once a week I’ll be joined on a webinar by one of our guest speakers where we’ll dig into assigned readings to keep you motivated, share additional insights, take your live questions, and we’ll even share our progress on some goals we’ll be making during the live event. It’s all about the “Who” Millionaire Maker is not about the "When to invest" or "How to invest" that most are used to The Norris Group producing. Millionaire Maker addresses the "Who in You" that you bring to real estate and life. Business professionals, real estate investors, and entrepreneurs of all experience levels are welcome and encouraged to attend. I truly hope to see you there. For more information, please visit: http://thenorrisgroup.com/millionaire

Does Your Property Manager Impact Your Net Worth? by Hannah Ash

Tips from Pam Blanco with PamTexas.com

ome airlines offer amenities such as gourmet snacks, personal televisions, warm face towels and ergonomic seating while some charge by the soda (and you’re lucky if they have your favorite kind). When it comes to property managers, some inspect your property each month and send you full reports - others simply collect rents. Pam Blanco, much like the select airlines offering top-notch service, treats her clients as though Your Property Manager Impacts Your Net Worth they are an invaluable part of her business (because As you know, the value of your property is not just they are). A successful investor herself, Pam takes a affected by changing market rates and neighborhood different approach to property management - and has gentrification: the value of your property has much an inside perspective on what investors should look to do with the tenants to whom you rent and with for and receive when it comes to choosing a great how well the physical property is maintained. A less property management company to safeguard their experienced or negligent property manager can cost investments. you thousands of dollars and lots of headaches while Investors who work with Pam, and most do so an ace property management team tackles the hurdles based on word-of-mouth, invest with greater peace of of investing (from leaky pipes to credit checks) so mind knowing that Pam’s team is on the case. Needyou don’t have to. less to say, repeat customers are kind of her thing. I caught up with her in the middle of a workday - she Your Property Manager Grows Your Portfolio was driving, not surprisingly, between properties in Part of property management, Pam says, is knowing her home state of Texas. Pam was happy to share the local market inside and out. Her research team, some rules investors should adhere to in choosing for example, is always on the hunt for great properand working with a property manager or manageties in desirable neighborhoods that promise low ment team to safeguard investments for the future. Continued on pg. 17

CashFlow Express • Page 6

From NYC & Beyond

How to Invest in Out-of-State Real Estate

by Teresa R. Martin, ESQ. uying real estate rarely goes smoothly, and buying property outof-state has even more potential challenges. However, it’s entirely manageable if the potential trouble areas are planned for and addressed. Many people own property out-of-state, and you can too.

Reasons for Buying Out-of-State Real Estate

There are several reasons why you might consider owning a property in another state. Maybe local real estate prices are simply too high to qualify for a loan on a second home or investment property. Perhaps another area of the country is experiencing a real estate boom. Maybe you have a desire to own a vacation home.

Potential Challenges Lack of knowledge about the area and the local economic situation. Everyone knows what areas of their hometown are doing well and which areas are struggling. Successful real estate investors usually know more about the area of town in which they invest than the REALTORS® do. You won’t have this type of day-to-day knowledge and will have to rely on others for their advice and opinions. Ensure you’re getting your advice from a worthy source. You don’t know the laws, regulations, property taxes, and other details. Real estate laws and practices vary from state to state and even from city to

city. Even more challenging, what is written in the codes and ordinances might not be the actual practice. You’re going to have to find a way to gain this knowledge. You need an out-of-state team. You’re likely to need a property manager, handyman, real estate agent, and more. Your team will have a huge impact on the level of success you experience. Build your team before you buy anything. Everything is going to cost more. For a non-occupant owner, interest rates, down payment, and insurance are all higher. The banks simply don’t have as much faith in a property owner that doesn’t live in the property.

Things You Must Do Hire an excellent property manager. If you’re going to rent out your property, keep in mind that an investment rental property is only as good as its management. It’s important to find someone that you can trust even when you aren’t there. Property management includes making decisions about repairs, filling vacancies, evictions, and handling any other problems. See the property before you buy it. While very experienced investors frequently don’t, it’s still a good idea to see the property before you buy it. Until you have a team you can trust, you don’t really know what you’re getting until you see it yourself. Visit the area. If at all possible, get out to the area and arm yourself with a local map. Spend a couple of days driving around, getting the lay of the land, and asking a lot of questions. Meet a couple of real estate agents and landowners. Join the local real estate investors club. Even if you’re buying a vacation home, these are the people that know the area, trends, and relevant people. One good friend in the local club is invaluable. Join and make a friend. Owning property out-of-state can be a wonderful investment from either a financial or enjoyment standpoint. As with anything else, if you understand the potential challenges beforehand and prepare for them, you’re likelihood of success is much greater. Be sure to get your team in place and know as much about the area as you possibly can. Good luck!

or visit www.teresarmartin.com.

Financial coach, Teresa R. Martin, Esquire, also known as the “Wealth Building Maven,” has been financially independent since the age of 35. She is the founder of the Real Estate Investors Association of NYC (REIA NYC). An active investor since the age of 18, she can be contacted by phone at (646) 467-7370, by email at tmartin@teresarmartin.com,

Real Estate expert ANDREWCORDLE wants to help you make money in real estate with a proven practices and one-of-a-kind resources! My passion is helping people ďŹ nd their purpose.

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‘No strings attached cash-flow is the goal for all investors, regardless of your tactic.’

by Hannah Ash

t’s tempting to think of millennial Andrew Cordle as something of a comeback kid but that’s only one part of the story. I caught Andrew in the middle of what was for him, a normal work week. We talked from his front porch at home in Georgia: He’d just flown in from a speaking engagement in Colorado and was preparing to fly out to Chicago the next day. Though his story does involve losing it all followed by winning it back and then some, it’s also about dedication, work ethic and a commitment to success. Recently back from a twelve day cruise through French Polynesia with his new wife, Andrew is a self made man. He comes from a middle-class background: his mother is a school teacher with over 23 years of teaching experience and his father is a union worker. Andrew shared with me that when you look at the stories of the most successful and wealthy families, it’s always one person in that family that “goes outside the norm and changes things for generations to come.” The week before we chatted, Andrew had dinner with the vice president of one of the world’s leading retailers, Home Depot. Clearly, Andrew wants to be that person to permanently alter the course of his family’s future. Before we go into what he’s up to now, let’s take a step back. I mentioned Andrew lost it all. Like many of us, he was a victim of the economy. During his first round at bat, Andrew was exclusively a flipper. He was 25 years old, had a staff of over 20 and a small fortune to his name when the bottom of the market fell out in 2007. Andrew found himself with a lot of houses he couldn’t liquidate. It changed his life. It changed his approach to investing. “It does no good to have 20 cars in your garage if you don’t have any gas for them,” Andrew reflected. The problem in 2007 was that Andrew had put all of his eggs in one basket: flipping. Like so many millennials facing a lean economy, Andrew ended up living in his parents’ basement. Unlike so many in his generation, Andrew did not stay there for long. Through the power of education, he transformed himself into a success again. This time, his success is different. He took the lessons he’d learned from his previous successes (and failures) to build a sustainable career as an investor that now takes him around the country and the world to share his wisdom with others. What was, and is, Andrew’s secret weapon for success? What is his vehicle for being that person in his family who steps outside of the norm and creates lasting success? Education. As the son of a dedicated school teacher, it’s not surprising. “Education can save you hundreds of thousands of dol-

Profit

lars and time. One caveat though: the right education,” Andrew tells me. Andrew’s approach makes sense. “If you want to be a doctor, don’t get a degree in event planning,” the successful investor declares. Though his approach to education is simple, it’s refreshing. With so many real estate gurus selling a one-size-fits-all-approach to success in investing, Andrew does not. He offers specialized academies that focus on the strengths and interests investors have coming into the game. He offers a four-day course for investors to learn about his approach to investing - and to the different techniques available for success. “There’s a wide variety of tactics to be successful in investing. You need to choose your tactic and go for it,” Andrew says. His four day workshop helps investors to bring a great sense of focus to their efforts. When it comes to finding education as an investor, Andrew takes a firm stance. “Many real estate gurus are teaching techniques they learned fifteen years ago. That doesn’t work. As markets change, tactics change.” For his part, Andrew participated in over 100 deals in the last twelve months; over the course of his career, he’s participated in over 1,000. His investor academies aren’t taught by guest gurus who want to sell their products; Andrew personally teaches them with the help of his wife and staff. To be successful as an investor, Andrew says that investors first need to decide what they want to achieve. Some people want boats, some people want to quit their day jobs, some people want to establish trusts. As an investor, Andrew says, you must know what you want to achieve. Once you know what you want, you can then pick a tactic that will best help you accomplish your goals. Different types of investors want different tactics. In addition to Andrew’s four-day Investing Academy, he offers four highly focused programs: Marketing, Rehabbing, Flipping and Rental. His marketing academy is geared toward creative types who want to find creative ways to net deals. Attendees leave with real world industry marketing know-how, blogs that are set up for them and turnkey social media accounts. The Flipping Academy is for investors who love the art of the deal or need to strengthen their cashflow before branching out into other tactics. Rehabbing is geared toward those investors who want to turn up the volume by doing more deals and treat investing as more of a CashFlow Express • Page 9

business than an individual skill. The Rental Academy, Andrew says, is for all investors. “No strings attached cash-flow is the goal for all investors, regardless of your tactic.” Rental properties do just that Aside from educating others, creating true cashflow is Andrew’s greatest motivation as an investor. Aside from resilience and determination, that “cash-flow is king” was the greatest lesson Andrew learned from the economic downturn. One of the top skills that Andrew Cordle advocates investors have? Aside from focusing and choosing a tactic, it’s knowing your market. Andrew shared with me how just last week he closed on a Victorian in Atlanta. The wholesaler from whom he purchased the property didn’t know that the Victorian was located in a top-choice district for a new charter school, making the property a significantly more lucrative buy. Andrew said that just by knowing his market, he stands to make many thousands of dollars off the deal. “There’s no get-richquick way to make it in investing,” Andrew says. Education. Strategy. Tactics. The ability to bounce back. Andrew says real estate investing is unique, and investors must be too, “Investing is not a 9 to 5. Work hard. Play hard. Be determined. Be resilient. Make a decision.”

Q & A with a Private Lender by Lori Peebles

unding is the foundation for every real estate transaction. As an investor, private lender and CEO of Zinc Financial, Todd Pigott knows exactly just how important funding is. The Central California-based firm lends on deals throughout the Golden State as well as neighboring Arizona and Nevada. To give our readers insight on the private money industry, we recently interviewed Pigott so he could give us his perspective.

nia. A very dated property built in the late ‘60s, with virtually no updating since. The ARV for the SFR came in at $1,100,000, and the borrower purchased the property for $750,000, and put down 20%. The borrower expects to spend about $70,000 on rehab for which ZINC is paying 70% of the cost. The investor expects to have the work completed in less than 6 weeks, and have it sold in less than 60 days. ZINC funded this transaction with complete ease and in less than 10 days.

Question: Hello, Todd, can you tell us about a recent deal you lent on? ZINC: Recently, we funded two rental buy & hold properties in the Sacramento region. Both were 3 bed / 2 bath, in solid urban settings. They were constructed in the late ‘80s early ‘90s, with about 1500 square feet of living space. Each was movein ready with rental quality amenities. The investor purchased them for $147,500 and $169,500 respectively; rental income was solid with a DCR ratio above 1.25. The real estate investor put down approximately 22% against the purchase price. ZINC funded both of these in less than 30 days with a 7.99% 5-year term. The real estate investor expects to make between $10,000 to $15,000 per year in net cash flow.

Question: Can you tell us a bit about Zinc Financial and what type of transactions you prefer to lend on? ZINC: We are a California lender. We focus on fix-and-flip loans and rental quality buy-and-hold loans. We lend on primarily SFR 1-4 units, but will consider multifamily on a case by case basis. We lend in any area of the state, so long as the property is in a well-known urban setting. We call it our “curbs and gutters” criteria, meaning if it has curbs and gutters there is a high degree of certainty we will lend on it. We stay away from land, cabins, extreme rural properties or properties in highly undesirable areas. We are very aggressive on our rates with our California Investors, and we are able to close our loans in 7-10 days because we are a direct lender with our own capital; we are not a broker.

Question: What are some of your favorite areas to lend on and why? ZINC: We just funded another great fix-and-flip in the San Rafael area, up in Northern Califor-

Question: In your opinion, how is the California market doing? ZINC: It is a great time to purchase and fix-andflip in California. Property values have stabilized,

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inventory is low creating a favorable resale for your finished product. Most of our real estate investors are reporting record profits of between $40,000 to $100,000 per fix and flip. What’s critical is buying the right property in the right location. ZINC prefers lending on properties below the median cost of housing for the geographical area where the property is located. With the state Continued on pg.,19

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by Mark Hanf

Attract Private Funds for Deals:

The Investor Questions

s someone who has attracted hundreds of private lenders to my real estate and lending practice since the real estate crash, I learned that one of the keys to finding private lenders is to always make it about them, and not you. Most people promote themselves. Promotion is about you. Attraction, on the other hand, is when you make your pitch about the other person. Key to forming a successful business relationship is a sincere focus on what is in the best interest of your prospective partner. This is especially true in attracting private money. When you demonstrate that you have the best interest of your prospective money partner at heart, and that your sincere goal is to help your prospective private lender make a great return on their money without taking unnecessary risk, you become extremely attractive. By focusing on the needs, goals and concerns of your prospective money partner you will create a loyal client for life, and one who will refer you to others who might also benefit from your good work. There are five basic questions that every prospective private lender is going to want to know. Your presentation—your credibility and opportunity package—should clearly answer all five of these with clarity and completeness. Here they are: 1. What is the opportunity? 2. How much money do you need? 3. How much can I make? 4. When do I get my money back? 5. What happens if you get hit by a bus?

1. What is the opportunity? “I’m in contract to purchase a 3-bedroom, 2-bath single-family home in a popular middle-class neighborhood. The property hasn’t been remodeled in years, and we’re getting it at a great discount. Well remodeled homes in this neighborhood are selling on average for $300 per square foot, and the average dayson-market is less than 30 days.” That is an example of a well-articulated and simple description of an opportunity that could be delivered like a 30-second elevator pitch at a networking event attended by people with money. It’s short and to the point, and it demonstrates your knowledge of the market. But answering this question in the mind of your prospective private lender goes far beyond the specific deal. In developing your answer to this first question, your lender is going to want to know things such as:

Who are you? What is your background? What is your real estate experience? Can I see examples of your previous work? How well did it go before? Providing your background, history and experience lays the foundation of your credibility, and answers the silent question, “Why should I listen to you?”

2. How much money do you need? Answering this question involves your detailed budget for the opportunity. You also might present more than one scenario for how your prospective money partner can be involved. There are many ways to structure the way they might participate. Is it a loan? Is it an equity investment? Will you be using other capital in addition to your private lender? Are you putting some of your own money in? Will you be using leverage (hard money)? While you don’t want to over-complicate or overwhelm a prospective lender with too many choices, understanding that there are many ways to structure a deal will help you to adjust your parameters based on a specific lenders’ preferences and comfort level.

3. How much can I make? How much you offer to pay your private lender will normally depend on a number of variables, including whether you offer collateral in the form of a mortgage or deed of trust on the subject property or if you offer an equity membership in an LLC formed to acquire the property. Will you be offering payment in the form of a loan (interest) or will you be sharing the profit (or

both)? If you are sharing the profit, what is the split? In answering this question completely, you should include both a best case and worst case scenario.

4. When do I get my money back? If you are planning to buy, fix and flip a property, then your exit strategy – how you will repay your private lender – is fairly straightforward. You will pay him back at close of escrow when the property is sold. What if you want to propose that your partner invests in more than one project at a time, or re-invest his profits from one project into another? What if your plan is to acquire rental property to hold long term? Part of your budget should include a timetable that, like above, has a best case and worst case scenario. Showing that you have considered that the unexpected might happen makes you look more professional. Also, keep in mind that it’s always better to under-promise and over-deliver and the other way around.

5. What happens if you get hit by a bus? While you want to have a plan in place in the event that you do in fact get hit by a bus, the bigger point of this question is to address the concern about what happens if things go wrong. What are the risks? What safety and security features have you built in to your business model? What protections are you proposing to prevent or to reduce the prospect of a loss to your investors’ principal? This is the area that many real estate investors either skip or downplay. Addressing up front these issues actually makes you look professional and shows that you have considered all possibilities and have planned for them. Optimism is important, but appearing to have blind optimism can work against your goals. These five basic questions present a foundation of an effective presentation that will weave together your story, the opportunity, and your promise in a way that impresses, creates confidence and that will attract capital to you in a big way. Mark Hanf is president of Pacific Private Money Inc., a California-based hard-money lender who has raised over $150 million in private capital since 2009. His eBook, “Insider’s Guide to Attracting Private Money”, is available at www.AttractingPrivateMoney.com.

Realty411Academy.com Learn from the Top Real Estate Educators in the Country in the Convenience of Your Own Home. Our interactive learning portal will give you the tools you need to succeed. Visit us today. CashFlow Express • Page 12

ave you always dreamed about owning your own piece of paradise, a place where you could hike, hunt, ranch, camp, horseback ride, or just relax to your heart’s content in the middle of beautiful, isolated scenery? Or are you interested in making a sound, safe, and affordable real estate investment in a prime location? What about both at the same time, in a place where the folks are friendly and the landscape is postcard perfect? Property in Texas offers all of this at once, and so much more. Texas is the perfect getaway location, with something for everyone. The wideopen countryside offers dramatic views the likes of which you cannot find anywhere else, with stunning landscapes and a sky so big and blue you have to see it to believe it. Locations this scenic and pristine are usually only found in state and national parks, but here in Texas you have the chance of a lifetime to actually own a part of the panorama.

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or the outdoorsman, owning land in Texas offers a rare opportunity to go hiking or riding on your own private property, and if you are a hunter or nature watcher, then get ready for a range of exciting game: deer, elk, wild sheep and pigs, and a variety of birds call Texas home, among other wildlife. What could be better than waking up every morning with the knowledge that the game you’ve always wanted a shot at might be just outside your door? Of course, if you’d rather just sit back and enjoy the view, there’s nothing quite like a Texas sunset from the back porch of your very own cabin, or stargazing from your own private campground after a hearty meal. Considering how affordable the land is here, the

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possibilities are endless: anything from tent camping to setting up an RV site to building the cabin of your dreams can be easily accomplished, and at a fraction of the cost of doing so anywhere else. What could be more satisfying than having a log cabin built to your exact specifications, on a piece of property straight out of a classic Western movie? In Texas, this isn’t just a daydream, it’s a way of life. Buying and developing land in Texas can mean returning to a simpler way of life, a laid-back lifestyle far removed from the modern rat race, but it can also be a great investment in of itself. Locations this gorgeous and affordable never last very long, and picking up a plot before they are all gone is about as sensible an investment as you can make – there is a good reason professional real estate speculators love Texas land, and try to snap it up as soon as it becomes available. For anyone looking to buy property, there is obviously no better choice than a plot of prime Texas real estate, and if you want prime Texas real estate, there is no better choice than Blue Quail, offered exclusively by Texas Ranch Deals. The Blue Quail location is only 30 minutes from Interstate 10 and is very close to schools, food, fuel, a post office, and anything else you might want. Whether you’re interested in a simple piece of investment land or if you want to build that log cabin you’ve always wanted, Blue Quail is the perfect choice. Property taxes in Blue Quail are an unbelievably affordable $100.00 per year on each 20-acres plot. Call 1-800-843-7537 or visit online at: www. TexasLandBuys.com, and we’ll tell you why Blue Quail is a great place to own property in Texas.

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by Hannah Ash

eal estate investing, more often than not, is a solo activity. That being said, you just can’t learn it all from books and you can’t do it all without help from others. Co-workers, or people to provide support, a listening ear and to help with some of the work, can be hard to find in this industry. Without online, print and community resources, many of us investors would be on our own as we try to navigate through the industry’s somewhat choppy waters. Those who are new to investment often find themselves with too many books and too few human interactions. Joint ventures are, therefore, common in the real estate industry and are a natural way for serious investors to find co-workers, support and greater successes. We found two business partners who. though they live far apart, are breaking the mold; their combined experiences and investment talent bridge the distance, making it possible for them to craft successful deal after successful deal. Partners Anthony Patrick and Duncan Wierman believe that when it comes to creating wealth, distance is just distance - nothing more. They each bring a different set of top skills to the investment table (or, in their case, bus), combining their talents to lead others safely through a very profitable (and, on the flipside, very risky) world of real estate investments. Their joint education venture is the Flipping Houses Tour Bus, and it stands apart as a truly creative way to get new investors to close the books and enter the investment lab where they can really start applying some of the principles they’ve learned. When the rare opportunity to meet up with these two very busy investors popped up, I had to bite. I wanted to learn first-hand about their latest venture and, of course, to get an inside look at how these tycoons land deal after deal in one of the most competitive markets in the world: Southern California. We explored their innovative approach to taking investing concepts out of the books and theory and into real-world applications: Flipping Houses Bus Tours. It’s a time to close the books and hit the streets. On the tour, Anthony and Duncan are expert hosts that break down just what they do and why: their methods, their reasons, the key strategies they employ to get the impressive results they continue to yield.

The Investment Lab: Hands-On Learning with Anthony Patrick & Duncan Wierman

Because Anthony and Duncan realize that action learning is longtime learning, they have you participate in the process while they watch alongside you and guide you toward a decision making strategy you can use time and time again. Anthony commented, “We are confident that when you leave us at the end of the workshop that you can duplicate what we taught you to do, so you can create financial success in your life.” It’s an exclusive opportunity for investors who have been there, done there and are tired of reading the same FSBOs (for sale by owner) and out-of-state owned homes in books and listening to the same CDS over and over again; which vacancies and repairs are starting to cause real hassles for owners who are likely considering a way out. Anthony it’s for, Duncan says, those “who are ready to finally take also adds, “Probate is our niche.” action and learn “hands on” from people who do this What, exactly, do these two savvy investors do? Where every day.” do they fish for their amazing deals? Is it foreclosures, short What were the driving forces that brought Anthony sales, auctions, or what? Anthony explains, “REOs, Short and Duncan to the same literal, and metaphorical, bus? Sales, FSBOs, deals on the MLS and internet leads.” What, I According to Anthony, “between the both of us, Duncan want to know, do Anthony and Duncan’s students walk away and I have over 25 years of experience in the art of inwith after completing a training program? Are they experts vesting. From marketing, deal evaluation, rehabbing, and in everything - or is it more of a survey course? most of all, giving the most value and knowledge for our Duncan shakes his head and explains, “This is a true, students.” There isn’t anything these two guys haven’t ‘hands-on and step-by-step’ experience. There is no better done - and well. As Duncan succinctly put it, “because way to learn than having us and our power team there to of our success in this business, we have decided to join ‘hold your hand’ every step of the way.” Students in Duncan forces to teach people hands-on instead of theory.” and Anthony’s workshops preview deals, are introduced What do Duncan and Anthony’s students learn from to projects the two have already run the numbers on, and Duncan and Anthony? Simple strategies that yield big then are taught those little tricks all of us, in any profession, ROI’s. For example, Anthony says, “we look for belowknow that can make or break our success. Students learn market homes on the MLS because if we don’t, we could how to find coveted hidden deals on the web and how to find miss out on a gem – homes with opportunities to create motivated seller leads with internet marketing methodolotheir highest and best use. Most investors aren’t doing gies. I asked Anthony to give us a run-down and overview on this simple search!” They know where to find motivated sellers: they teach students to target those much coveted

Be Sure to Read

Co-published by Realty411

REI Wealth Monthly

REIWealthMag.com CashFlow Express • Page 15

Continued on pg. 19

Business Inc. Take the Next Step in Growing Your Venture by Making It Official Nothing says you mean business more than the right entity structure, it may also help to reduce income taxes & shield personal assets.

Incorporating: Entity Selection

f you decide to incorporate, an important decision you’ll need to make is which entity to select for your business. Generally, your choices are C-Corporation, S-Corporation, or LLC. Each entity has its upsides and downsides. The selection of the entity is determined based upon the business activity and the individual’s goals. An understanding of the key differences between the three typical entities should help in this decision making process.

Taxes Management Liability

C-Corporations are unique in that they are taxed on the corporate level. This means, if any net profit is reflected on the corporate level,

tax will be assessed based upon the taxable income. Furthermore, no self-employment tax is reflected on the corporate level. Additionally, CCorporations can adopt a fiscal year end that allows the corporation to operate on a 12 month cycle that does not end in December, which is typical for most entities. C-Corporations also have the ability to deduct medical expenses as a line-item deduction. S-Corporations differ from C-Corporations in that they are considered “flow-through” entities. This means, the profit or loss generated on the corporate level is passed back to the Shareholders of the corporation, based upon their percentage of ownership, where the profit or loss is reflected on the shareholder’s personal tax return. Secondly, S-Corporations are exempt from self-employment tax. The caveat is, Officers of S-Corpora-

tions must be “reasonably” compensated as employee of the company. Therefore, a W2, subject to payroll tax, must be issued from the corporation to its officers to remain in compliance. Reasonable compensation has been established through court cases as approximately 40% of the net revenue generated by the corporation. LLCs (Limited Liability Company) are similar to S-Corporations in that they are “flow-through” entities. Where they differ is treatment of net profit. Shareholders of LLCs that are considered general partners are subject to self-employment tax on 100% of the ordinary income generated by the business. Additionally, in order to file a separate tax return as a partnership, an LLC must have 2 or more members. If this requirement is not met, the LLC is considered a disregarded entity, meaning,

its business activity would be filed on the shareholder’s personal tax return as a Schedule C, like a sole-proprietorship. That said, the single-member LLC is a glorified Schedule C, with the addition of limited liability. When coming to the decision of which entity fits best, it is highly recommended to consult a tax professional to assist in this decision. If the proper entity is selected from the beginning, the transition from sole-proprietorship is a smooth and easy one. One key component each entity has in common are filing fees. California will assess a filing fee of $800 per year until the entity is dissolved. It is therefore, advisable to set up an entity when one intends to use it. This can otherwise become a very costly thing, unnecessarily.

Limited Liability Co.

Limited Partnership

S Corporation

C Corporation

All managers and members (owners) of a limited liability company have limited liability (up to amount invested).

Stockholders have limited liability; officers and directors can be held personally liable for some corporation obligations.

Management decisions in an S Corporation are usually made by the officers and directors of the corporation.

Management decisions in a C Corporation are usually made by the officers and directors of the corporation.

S Corporations are not required to pay income taxes. Each shareholder must report their pro rata share of income, whether distributed or not.

C corporations must pay income taxes on any gain or profit. If money is distributed in the form of dividends, the shareholder must pay a second tax.

Decisions in a limited-liability company may be made either by the managers, members, or both, depending upon the provisions outlined in the Operating Agreement. LLCs are not required to pay income taxes. The members must report their pro rata share of income, whether it is distributed or not. However, an LLC may elect to be taxed as a corporation. EDITORIAL COURTESY OF: ROBERT HALL AND ASSOCIATES

All management decisions involving limited partnerships are made by the general partners. Limited partners who become engaged in management could become personally liable for partnership obligations. Limited partnerships are not required to pay income taxes. Each member must report their pro rata share of income, whether distributed or not.

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Property Management Tips from PamTexas.com, pg. 6

vacancy rates and values poised to appreciate over time. Factors such as transportation, schools with great academics or sports (a consideration in Texas) programs, and higher than average monthly incomes are part of what Pam’s team looks for. An excellent property manager has your best interests in mind and will be able to guide you toward great buys that help you grow your portfolio over time. Your Property Manager Saves You Money Property managers can keep money in your wallet. Property managers are in the position to find small problems before they - literally - explode. For example, a highly-trained management team like Pam’s can drive up to a property and spot a duct issue before it backs up and causes a more expensive problem to develop. When work is needed, fantastic property managers work with fantastic vendors who do great work for great prices. Your Property Manager: Your Eyes & Ears Texas, Pam notes, has a great market and is very landlord friendly: as a result, she has a lot of out-of-state investors under her fold. Long-distance investors simply can’t walk their properties and perform interior inspections; your property manager needs to be your eyes and ears. Pam’s team walks each property on a monthly basis and performs an exterior inspection; interior inspections are conducted twice a year. Your Property Manager Communicates Well Great property managers know how to keep their clients in the loop. Pam’s team prepares and sends clients monthly reports that include detailed financials, relevant photos, market reports and expenses to keep them on top of the latest with their property or properties. “Investors deserve to know what’s going on with their investments,” Pam says. Your Property Manager Keeps Your Property Rented Property managers know how to find credit-worthy tenants - and they have a process for doing so. Beyond finding credit-worthy tenants, property managers should begin marketing an apartment as soon as they find out it will be available - not once it’s empty. Reducing vacancy rates is a key part of the job, Pam says - and her team works hard to make sure their properties are rented. Beyond ensuring a property is rented, property managers need to keep abreast of the current market changes and make recommendations for rent increases when appropriate. An investor herself (Pam is currently working toward building her children’s trust), Pam knows what investors need and deserve from their property management team. Her company, Professional Asset Management and Sales, offers investors a full-service experience. Pam Blanco doesn’t want to put her name behind managing a property she doesn’t think is a good value - so she has a team of researchers on the case. The research arm of Professional Asset Management and Sales scouts out the best properties in neighborhoods that offer tenants the amenities they want (i.e: schools, transportation) and gives investors the stability they crave. Pam’s proactive management team walks every single property they care for every single month. A quick glimpse at her company’s website reveals a multi-channel approach to property management: PamTexas.com has everything from featured listings and utility info to online rent payment processing. Systems for management are what sets a great property manager apart from a good one. Systems should be in place, Pam implies, for everything from finding new properties for her investors to finding new tenants. Clearly, Pam Blanco has systems in place that are blazing a new path for other property managers to follow.

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by John Pribble

Attracting Private Money Lenders

ust a few short years ago, many real estate investors were unaware of private money.

More recently, private money has become familiar in almost all real estate investor circles. Private lenders can be a great source of business growth. Unfortunately, there is currently a lack of good quality information about private lending, which is why I wrote a book about it. Let’s first clarify what I refer to as private money. Private money is monies that you acquire from any private individual. Private money is not institutional money, hard money, or money from a lender that is in the business of lending money. Private money lenders (PMLs) are individuals that have the funds available to invest in any vehicle they see fit, and they often find that vehicle to be you and your real estate portfolio. No matter your exit strategy - flipping, buy and rent, owner finance – private money can help you create lasting wealth. Arrangements can be structured for financing only or equity shares. Sometimes a combination of both can be beneficial. For example, let’s say your PML will loan you one million dollars to buy rental properties, but they want some equity. Perhaps you would find it favorable to pay your PML a 7% note rate and give them 50% of the equity above purchase price and make ready costs. In return, you would collect a management fee to manage the properties and also benefit from all the earned equity from principle payments as well as 50% equity above purchase price and make ready costs. Attracting private money involves much more than telling someone that you can give him or her a certain return on a safe investment in real estate. It’s more about you and how you conduct your business, structuring what you do in a way that is inviting to others. PMLs want to do business with someone that they trust, have confidence in, believe in, and enjoy working with. You do need to be an expert in your business and your field of practice. Whether you plan to flip or buy-and-hold rentals, you need to know the questions to ask about the properties you look at. Property analysis is extremely important to PMLs, and you should have a way to analyze every deal from multiple exit strategies so that you are comparing each deal as similarly as possible. It’s up to you to know the property values in your area and understand how to pull accurate comparable sales and leased properties. Know the rehab costs of projects in different price ranges and exit strategies. Understand

how to efficiently hire and work with contractors. People and property management skills are important, as is keeping all that you are doing as organized as possible. Practicing profitable habits is important to attracting PMLs and their money. To maintain your business acumen you should be in a constant state of education. The more you know, the better you can communicate, and the better you can communicate, the more money you can raise. There are plenty of real estate topics to choose from on Amazon, you can go to seminars, attend investor club meetings, and even view webinars from your home office. Take some time to learn about personalities and communication styles. Be the realistic optimist, plan for the worst but hope for the best. PMLs want to work with someone that is working hard to build their business and willing to do what it takes to succeed, even when it requires a great deal of discipline or restraint. Handle your business professionally and in a timely manner. Do what you said you would do, and do it on time. You should be out beating the trees and shaking the bushes to see what pops out. By doing so you will create activity and get the attention of PMLs. Producing income will make you attractive to PMLs though it is not a requirement. Whether you have a full-time job or income from your current real estate business, use that to your advantage when talking to potential PMLs. Producing income shows the stability of your business and is a testimony to your expertise. When starting out, the quickest way to produce income in your real estate investment business is to start wholesaling. Not only does this provide you with income, but it will help you to become familiar with the market and values, which all makes you more attractive to PMLs. Targeting high-wealth PMLs will be most beneficial. High-wealth PMLs are those that you believe have the funds to invest one million dollars with you. The fewer PMLs you work with the easier it will be to operate your business. In your pursuit of high-wealth PMLs, you will find others with smaller sums that want to invest and you should be happy to oblige. Small sums can come in handy to use as second liens when you are financing your first lien with a bank. No marketing is required to get all the private money you need, only networking. Start with your sphere of influence and the people you know. Tell them how great real estate is going for you and how you have individuals loaning you money and earning them 10%. Invite one PML prospect to lunch every week, and you will find private money. It may take 6-12 months, but nothing worth having comes easy. Don’t expect to get a CashFlow Express • Page 18

John started his real estate career in 1999 at the age of 19. In 2000, John got his real estate license and today is a real estate broker. He has practiced many different strategies in his real estate business depending on market conditions. John has experience in wholesaling, rehabbing, subject-to, owner finance, rentals, short sales, foreclosures, brokerage and client representation, property management, and working with banks and private money lenders. When his rehabbing business began to grow John found it beneficial to utilize private money. As the market changed he shifted to more of a buy-and-hold strategy buying rental properties. Private money and local bank financing became a great resource as he accumulated more properties. John has learned many important lessons from working with private lenders and their funds in his business. A great deal of effort has gone into marketing, lead tracking, management, and developing systems for a smooth and successful operation. He also works to maintain a balanced life, remaining focused on family, friends, and enjoying life through activities such as networking with others, climbing mountains, and spiritual growth. For more information, visit: www.johnpribble.com/about-john

firm commitment but if they seem interested begin sending them properties that you plan to acquire. It is a good idea to have a presentation manual that you can show or email to prospective PMLs that discusses you, your business, and how you structure your loans. Include a short video showcasing a few of your best projects in different price ranges. You should also take the time to understand estate planning, tax implications, and finance. High-wealth PMLs have a good understanding of those topics as they work to preserve their estate. Private money lenders are people from all walks of life. They are often humble and conservative, past their years of working long hours, and enjoy putting their money to work for them. PMLs working with real estate investors are a rare instance where two individuals in different stages of life can help each other achieve their goals in an incredible way, bringing forth a profitable business and personal relationship.

Q & A with Zinc Financial, pg. 10

Hands-On Learning with Anthony and Duncan, pg. 15

coming out of its worst recession and values continuing to rise, this is an absolutely great time to fix and flip your next deal with ZINC Financial.

how a typical tour with goes. He explained it’s run like a lab, chock full of real-world applications. “On our tour you can expect to learn how to set up your team, how to find and work with a REALTOR®. You will discover how to find a deal, how to find comparable properties. We will explain the ARV (After Repair Value) and figure out if a property is a fix and flip or a buy and hold. We will talk about wholesaling as an exit strategy for the deals you pass on. The whole class also visits a local Home Depot store and we go over materials needed for a typical rehab. It’s a jam-packed tour because we also visit numerous houses: one under construction, one in the middle of construction, and a finished home in escrow. We also see a couple of deals that we have yet to see ourselves and go over them with our students. We teach what to look for and whether an offer should be made or not. Lastly, we wrap it all up from start to finish and go over how we can get deals accepted.” Duncan and Anthony are clearly more motivated by their love of real estate than of wanting to turn education into a big business - they keep course registration fees refreshingly low - with a three-day tour only costing only $197 for everything. As they’re usually busy making

Question: Can you describe a profile of who your ideal investor client is? ZINC: Most of our borrowers are entry-level or moderatelevel real estate investors. Most are knowledgeable in real estate investing, and they are very well informed in the community where they live. Most have at least some exposure to real estate or construction and they all have some money to work with. ZINC requires a down payment of at least 15% so having some capital to work with is a must. ZINC typically shies away from the true novice who has not done significant homework on this trade, or whose complete exposure to this segment is a weekend guru seminar on how to get rich quick. So, if you have some exposure to this field, have some working capital, we at ZINC are ready to partner with you on your next fixand-flip or rental property transaction. Question: What are your company’s goals for 2014? ZINC: Currently ZINC is considered a boutique lender for fix-and-flip financing. Our goal is to provide reliable, quick and easy funding for our investors. Reliability is key, as investors rely on this capital to fund their deal when they just placed a non-refundable deposit. Quick funding is important, because owners of distressed properties will not wait months for funding, and finally, ease is important, as we do not mandate all of the strict lending guidelines required by most banks. ZINC is the premier lender for fix-andflip and rental buy -andhold properties located in California or Arizona. We can fund loans with our own capital in less than 10 days. Our service sets us apart; we are reliable, quick and easy for our funding process. Contact us today at 559 326 2509 or visit us on the web at zincfinancial.net. Lastly mention coupon code “REALTY411” for $750.00 off your next loan, expires in 30 days.

deals for their own portfolios, these workshops don’t happen all that often. Duncan comments, “We host them only three times a year, and we do limit the number of people who can participate because we want to really give personal attention.” The results students take home of working with these two pros at the top of their game? Anthony says the proof is in the pudding. Students, they say, will be ready to do their own rehabs after the tour - or whatever else they want to try. Anthony explains, “This is a step-by-step event with a simple road map for each person who wants to learn not just rehabs but everything in real estate.” Their coaching students can use them, and their power team, for future deals if they choose to. “We want our coaching students to use our power team so they can get a deal done fast. Our track record is phenomenal, nearly 80% of students have a deal in their first 60 to 90 days!” Duncan and Anthony want to help others find some of the success they have, doing what they love. A love of the craft of investing is what motivates these two proven investors.

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Ca$hFlow Resources

FirstKey Lending Offers Unique Options, pg. 1

The publication is available on their home page http://Realty411guide.com NEW: Breaking Mortgage News Reiff broke the news of this exciting new mortgage product for Realty411 readers in our interview FirstKey is now offering an acquisition-bridge loan product designed to enable the acquisition, rehab and renting of single-family rental portfolios. Buy-and-hold investors can use these loans to acquire distressed property, renovate and roll performing rentals into attractive long-term permanent financing with only one set of closing documents. Besides perhaps being one of the most enticing loan programs to come to market in this space, Reiff points to the specific benefits of flexibility, efficiency and cost savings of this type of loan, which preserves profit and gives investors an edge in the market.

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CashFlow Express • Page 21

Ingenious Loans for Smart Investors… FirstKey clearly offers some progressive financing solutions, positioning the lender as the vanguard of the new mortgage capital landscape. Still, Reiff says innovation is in the blood of FirstKey, which is committed to constantly optimizing its current products and creating new programs to meet the needs of its customers. “Entrepreneurial borrowers value flexibility, whether they own five properties or 5,000,” he said. “We are proud to be a market leader in tailoring products to their unique needs. We recognize the importance of excellent service and are highly focused on delivering just that. It’s not enough to simply offer debt solutions. We also need to ensure that our customers are comfortable with the process and can choose a product that is best suited to their needs.” Surely there will be more to come. Want to know what FirstKey can do for you? Check them out online, or, Reiff suggests, “Bring us your portfolio, and let us help evaluate your options.”

Have you ever done business with this guy? Yeah, he’s the lender who promises low rates and terms, but never closes your deal. He’s also the guy who asks for upfront money just to "look" at a deal, but doesn't return a phone call. You know, the guy who promises everything, but never delivers. Avoid having to deal with “this guy” by establishing relationships with reputable lenders, industry service providers and experienced brokers. A solid network is key to finding success in our industry. You have to know who to call—and for which deal. Make these powerful connections by joining us at Pitbull’s 33rd National Hard Money Conference and maybe, just maybe you will never have to do business with “this guy” again.

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16 2. 85

Lawfully Avoid CAPITAL Gains T

by Jay Butler

he Equity Recovery Program works for you and not the bankers! Holding real property in your individual name provides no asset protection whatsoever and, upon selling the property, causes you to pay the maximum amount in capital gains tax and state taxes. Plus, most real estate ‘business deductions’ are not deductible for an individual filing a 1040 tax return. Your silent partner (the Internal Revenue Service) will love being in business with you as they take 30% to 40% of your hard-earned money from the sale of your property in taxes. Sadly this is the reality for over 50% of all escrows in the United States, but it doesn’t have to be that way for you. By employing the Internal Revenue Code (IRC) Section

income tax bracket you fall under. 0% if in the 10% or 15% tax brackets 15% if in the 25%, 28%, 33%, or 35% tax brackets 20% if in the 39.6% tax bracket In both ‘short-term’ and ‘long-term’ capital gains tax cases, there are no allowable deductions that you may ‘take’ in order to reduce your personal capital gains tax liability other than capital improvements and selling expenses such as commissions, closing costs and inspections. Please note that short and long term capital gains taxes do not apply to any “C” Corporation or LLC filing an 1120 tax return. The “gains” from such a sale are considered ‘ordinary business income’ if the said entity is in the real estate business.

Before selling a property, be sure to plan ahead to avoid capital gains taxes. Leave more profit in your pocket with these simple steps. Ordinary Income Ordinary income is the income generated during the ‘ordinary course’ of a company’s business activities. For example, a new car dealership purchases cars to sell. The Internal Revenue Code considers these cars ‘inventory’. When a car is sold, the income derived from the sale is commingled with the income derived from servicing the cars and the parts the dealership sells for the cars. This income is never considered capital gains. This is a very important concept to understand as its application is equivalent to that of business whose ‘business purpose’ is the purchasing and selling of real estate. Should the corporation not have enough writeoffs to eliminate its taxable income all together, the corporation would be required to pay taxes on the net amount remaining at the end of the tax year, if any. In other words, should the corporation not ‘spend’ all its income on allowable business expenses by the end of its fiscal calendar year, the remaining net taxable income would be taxed at the corporate level. It is important to remember that “C” Corporations invariably pay less in taxes than do individuals filing a 1040, LLC’s filing a 1065 or “S” Corporations filing an 1120-S on incomes up to $250,000.

IRS Code Section 351 states that no gain or loss is recognized by either the contributing shareholder or the recipient Corporation if three conditions are satisfied. 351-Transfer when selling your property, you can legitimately eliminate state tax and federal capital gains taxes. Our nationally recognized (and patent pending) Equity Recovery Program increases your net earnings from the sale of a property by more than 15% to 20%. Short-Term Capital Gains Tax Properties held for 365 days or less are considered ‘short-term’ and are taxed at your ordinary 1040 income tax rate if the property is owned in your personal name or an entity that is a pass-through entity such as an “S” Corp, LLC (filing a 1065), LP or Sole Proprietorship. Taxes are paid at the 1040 tax rate on those gains of anywhere from 10% to 39.6% for the year 2013. This could be a real killer should your taxable gain, plus any other 1040 income, push you into the higher tax brackets. Long-Term Capital Gains Tax The following tax levels are known as ‘long-term’ capital gains and apply to property that you hold for more than 365 days (more than one year). Long-term capital gains tax rates depend on which ordinary

IRC Section 351 The Internal Revenue Code, Section 351 was instituted in 1921 and can be found under Title 26, Subtitle A, Chapter 1, Subchapter C, Part III, Section 351. It wasn’t widely used until Congress provided relief from its previously burdensome provisions in the Miscellaneous Trade and Technical Corrections Act of 1999, which for the first time allowed 351 transfers that included liabilities such as a mortgage. Before that date, 351 transfers could only be undertaken with unencumbered (or fully-paid) properties. 351 Transfers The government will assist people interested in venturing into business for themselves by allowing them to utilize previously owned assets to ‘fund’ their new business venture. The IRC refers to this as a ‘capital contribution’. The IRC further states categorically that in order for a transfer of real estate to a corporation to be tax-free, there must be a verifiable business reason for the transfer. Source of funding, necessary to undertake business, is in large part based upon the entity’s ‘business purpose’ such as the acquisition and selling of real estate. The Equity Recovery Program is a process whereby a “C” Corporation is specially drafted for the property owner to exchange the ‘basis’ of the property for the stock of the corporation. Once transferred, the stock becomes ‘valued’ at the same basis that the property was valued prior to the transfer. When the corporation sells the property, the ‘code’ considers the income as ordinary income of the corporation and not as a capital gain of the corporation. Thus, the Equity Recovery Program (which utilizes a 351 transfer) eliminates federal capital gains taxes when the property is sold. And, by having formed the corporation in a tax-free jurisdiction such as Nevada, the property owner can eliminate state taxes as well.

351 Transfer Requirements IRS Code Section 351 states that no gain or loss is recognized by either the contributing shareholder or the recipient Corporation if three conditions are satisfied. Assuming that the transfers having a bona fide ‘business purpose’ in real estate, the said conditions are: 1.) There is a transfer of property (and not services) 2.) Solely in exchange for corporate stock, and 3.) After the exchange the contributing shareholder(s) is (are) in control of the corporation (i.e. own at least 80% of the voting and outstanding stock).

Contributions by several shareholders may be aggregated in determining if the 80% test is satisfied, provided that all contributions were part of a single integrated transaction to form the business. Note that contributions of cash or property in return for long-term debt (e.g., bonds) do not qualify for a Section 351 transfer treatment. “No gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control of the corporation.”! – IRS Regulation §1.351-1(a)(1) If all Section 351 conditions are met, the transaction is treated as though ‘nothing happened’ in that no gain or loss is recognized. The basis of the shareholder’s stock equals the basis of the property contributed, and the basis of the property to the corporation equals the contributing shareholder’s basis. Please contact our offices for more information on the Equity Recovery Program and to schedule a private consultation and learn how to lawfully avoid paying any capital gains tax on the sale of your next property, http://AssetProtectionServices.com

Lawfully Avoid Capital Gains Tax State Tax and Self-Employment Tax While Receiving 15% to 20% More on the Sale of Your Properties!

Damian Barton President

Jay Butler Managing Director

Dr. Robert Hagopian Chief Executive OfĂ&#x17E;cer

Mobile: (702) 425-4143 Skype: RocketFizz Damian@AssetProtectionServices.com

Mobile: (702) 997-3260 Skype: AssetProtectionServices info@AssetProtectionServices.com

Mobile: (702) 430-9550 Skype: Robert.Hagopian Robert@AssetProtectionServices.com

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