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FOUNDER/CEO Linda Pliagas DRE #01355569 PRESIDENT Nikolaos K. Pliagas EDITORIAL STAFF Hannah Ash Robb Magley Tim Houghten Stephanie Mojica COPY EDITOR Lori Peebles PHOTOGRAPHER John DeCindis COLUMNISTS Tom Wilson Kathy Fettke Lori Greymont Randy Hughes Jason Hartman

BROKER/ADVISOR Steve Kendis, GRI, MLO DRE #00815859 PRODUCTION Jeff Cohen Augusto Meneses WEB MASTER Victoria Landis ADVERTISING Teri Burke Kelly Global Marketing EVENTS & EXPOS Jason Kennedy Lawrence Ruano DISTRIBUTION To receive complimentary copies, please call our hotline 310.499.9545 ADVERTISING: 805.693.1497 Realty411Guide.com | reWEALTHmag.com

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Realty411 / reWealth magazine is published quarterly from Santa Barbara County, Calif. ©Copyright 2014. All Rights Reserved. Reproduction without permission is strictly prohibited. The opinions expressed by writers/columnists are not endorsed by the publishers. IMPORTANT DISCLOSURE: Publishers and staff are not responsible for performing due diligence on the opportunities offered by this magazine’s advertisers and sponsors. Before investing in real estate seek the advisement of a trusted financial advisor, attorney or tax consultant. Beware: Real estate investing can be risky and may result in loss of capital.

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by Linda Pliagas publisher, agent, investor

hank you for spending some time with us, I hope you enjoy our new issue. We are excited to show off our largest print edition to date. When we started the publication in 2007, it was a modest 16 pages and printed on newsprint; now we own multiple publications, numerous real estate websites, and we are producing expos around the country. We’ve really grown tremendously, and I’d like to thank our loyal readers and our advertisers for their support. Now it’s our time to give back, which is why we are devoting the entire 2014 to traveling across the country to host complimentary expos and mixers to connect with as many investors and industry professionals as possible. From New York City to San Francisco and Indianapolis to McAllen, Texas, we want to learn the nuances about a variety of markets so we can better educate our readers. Over the years, investors from around the nation have relied on our magazine to make informed decisions on where to invest, what type of properties to focus on, or whom to train with to further their real estate education. I take my position as publisher very seriously, and I’m proud that I have been in the industry over 11 years as a licensed real estate agent in California. Besides assisting many with their real estate transactions by referring them to brokers around the country, I have also personally purchased, managed, and sold millions of dollars worth of real estate in five states. Real estate is such

an exciting industry and, to me, finding solid rental properties is exhilarating. I truly enjoy the art of real estate. In fact, my husband and I recently closed escrow last month on two phenomenal rental properties in Santa Barbara County. Both were purchased for half of what the market was just a few years ago and appreciation, in this particular area, is already starting to set in! Folks, if we can locate two value-priced properties in one of the most expensive areas of California, I know you can find some solid deals in your market too. If being a landlord is not your style, then perhaps you’re better suited being a private money lender or a note buyer. How about purchasing tax liens or maybe even a hotel? The beauty of real estate is that opportunities for investing are diverse, a lot of avenues for prosperity exist. It’s up to each of us to learn what type of real estate best suits our personality, needs and goals. I hope this publication can give you some ideas and resources to help you in your journey. Until next time,

linda’s note

I truly enjoy the art of Real Estate.

Linda Pliagas

PS: Be sure to keep up to date with our travel schedule by visiting www.Realty411guide.com/events for our calendar.

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contents

BIRMINGHAM, AL

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11 Linda’s Note: The Art of Real Estate 13 Memphis Invest Expands to Texas 18 Safety in Numbers with Tax Liens 21 Analyze Marck de Lautour’s Deal 22 Finance Goes Back to Basics 24 Due Diligence with Kathy Fettke 27 Learn About ListedBy.com 30 Perfect Credit with Dr. Grayson 34 Mobile Home Park Investing with Mike Conlon 37 Discover B2R Finance 38 Secrets from Sensei Gilliland 40 Flipping Houses with Duncan Wierman & Anthony Patrick 42 Jason Hartman Talks Real Estate 44 A Bus Tour with Lori Greymont CEO of Summit Assets Group 45 Manifest Real Estate Miracles 46 Profile of Hanover Equity Group 47 Zero in on Vacant Homes 49 Special Private Money 411 51 FirstKey Lending Unleashes Big Capital for Smaller Investors 52 Discover MOR Financial 54 Five Steps to Raising Capital 55 No Fluff with Leonard Rosen 56 Financial Market Intelligence 60 A Successful Private Lending Practice 65 The Launch of LA South REIA 66 Multifamily vs. Single Family 68 Retire Wealthy with an IRA 69 Turn-Key and Renter Ready 71 Land Trusts vs. LLCs 73 Crowdfunding Investing 75 Flip or Flop with Tarek & Christina El Moussa 78 Williams & Williams Update 80 10 Rules for RE Success 81 Taking Title Properly 82 Larry Goins Discusses Deals 84 Let’s Analyze a Hotel 88 Learn Probate Investing 90 Legal Aide for Investors 92 Connecting with SJREI 93 News from Lady Landlords 96 The Boom After the Bubble 98 Relationship-Building Tips

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pg. 81

Pg. 75 reWEALTHmag.com

Texas Expansion with MemphisInvest.com S

uccessful investors realize how important diversification is to risk management in their portfolios. MemphisInvest.com, the largest turnkey investment company in Tennessee, is responding to the needs of their nearly 900 clients by expanding their operation to what they believe is another top market: Dallas. Although it’s over 400 miles away from their Cordova-based company, the Clothier family, principals of Memphis Invest, are quite at home in the Texas market as they had lived in Dallas for many years as proprietors of a grocery business. So comfortable in fact that they quickly expanded into the market by purchasing hundreds of homes, which were rehabbed and sold as turnkey investments to their loyal clients, many of them already own multiple properties in Memphis. All the properties were sold without any direct advertising or marketing. Now that a secondary office has been set up to handle their growing list of properties under management, they are well on target to expand to nearly 800 doors. Recently, we had the pleasure of interviewing Chris Clothier, co-owner of Memphis Invest to discuss their explosive expansion into the Texas market.

Question: Why did Memphis Invest choose Dallas as their next rental market? Answer: There were a couple of reasons, but mostly our familiarity with the market. We still have family and business ties in the Dallas/Ft. Worth area and luckily the market was a fantastic investing opportunity. We had been looking for which market to expand into and Dallas kept presenting the best opportunity for our success and, more importantly, for our clients’ success. Realty411Guide.com

Q: I’m sure your team and clients had wonderful reactions to the expansion, but were there any concerns about adding a second city? A: The biggest concern was consistency. We had developed a very stable and reliable model in Memphis with a fantastic team and that is very difficult to duplicate. We were very methodical about who we hired and how we trained them. Our culture of putting customer service first and being transparent in our communication, both good and bad, was very important to us. So our biggest concern was how do we keep the high quality of work, communication, service and the reliable model while moving into another city. Q: When did Memphis Invest decide to expand to Dallas and how long did it take from the initial idea to actually selling properties and overseeing rentals in that market? A: We decided in the 4th quarter of 2011 that we were going to open an office in Dallas. We were actually buying our first properties there in February of 2012, but we were not advertising the new city at that time. We were having private conversations with individual investors about the opportunities there and taking orders for properties. At first, we outsourced the property management, but learned very quickly that no one was going to show the same attention to detail and care like we were, so we opened our property management division in October of 2012. We held our first sneek peek event in the Fall of 2012 and hosted 140 investors to the city. Today we are managing just under 250 properties in the DFW metroplex and on average completing between 17 and 20 deals a month over the last couple of months. Our goal for 2014 is to complete PAGE 13 • 2014

Interview by Linda Pliagas

between 250 and 300 transactions in the Dallas market. Q: How did you put your team together in a far away city and what tips do you have for other companies and investors trying to manage a long-distance portfolio or staff? Chris Clothier

A: Without the ability to have a Clothier or a high-level team member in the city each day, I am not sure we would have undertaken a remote location. Our reputation, our commitment to excellence and our integrity are too important to us. So without the easy commute to Dallas, I am not sure we would have chosen the city. We could leave early morning and be in our offices by noon. There are also daily flights back and forth for the hour-long flight. So we chose a city with three attributes for us: a. We were very familiar with the layout of the city. b. We had great connections in the city and were able to locate high quality personnel quickly. c. It was close enough for a Clothier or one of our top leaders to be in the city almost daily.

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Without these benefits, I think it would have been much more difficult. We kept great notes, had meetings on the progress and issues with the second city constantly and have essentially developed a roadmap for going into additional cities. Question: How many clients now own in Dallas? How many homes are currently under your management? A: We have just under 250 properties under management in Dallas and there are right at 80 clients who own properties in the metroplex.

and would be lucky to get 1-year leases in Dallas. We scoffed at that belief and brought the exact same property management and renovation style to Dallas from Memphis. We believed that a home that has been renovated to a higher standard and a management company with great communication and service could easily command a 2-year lease. Today, we rent 80% of our properties in the DFW market on 2-year leases. Q: Are you still hosting property bus tours in both cities? Where can we find out more information about them? A: We do not do bus tours of the cities anymore. We have investors visiting our offices weekly to see properties and the operation. The events that we host now, one in each city each year, are geared toward showcasing our team and our operation as we all the attributes of the cities

neur in Memphis for 25 plus years. My older brother Kent Clothier, Jr. more than doubled the size of a private company in Florida at the age of 28 growing sales for that company to over $2 billion a year. Kent may not be a part of the day-to-day business operations for our companies, but he is a great example of our family being driven to excel. Our families’ success is due to the fact that we have failed and been able to grow and learn from those failures. What you see today is a company where the culture is so important. We have 44 employees and they all strive to excel and be the best. That is very similar to the culture we have developed in every company we have built. Q: Can you give us a sneak peak to what the future holds for the Clothier team and family? A: We are already in a third city, Houston,

Question: Are you inclined to stay within certain areas of the city? How were those areas chosen? A: Just like in Mem“Just like in Memphis, we are trying to buy in areas that we are phis, we are trying to buy in areas that we are very familiar with. We have an understanding of the dynamics very familiar with. We have an understanding in the area and the economic factors that make it a good rentof the dynamics in the area and the economic al part of town. Our biggest concerns are always going to be factors that make it a good rental part of access to jobs, access to transportation and schools.” town. Our biggest concerns are always going to be access to jobs, access to themselves. We try to include charities TX, exploring and looking for office locatransportation and schools. So right and big companies in the cities as well as tion as well as properties. There is a lot of now we are buying in spot areas of town inviting political leaders to address the good opportunity coming for our existing and are only managing in maybe 10% groups. Our events now are much less and future clients and three cities will of the entire metroplex. There is plenty about selling properties and more about certainly help us to fill all of the demand. of room to grow and expand into other helping investors get a good feel for the It has been a process of development over areas of the city, but right now we are market and the company and then make a the last 10 years and these next few years concentrating on doing it right, not so decision if the market and the partner are certainly look to be very promising for our much doing it quickly. the right fit for them. Of course, there is company and for our clients. With three always time on our weekends for investors cities we believe we will be able to fill the Q: How does the Dallas rental market to get out and see properties and we endemand from smart real estate investors as compare with Memphis, as far as ROI, courage it, but we wanted to take the focus they look to develop portfolios of consisvacancies and taxes? off of the “bus tour” or “buying tour” tent and stable returns on solid assets. A: The two markets are remarkably mentality and put it back on the long-term similar as far as returns are concerned, relationship aspect of investing in buy and Q: Is there anything you would like to but Dallas certainly presents more hold real estate. add about the Dallas market and your challenges with insurance and tax rates. involvement in that city? They are a little more fluid than they Q: Your company has accomplished so A: We are really excited about the Dallas/ are in Memphis and are more prone to much in such a small amount of time, Ft. Worth market and even about the change. So we keep a very close eye on what do you attribute your success to? possibilities in the near future for Housthose two costs, which are major factors A: This is not new to my family. My ton. This is going to be a fun year and in an investors ROI. As far as vacanfather has been an entrepreneur for over we are focused on positive growth and cies are concerned, we were told early 30 years and he followed in the footsteps building some great friendships with our on that we would have high turnover of my grandfather who was an entreprenew clients. Realty411Guide.com

PAGE 14 • 2014

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Safety in Numbers

Discover how Chris Gleason and MMG Capital lower the risk on what’s already one of the most secure investments in the industry. By Robb Magley | Photograph by Sam Green

Every day, all across the country, real estate taxes go unpaid.

It’s no secret that real estate taxes generally represent the majority of a county’s revenue; and they need that revenue to provide services like firefighters, police officers, roads and bridges. In more than half of the U.S., counties are required by law to collect unpaid taxes through the sale of tax liens to investors — counties sell a certificate that grants the right to collect those taxes, plus interest and penalties, to investors for the amount of the outstanding tax alone. This allows the county to balance their budget and operate without a revenue deficit — it’s great for the county, and investors like the opportunity, too. But while the sale of real estate tax liens to investors is a process that dates back to the early 1900s, it’s not the unexplored territory it used to be, according to Chris Gleason, managing director at MMG Capital. “The tax lien industry isn’t a secret any more,” said Gleason. “Anyone can register, walk into an auction, and bid. There are thousands and thousands of tax lien investors across the country, and that makes the market competitive.” It’s become so popular because it’s

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an exceptionally low-risk investment in general, according to Gleason, who noted the overwhelming majority of tax liens investments eventually get paid back to the investor — plus interest and fees. “That’s because no one’s interested in losing their house over a tax lien that represents 1-3% of the property’s value,” said Gleason. “Over 95% of property owners redeem their unpaid taxes within their state’s statutory period. For the ones that don’t, the certificate holder has the opportunity to do what’s called ‘filing for deed’ — the equivalent of foreclosing for a tax lien.” Filing for deed starts the process, and the property owner is forced to “redeem” (e.g., pay up), or the property will go up for sale. “At that point, if you’ve done your due diligence and you have a piece of property that has value, someone’s going to come along at that foreclosure sale and pay for the property,” said Gleason. “And that essentially gets you redeemed, too. Over 99% of the time you get your money back, plus interest and fees.” And that’s the goal. Gleason points out the biggest misunderstanding about the tax lien industry is that people think everyone’s in it to acquire real property. “No one PAGE 18 • 2014

should be going into it because they want to buy property for $500,” said Gleason. “Realistically, you’re not going to acquire property this way — unless you’re buying tax liens on worthless property nobody wants. Then you might end up with it — and you’re going to be mad that you did.” While the concept of investing in tax liens is very attractive, and in many ways very simple, the reality of doing it in a competitive market is complicated once you’re on the ground, according to Gleason; between the ins-and-outs of varying state laws, timing, and bid structures, to say nothing of traveling to auctions and servicing the liens once you buy them, the real rate of return for a small investor shrinks quickly. Gleason and MMG Capital structure the purchase of tax liens as a pooled fund opportunity — at once spreading out an investor’s risk and increasing yield. “The rates that you can achieve by yourself, with not a lot of money, are not very high,” said Gleason. “First of all, you’re competing with people like us; we come into these auctions with millions of dollars. Second, if there’s a larger parcel out there, say an apartment building, that’s Continued on pg. 86

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SBD Housing Expands to Florida F or the past 10 years, Marck de Lautour, owner of SBD Housing Solutions has been focusing on the metro Kansas City area for investment properties. His Rolodex of investors includes clients in Australia, New Zealand, Canada and California. Now with the success of hundreds of deals in the Mid West, SBD Housing Solutions is now expanding operations to Florida, specifically Tampa. Recently we interviewed de Lautour to get an inside glimpse of how this savvy investor is able to scoop up quality deals with built-in equity before anyone else does.

By Lori Peebles

of time so it certainly helped in getting the property turned quickly and efficiently.

The SBD Housing Solutions Team (SBD) started researching in the Tampa Bay area back in Jan 2012 and didn’t get our first buy until June 2013! Not fast, but we had to learn the market and we went through 3-4 different cities before settling in on the Bradenton / Sarasota area.

Acquisition Phase Research Phase Question: How did you land your latest re- Q: What were the terms of the sale? A: Cash, closing fast. Got them down from hab deal? A: It was an MLS opportunity, the owner list price of $295, down to $264K. Then got it SOLD for $369,900 in under 70 days. occupant needed to sell. But it was undervalued even at that price. Q: What are some tips you have to research Q: How did this deal compare to other deals you’ve done? a property or area? A: You have to have someone local on the A: We typically buy on the courthouse steps ground that is firmly entrenched in the mar- so having to wait 30 days to close on the ket, able to jump on deals when they come purchase was a bit different! But we could up. We were very patient. Our company get our contractors inside the home ahead

Realty411Guide.com

PAGE 21 • 2014

Rehab/Maintenance Q: Was the property rehabbed or was it a light cosmetic fixer? A: It was a cosmetic fixer upper, but there was an upstairs loft that converted easily with one wall built, into a 4th bedroom. Probably increasing the value by $10K-$15K with that addition alone. The rest was dolling up the bathrooms and kitchen with granite and travertine, and the whole house with some phenomenal dark hardwoods floors! Q: How does this rehab compare versus the properties in the past? A: Of all the homes we have completed in Florida this was the easiest. Extensive cosmetic makeover would describe it, approximately $25,000 of capital invested in the remodel. Management Q: How long was the property held? What tips do you have for managing an asset? A: Just 68 days prior to contract acceptance, then 25 days to close. Work with people you trust — simple as that. Have fun — laugh and learn from mistakes, and Continued on pg. 86

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But With A Few New Tricks

By Robb Magley

teve Bighaus has been in the mortgage industry long enough to see a lot that looks familiar about today’s market.

“I tell people, as far as qualifying, we’re back to lending as it was 20 years ago,” said Bighaus, senior loan officer for SecurityNational Mortgage Company. “I mean obviously we have a few tools we didn’t have back then — credit reports are instantaneous, we’ve got the automated underwriting system, and so on. But as far as documentation type, we’re back to that full-doc loan.” After last July’s bump in interest rates, things are settling back into a more comfortable area that Bighaus says a lot of his investors still find attractive. “I still see a lot of people who want to get into investment properties obtaining financing, because it’s a great time right now to do it,” said Bighaus. “Terms are still great, you know — 30year money, getting high 4’s and low 5’s, that’s still pretty cheap money when you’re looking at investment properties.” As more people enter the market, Bighaus said he’s seeing investors follow the lenders’ lead as far as trending toward more traditional investment models — 20-25% down payments, for example, and buy-and-hold investments outnumbering fix-and-flip plans. “I’ve only seen a handful of people in the last couple of years who have bought their properties and turned around and sold them right away,” said Bighaus. “Everything I see with my clients right now is portfolio building, because they’re all thinking about retirement.” One of the results of that is the increased popularity among investors of 15-year mortgages, especially for loan amounts associated with smaller properties; Bighaus said savvy borrowers are looking at the small difference in payments and seeing big advantages to Realty411Guide.com

Image: maxxyustas / 123RF.com

strategy

Mortgage Industry Goes Back To Basics–

shorter terms. “Where I really see it is in those loan amounts below $50,000,” said Bighaus. “When you look at the difference between 30-year and 15-year terms on a loan of that size, for $50 or $100 difference in the payment every month, you’ve got a better rate, you’ve got more money being applied to principal every month, and you’ve cut your term in half. They’re thinking long term; if they can get it paid off in 15 years, then they’re that much farther ahead of the game.” And the game is growing; Bighaus’ company continues to expand its footprint, operating today in a dozen states with more being added by the end of this year and still more planned for 2015. That can mean a lot of traveling, but Bighaus sees it as part of what differentiates his service from the competition. “Wherever investors are buying property, that’s where we’re focusing our business,” he said. “I like to visit the markets that I loan in, because I like to actually see the inventory and meet the people.” Bighaus is seeing a lot of his customers come back with

PAGE 22 • 2014

Continued on pg. 85

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Close your loan in as little as 30 days! Steve Bighaus has over 24 years experience in the mortgage industry. He maintains a focus on servicing the real-estate investor by offering aggressive financing options and resources for buyers interested in purchasing or refinancing their investment property. By concentrating on investment properties and the financing that comes with them, Steve is recognized nationally as an industry expert. The knowledge that he has enables him to find financing for people even when they have had difficulty elsewhere.

Contact Steve Bighaus Senior Loan Officer 206.930.1801

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steve.bighaus@snmc.com NMLS#: 112825 This is not a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicantâ&#x20AC;&#x2122;s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant. Security National Mortgage Co. is an Equal Opportunity Lender.

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Kathy Fettke gives insight on a recent fraud investigation - They wanted to offer the best deal in town. Testimonials on their website raved about what a great deal it was. “No worrying about property management! No vacancies! No repairs!” Who wouldn’t want that? In reality, that type of situation can exist, but usually only in a triple net lease situation where the tenant agrees to pay all expenses and repairs. It cannot work in a situation where the seller takes on such enormous responsibility for thousands of clients . Here’s what our member thinks happened next: Half-way In:

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Property Providers

(and Avoid Getting Scammed)

eal estate, like any investment, can attract lots of scammers. How do you really know who you’re dealing with? You see ads everywhere for “turnkey” rental properties, but what does this really mean, and how do you know who to trust? The owners of the Bay Area Equity Group, a turn-key property provider located in Campbell, California, were recently arrested on suspicion of fraud. I saw these guys at a real estate expo I attended last year and they seemed like nice enough people. What happened? Real Wealth Network has over 14,000 members now, so it’s pretty easy for us to get information. It turns out that one of our members purchased property through the Bay Area Equity Group. I asked him about it and here’s what he told me he thinks happened: In the Beginning...

- They started to get behind on making owner distributions.

- They realized they couldn’t meet the guarantees. - They didn’t want to let their investors down. How Ponzi Schemes Begin... Often times operators need to rely on new money to feed the old promises. In this case, our member suspects this is what happened: - Allegedly the owners started to buy distressed property, perform a minimal rehab, and then resell far above market prices. - Proceeds from the sales allegedly went to pay for the former guarantees. - It still wasn’t enough.

- They started out with good intentions. - They made guarantees of 15% returns on rental properties in Detroit, MI.

- Desperation kicked in. Allegedly they started to sell the same property twice to different people, but only record one sale. Continued on pg. 83

- They offered to cover repair costs in many cases. Realty411Guide.com

- Operating costs ended up being higher than expected.

PAGE 24 • 2014

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Join us on

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The FUTURE of The Real Estate Industry

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FREE EXPOSURE FOR YOURSELF AND YOUR LISTINGS

• Global Online Real Estate Marketplace • Live Bidding Auctions • Listing Style Property Offerings • Fully Functional Social Network Designed to Get Exposure for Real Estate Professionals • FREE to post listings • FREE to bid on assets • FREE to become a listed service provider and market yourself to potential clients! • We make our money off of advertising so our users pay nothing ever!

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Stephan Piscano

The real estate market continues its aggressive ascend back from the ashes of 2008 and is showing no signs or desire to slow down any time soon. With interest rates at all time lows, the landscape for investors seems just right even for the less aggressive types. ListedBy founder and chief executive officer, and real estate investment veteran Stephan Piscano has been one of the most successful – and daring – investors to take advantage of the recent market drop. While he spends time building online auction site ListedBy.com, his investor acumen continues to spot opportunities along the way. If you heard or read Stephan’s predictions for the real estate market a year ago, and you followed his advice, you would know he was spot on. Today we’re happy to join Stephan to get insight into some of his investing strategies and plans for the future, and how real estate investors and real estate professionals can benefit from using ListedBy.com.

Q: Stephan, you created the website ListedBy.com to meet the needs that you personally had experienced and observed in the online sector as a real estate investor. Can you give us a brief rundown of what ListedBy.com is and how it helps investors meet their needs? A: Thanks Roger, I am excited and thankful to discuss this here on Realty411. As many who follow ListedBy know, I created the site after liquidating several real estate assets online through sites such as eBay and others. At the time it became clear to me after searching literally for years that there was no website out there that allowed me to have the marketplace functionality I needed to properly market my listings, and do it in a setting that promoted trust and openness. With that in mind we went live with ListedBy.com to harness the marketplace functionality of a site such as eBay, but tailor it to real estate, and we added the key piece of the social network which we modeled after LinkedIn to give the buyers the ability to not only research the property that they were buying, but also research the person they are buying it from. This creates more direct communication between the parties and since we never play middleman as our competition does, we create a setting where transactions are much more likely to take place. This functionality allows an investor to not only research real estate online, but actually make a BUYING ACTION through the site and be in DIRECT contact with a person that can actually accept that action all online and all at no cost. Q. That seems comprehensive. So it sounds like the key aspect of the site is transparency? A: Yes you could say that. It is really all about cutting out the Realty411Guide.com

middle man and allowing the buyer to be in direct contact with either the property owner, or the actual list agent. Many websites try to either limit the communication between the parties so they don’t get cut out, or they route traffic to their own buyers’ agents so the buyer ends up dealing with an agent that knows nothing about them, and nothing about the property itself. That can be beneficial to first time buyers who need their hand held a bit more, but to an investor it simply slows everything down and wastes time. ListedBy.com dramatically speeds up the process for the buyer and creates targeted exceptional exposure for the owner/agent. Q: Well that sounds great but I’m assuming that Brokers and Agents are not too happy about being cut out of the loop. A: Oh No I’m happy you asked about that because that is actually one of the biggest misconceptions that people have about the site when they hear about the model. While it is true that of course an owner could use our site directly with a buyer, the reality of it is that the majority of transactions happening on our site take place with agents, and we have actually found that, believe it or not, the agent benefits from our site more than anyone else. By removing the middle man and routing the DIRECT buyer traffic straight to the list agent, it gives the listing agent the opportunity to double-end the transaction and effectively put twice as much revenue in their pocket. In addition to that we have actually heard from several agents that by building out their social network profile on the site with photos, bio, and client recommendations, they have actually gotten new

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Q: So in essence, in addition to buying and selling, an agent can use the social networking part of the site to grow their brand? A: Yes, we built out the functionality with everything that a real estate professional needs to connect with investors and partners from around the world, and it is ALWAYS FREE. Agents can see stats on who came to their profile page and who viewed their listings. It is some unreal technology that can put REAL CASH in their pocket.

A: Yes actually we added MLS syndication in October 2012 so currently you can search about 600,000 MLS listings in a separate section of the site. We also recently partnered with Foreclosure.com to feed nearly two million foreclosure listings to the site. This combination gives our users the opportunity to search auction listings, MLS listings, and foreclosure listings all in one spot. If that was not enough, we also have a service providers directory where users can search property managers, contractors, escrow compa-

“By removing the middle man and routing the DIRECT buyer traffic straight to the list agent, it gives the listing agent the opportunity to double-end the transaction and effectively put twice as much revenue in their pocket.”

Q: So what type of advertising opportunities are available on ListedBy.com ?

Q: Do users on ListedBy have other listing options or just auction? A: Good question. The site is set up to allow users to list as a live bidding reserve, or no reserve auctions. However, most of our listings are actually what we call an “Own-It-Now” Best Offer Listing. This is where the listing is set at a fixed “Own-It-Now” price, but users can actually submit offers through the site which can be countered, accepted or rejected all through the site. It is actually that rapidly paced direct offer submission functionality that really seems to excite our users the most. Q: So are there any other features besides the marketplace and the social network? Realty411Guide.com

recently we have been debating if we should start charging a small fee because people simply don’t believe that it REALLY IS FREE. But right now there is no fee to list, no fee to buy, no commission, no percentage, no membership fee — NOTHING. ListedBy really is free. Our main revenue model currently is from corporate advertisers. We have been fortunate to have three separate fortune 500 companies enter long-term advertising partnerships with us since we went live. When we designed the site model I looked at all the most successful sites such as Facebook, Google and others and we realized that these sites really don’t charge their userbase anything. We want to give our users something that they want and need, and give them a reason to come to the site everyday which creates targeted traffic that is extremely valuable for our advertisers putting their brand in front of consumers that they KNOW need the service, at the moment that they need it the most.

nies and more all on the site. I would get sleepy thinking about it if it wasn’t so darn exciting! Basically we are like five websites in one. And we are designed to give the investor, the agent, and the real estate service provider, everything that they need all in one spot! Q: So I’m hearing a lot of use of the word “FREE”. How can that be? A: Many users may be wondering what is the catch and how ListedBy generates its revenue. Yes, we get that a lot. In fact, PAGE 28 • 2014

A: We have several ways that we can drive traffic to our advertising partners. From our massive reach on social media with our LinkedIn groups, to our more than 200,000 opt-in users. We find that all of our top advertisers extend their campaigns and dramatically lower their cost per lead working with us. I always say that when we went live with the site and tried to figure out how to drive traffic ourselves, I made all the mistakes already with my own money so you don’t have to. We know as a group that we have developed what we believe to be the most effective and powerful marketing platform in the real estate sector, and we are thankful that excelling in reWEALTHmag.com

Image: Gina Sanders / 123RF.com

business and new clients from being on the site! A lot of times a user might come to the site looking to buy, but they don’t see a property that particular day they like, but if perhaps they see an agent profile that catches their eye and excitement now that agent has a new and hot lead directly to their site! Given that we designed the social network to drive traffic back to the agent’s own site, it becomes an exceptional benefit in itself.

this way allows us to help drive profits for our advertisers, and more importantly keep the website free to our loyal and active users. Q: You actually were on the cover of Realty411â&#x20AC;&#x2122;s alternate cover, Real Estate Wealth, when the site went live back in 2012. How has the site grown since then and what are you looking forward to in the coming year? A: Yes, it actually is a bit sentimental to me being in this issue because the very first piece of media/advertising we did when we went live was with Lindaâ&#x20AC;&#x2122;s alternate cover, Real Estate Wealth. Since then while we have had some ups and downs I am so thankful to say we have grown at one of the fastest paces in the real estate sector, had literally thousands of transactions take place as a result of the site, and I am really thankful to have gotten to meet some of my heros and icons in real estate and tech.

Also I am really thankful to great members that have joined the team in the last year and provided such amazing talent and have been such a huge part of our success. In the coming year I am excited about where we are going because I feel like the first year we built our brand, built our base, and learned what we are and how to execute. I feel that we are now ready to put it all in place. In 2014 we are going live with the 2.0 main version of the site, which is going to have some simply UNREAL features that the world has never seen before. This will help us as we also transition more to focusing on having a major presence in the auction and the real estate sector and focusing on high level transactions and allowing users to truly buy real estate in a better and more effective set up. Q: Any other thoughts youâ&#x20AC;&#x2122;d like to share with a fellow property investor?

A: I think that this is an exciting time to be a real estate investor, and perhaps even more so to be an agent. The lack of inventory, combined with low interest rates and the basic sense that this is an exceptional hot market has created a consistent rise in the market as we had projected. I think the market should continue to rise the next 2-3 years, however I do believe that at some point when interest rates start to go up that we could see another small crash in the market. To me it is simply a race between rapid inflation and the interest rates, to see which of the two catalysts stands to impact the market the hardest. You could see the prices continue to rise not because homes are worth more but because the dollar is worth less. That would mean the more leverage that you buy with, the better you can capitalize by paying off your loan balance with cheap dollars in the long term. Either way, whatever you do you better do it on ListedBy.com, and we hope to see you there soon.

Give Him Some Credit One Man’s Quest for Perfection.

by Hannah Ash

now the perfect credit score (not 850), and that’s what he wants; he wants to get you thinking differently about credit. The ambitious CEO of Grayson Financial Services and The 990 Club believes that a credit score of 990 is a goal well worth setting (and achieving). Dr. Grayson is a man on a mission and his mission is to empower Americans to acquire financial literacy and excellent credit. In this economy, his message of hope is both a rarity and a beacon of light. “Do you know what FICO stands for?” Dr. Grayson asks. That most people can’t answer this question, he says, is indicative of a problem. Dr. Grayson believes that as a country, we need to acquire a richer understanding of how the current credit scoring system works and what we can do to improve or perfect our scores. He is eager to point out that in the year 2000, a new credit regime quietly took over and rewrote the age-old model….too quietly, he implies. In previous years, he begins, “As long as you paid your bills on time, you could expect to have good credit...but in 2000, that changed.”

ong after everyone else has taken off for the weekend, Dr. Michael C. Grayson enthusiastically discusses the ins and outs of credit from his empty New York office. Dr. Grayson’s finance and credit service, The 990 Club, was inspired by a rather lofty goal; to help his clients achieve the perfect 990 credit score. 990? He knows it may surprise you to learn that 990 is

mericans, and their credit scores, now fall under the FICO-based system; FICO, or the Fair Isaac Corporation, scores are calculated based upon the length of credit history, amount of money owed, types of credit and newly opened credit while the payment history is a mere 35% of the score. What this means, Dr. Grayson concludes, is that a millionaire many times over who always pays her bills

Realty411Guide.com

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Image: Alma Gami / 123RF.com; Dr. Grayson photographed by Mike Morgan

on time may end up with a less than desirable score. He has seen how credit scores can make or break a real estate deal. He recounts a cautionary tale of how he once worked with a real estate developer and millionaire whose funding for a project got held up due to her score. The developer, who always paid her bills on time, had assumed her credit was excellent. Her FICO score, which landed somewhere in the 500’s, was a rude awakening. If a multi-millionaire isn’t credit-worthy, then who is? According to Dr. Grayson, everyone can be. The 990 Club and GFS were founded as a response to the financing problems Dr. Grayson, while working as a financial advisor, saw investors encounter as a result of lackluster credit. The teams at GFS and The 990 Club function like something of a credit and financing think tank; through offering intellectual capital to those seeking capital and credit, Dr. Grayson’s company provides an innovative, and popular, service in a downturned economy. Grayson offers unique FICO-compliant strategies that elevate investors, home buyers, corporations, small businesses and nonprofits to the credit level at which they want to be. Dr. Grayson has cracked FICO’s algorithms and, he says, he has a formula that gets his clients results. Does his formula work? For Dr. Grayson, the proof is in the pudding. One of his clients was able to achieve the highest credit score in the world, a perfect 990. He is eager to spread the message that long-term financial growth and excellent credit go hand in hand. Simply stated; Dr. Grayson wants to change the world, one credit score at a time. Though many companies offer credit repair services, Dr. Grayson isn’t flustered by the competition. The one-size-fitsall approach that most credit repair companies use doesn’t really repair anything: “The problem with the other leading

companies,” he says, “is that they only address the negative items on a consumer’s payment history”. As payment history accounts for a just portion of the total score, the switch to the more comprehensive FICO system in 2000 actually made payment-history focused credit repair somewhat obsolete and the result, Grayson says, is that his competitors’ take far longer to do far less.

redit repair companies today must address all aspects of credit scores, Dr. Grayson puts forth, and GFS does just that. Most credit repair companies are equipped with dispute form letters; GFS is armed with the “Grayson Formula” (the result of Dr. Grayson’s reverse engineering of FICO algorithms). Rapid Restructuring is Grayson’s secret ingredient; the Formula, he says with confidence, can give anyone good credit in approximately 30-45 days using his strategic credit restoration and development approach. Anyone? “Anyone,” Grayson reiterates; further, his formula can take good credit scores and make them great. Great credit scores can become perfect (or close to) and Grayson is proud of his success, “The 990 Club has more members whose credit scores are in the 900’s range than any other service club.”

Dr. Grayson is a Man on a Mission..

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Dr. Grayson wants to bring his message of financial literacy and good credit beyond his work with investors and individuals. He believes good credit is the key to obtaining loans, closing contracts, obtaining grants and even getting a job these days; GFS is committed to community outreach and empowering the disenfranchised. Dr. Grayson regularly works with government organizations, politicians, churches and nonprofits to discuss opportunities for financing, credit and financial growth; in 2012, Grayson presented before New York Governor Cuomo’s forum on small business. Currently, he is undergoing a series of meetings with New York City’s high school principals to develop a pilot program: The 700 Club. Grayson’s goal for the project is to give every graduating senior the gift of good credit (a 700 score) and the skills to maintain it; a large task, no doubt, but one in which Dr. Grayson believes fully. For individuals looking to improve their credit scores, Dr. Grayson advises they learn what FICO stands for and what, exactly, is scored. Though a perfect credit score may seem impossible for most of us to achieve in the current economic climate, he disagrees. Where we see 500’s and 600’s, this determined CEO sees 800’s and 900’s. Is he a magician? No; Dr. Michael Grayson is a scientist who believes in the transformational power of great credit. For more information about Dr. Grayson, visit www.mydebtfilter.com

Dr. Grayson photographed by Mike Morgan

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PAGE 32 • 2014

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bad shape (a goal in any purchase is to save as many homes as possible). The first move we made was to “zonedown” the properties to create immediate higher occupancy. We zoned the larger park down to 132 spaces by creating one lot from two spaces. We did the same with the smaller park going form 84 spaces to 60. Existing residents loved the larger lots, but our goal was to get it prepared for financing, which means we need a minimum of 65% physical occupancy (actual homes on lots) at both parks. The “zoning-down” process took us approximately 4 months to accomplish with a total cost less than $20,000. Less density is almost always well received by local municipalities. Many investors ask me why I would “zone-down” a park instead of simply filling it up with a repo home. Although we added 5 repo homes to each park, this process is time consuming and expensive. A typical repo home will cost you $15,000 — $20,000 to purchase, move, set-up, and rehab. “Zoning-down” parks is a much cheaper way to get occupancy up immediately. Once we zoned the park down, we executed our “rehab playbook” to perfection with the following steps:

Mike’s basic investing premise has brought him success over the last decade and he foresees even more opportunities over the next 10 years. Unconventional Wealth gives readers insight into the skillz they need to become Main $treet Millionaires.

Realty411Guide.com

MIKE CONLON

He has bought, rehabbed, and sold over $50 million worth of commercial multi-family (affordable apartment complexes and mobile home parks) involving 15 projects over the last ten years. He was a leader in the financial planning business in the 1990’s and early 2000’s as he grew a financial planning broker-dealer from $1.2 million in gross revenues to $40 million in six years and then sold it to a large national insurance company; he also managed over $100 million of client money in his own financial planning practice before becoming completely disillusioned with Wall Street money machine. He is a 1990 graduate of the University of Minnesota Law School.

The New Main $treet Millionaires

2012. Both parks were REO (bank owned) parks that we bought via a broker. This was y company, an off-market deal Affordable that was not listed The New Main Communities on any public $treet Millionaires Group, LLC (ACG), websites. In my based in Cary, NC, business, knowing specializes in purchasing the brokers and MIKE CONLON distressed mobile home establishing a track communities at distressed record with them sales prices, rehabbing is very important. the properties over 9-15 months and We like the greater Cincinnati – Dayton then either obtaining a refinance from market because of its large population a financial institution or flipping the (over 3 million combined) and strong property for significant gain. We have base of employment. The multi-family done 16 full cycle deals (buy, sell, rebusiness, whether apartments or mobile hab) for sales proceeds exceeding $65 home parks, is all about having strong million over the last 9 years. We also employment near the property. Lot rents currently own over 3,000 mobile home are solid in this market as well , ranging spaces amongst 12 parks throughout from $325 - $375. the Southeast and Midwestern U.S. for We purchased the two parks for cash flow purposes. $1,150,00 all cash. One park had 306 We have just recently finished a spaces with 55 resident-occupied homes 12-month rehab project amongst two and 120 empty homes. The other park parks in the northern Cincinnati market had 84 spaces with 34 resident-occupied that we run as one combined park, homes and 3 empty homes. Both parks (they are 10 minutes apart). We use had been in steady decline for 5 years. In one manager to cover both parks. We fact, we had to tear down 101 homes at the purchased the deal on October 26th of large property because they were in such Mike has the unique ability to provide Americans with a realistic, no B.S. view of the financial world today – one that comes from his years of street-wise investment success in three different businesses – financial planning, mid-sized apartment complexes, and mobile home communities that have made him a true Main $treet Millionaire.

PAGE 34 • 2014

1. Repaved the roads – cost $79,000 2. Trimmed many trees – cost $21,000 3. Rehabbed 22 existing homes and sold them to residents – net cost $88,500 4. Added 5 repo homes at each park – cost $180,500 The additional cost in this project was the tear-down of 101 homes, which cost $111,625. A little bonus at the larger park is that 8 owners of nice RVs are leasing lots form us in the back of the park. Total rehab costs for this deal were right under $500,000. I was fortunate to use a bank line of credit for half of the rehab. Our total cost into the two parks is

reWEALTHmag.com

Photo: Jacqueline Moore | Dreamstime.com

miche

Invest in Mobile Homes Investor & author mike conlon teaches how to

Why Should You Invest In A Mobile Home Community? 3 The demand for affordable housing is skyrocketing 3 Very little, if any, affordable housing has been built in the U.S. since the mid-1990’s 3 Much higher cash flows than apartment complexes as they are less maintenance intensive, have much less resident turnover, and much lower ongoing capital expenses 3 Higher barriers to entry as the costs to build a new park are high and available land near larger metro areas is scarce and expensive 3 Much easier to manage when the majority of residents are just “leasing the dirt”

Why affordable communities group? Learn how I made over $500,000 in profit in two years by buying one distressed community

Mike Conlon, President/CEO MIke Conlon, aka Main Street Millionaire, has the unique ability to provide a realistic, no b.s. view of the investment world today as he is highly educated but also has 15 years+ of streetwise investment success that has made him a multi-millionaire. Mike tailors his business strategy around providing outstanding customer service and quality, affordable products to the fastest growing consumer segment in the U.S., to the working poor.

AFFORDABLE COMMUNITIES GROUP

3 10+ years experience in buying, rehabbing and selling over 3,000 units 3 Have completed 15 full cycle deals (buy, rehab, sell) resulting in over $50 million proceeds 3 Experts in the property management business as we self-manage all our properties - very “hands-on” 3 Keep a tight geographic focus - diversified, but not too spread out 3 We put our own capital into every deal

Log on to any websites below to get more information on investing in Mobile Home Communities and to score a free copy of Mike’s new book: Unconventional Wealth Creating the New Mainstreet Millionaires

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$1,650,000. We now have 126 residents combined from both parks (up from 89 a year ago when we took over). We will add 6-10 more repo’s in the Spring to get to 70% occupancy. We just had the parks appraised and the valuation was $3,225,500. We will get all of our original capital and rehab funds back upon a refinance this Spring. More important, the parks have been positive cash flow from day one (I can’t stress the fact enough that you never buy a negative cash flow property) and the monthly net cash flow (after all expenses and mortgage payments) now exceeds $15,000 a month. You can see a positive article about our project written by the local newspaper on our website, just go to: www.acgmhc.com

Affordable mentoring and training classes Hands on investment opportunities Exclusive insider’s member resources VIP membership with 24/7 access to MLS and Deal Analyzer Success and self improvement training sessions Online real estate hangouts and video libraries

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reWEALTHmag.com

Blackstone Unleashes

Financing Options

eal estate investors looking for funding in 2014 could find this new lending source and its President one of their best allies… On November 15th, 2013 investment giant Blackstone made a major announcement that changes the game for rental property investors, and is likely to create ripples which have the potential to provide a huge boost to the U.S. economy at every level. Former joint head of single family rental finance at Deutsche Bank AG, John Beacham, recently joined Blackstone Tactical Opportunities’ new B2R Finance lending arm as President. “B2R” has now unleashed several stunning new mortgage finance programs specifically designed to aid small to mid-sized buy and hold real estate investors with loans of $500k to $50M. The Major Pivot Real Estate Entrepreneurs Have Been Begging For In recent years some rental property investors have felt significant pressure from mega funds like Blackstone, which according to Bloomberg, has spent over $7B in acquiring tens of thousands of U.S. residential rental homes. At the same time, access to credit for those desiring to capitalize on appetizing investment opportunities in the market has been incredibly restrictive, even for well-qualified borrowers. The B2R Finance pivot completely changes these dynamics. The new buy to rent financing source puts all of the best of Blackstone behind the smaller real estate entrepreneur to fuel their goals for the new year, and long term passive income generation and wealth building. With access to considerable deal flow, the capital to execute on it and a lending partner that really understands their needs the next 12 months promise to be an exciting time for expanding portfolios. In an interview with B2R President, John Beacham, Realty411 got the inside scoop on the firm’s new loan programs… Making Buy to Rent Finance a Breeze So what’s so notable about this new collection of loan products, and lender, and how easy is it to get funded?

Realty411Guide.com

By Tim Houghten

al nightmare scenarios in which they have In our exclusive run out of funds have proven them to not January 2014 interview always be the most attractive option for John was quick to point buy and hold investors. out that while B2R Blackstone’s B2R flips this all on its Finance is a completely head, and specifically provides critically separate entity to Invineeded liquidity for those with 5 or more tation Homes, it puts rental homes, who are seeking loans from all of that experience, John Beacham $500k and up. billions in liquidity, and This enables investors to re-capitalize, understanding of the challenges investors achieve leverage for expanding portfolios face in this arena into backing the smaller and is providing a massive cash injection rental property landlord. with wide reaching benefits which should In fact, B2R is one of the only players make life a little better for everyone. in this segment of the market. Specifically 3 Steps to Success… it is unique in offering tailor made loan When asked about the advantages of products for financing single family rental working with B2R Finance, John Beaproperty portfolios with loan amounts cham explained, the B2R management between $500,000 to $50,000,000. team has funded significantly Mr. Beacham more rental homes loans than points out that Loan Program other institutions, pointing out not only are Highlights: the benefits of the expertise and approximately • Easy 3 Step Loan Process focus as “This is all we do.” 98% of the na• 30 Year Amortization Of course what everyone tion’s estimated • 5 & 10 Year Terms wants to know is how easy it is 14 million sin• Non-Recourse Options to get one of these loans… gle family rental • Min. DSCR 1.25 John told Realty411 that homes actually • Low Cost owned by small- • Loans from $500K to $50MB decision making on these loans is primarily based upon the asset er investors (not and cash flow, the company offers non-relarge institutional players), but “75% of course options; providing fast funding and those properties have been purchased with no debt.” John goes on to highlight: “that’s a straightforward process. Beacham was clearly very bullish on over 10 million properties in the U.S. with the outlook for rising asset values, which no financing on them, much of which has been picked up by entrepreneurs buying for investors should take as a great sign, and indicator of an aggressive lending partner their own personal portfolios”. which really wants to make loans, and B2R’s President comments that this pool which represents around 1 in 10 of all a lot of them. According to the head of the unit the borrowing process is really a homes in America doesn’t remain unlevsimple 3 step process: eraged due to a choice, but rather a gap in 1. Call toll free on 800-227-8107 or apply the market which has left investors sorely online at http://www.b2rfinance.com/ underserved. apply-now Besides the strict credit requirements 2. Return the signed term sheet and banks have set, investors in this segment ‘expense deposit’ for due diligence of the market have been buffeted by 3. Close your loan quirks in underwriting requiring extensive paperwork and limits put on the number of Investors who are serious about improving properties able to be financed. Hard money and growing their portfolios for 2014 need to learn more about B2R Finance and the lenders have tried to move back in, but high fees, double-digit rates, and occasion- opportunities they offer. PAGE 37 • 2014

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The Sensei Speaks On What, Where & How To Invest In 2014

ensei Gilliland, of the extremely successful 12 ROUNDS real estate investors club and Black Belt Investors, just gave us the scoop on Remote RehabsSM, and where to find big spreads like it was 2010 again… The U.S. housing market may be even hotter than the club house fireplace at this time of year, but many new and veteran real estate investors alike are finding themselves battling heavy competition, rapidly rising prices and the logistical challenges of out of area investing. Sensei Gilliland’s simple “Find it. Fix it. Profit” mantra hasn’t just helped him come through some of the toughest years the U.S. housing market has ever experienced unscathed. It has evolved into the formidable weapon many rapidly growing investors, portfolios and investment businesses are crediting with using to get the edge – Black Belt Investors. In the past four years Black Belt Investors has been responsible for an incredible number of transactions. A big part of this certainly has to do with the focus on investing in the individual success of other investors. Rather than simply trying to pitch investors or consumers on a product, or overpriced inventory which needs to be shed, Black Belt Investors offers a full suite of assistance from education to investment opportunities to coaching and hard money lending in order to help all investors grow from the ground up to achieving their personal goals. Sensei explains this unique approach has helped many with their own breakthroughs, and just making what they were already doing better. This variety of strategies has helped others to reduce risk and hone in on what they really want more of. To date Sensei Gilliland’s students have used these strategies to generate cash via flipping houses, lease options and owner financing. Still, when asked which was his favorite real estate investment strategy for 2014, Sensei says he is still bullish on Remote RehabsSM. Remote RehabsSM enable global investors to benefit from accessing discounted properties, adding value and either flipping them for sizable, fast profits or holding them for ongoing cash flow and passive wealth building. Satisfying the demand for strong returns and below average acquisition costs, with the perk of having multiple exit strategies to choose from, Remote RehabsSM enable investors to engage in the most profitable markets, at the right times and leverage expert teams to maximize their returns. Obviously the biggest question most have today is where to engage in remote rehabbing? Black Belt Investors continues to see primary markets such as Las Vegas, Phoenix, and Southern California as the territory of wealth builders with an extremely long outlook, or who are okay with modest yields in exchange for enhanced safety. These markets continue to attract plenty of domestic and foreign interest, yet to a certain extent have suffered due to this popularity. Rental property investments in these areas can be great for long term hold and wealth preservation, but lack the advantage of rapid price appreciation today. Secondary is the new primary according to real estate experts and analysts across all industry sectors. Sensei Gilliland points Realty411Guide.com

to secondary markets such as Kansas City, MO and Indianapolis, IN as offering a superior solution for those seeking a blend of appreciation and cash flow. However, for those looking for rapid wealth building Sensei’s top pick for Q1 2014 is Cleveland, OH. As he puts it “Cleveland, OH is now like Southern California in 2010,” It’s ripe with pent up equity, offering tremendous benefit to cash flow and value seeking investors.” Put simply Sensei sums up the current opportunities as being able to “pick up a beautiful home, in a good suburban neighborhood, with a strong cap rate,” but warns “the window of opportunity is short.” Right now Sensei paints a good example of this opportunity as being able to scoop up one of these homes which previous sold for around $100K, for just $45K. He also points out some of the benefits of this market right now include: 1. Getting ahead of hedge funds (and profiting from the rise they will provide later). 2. Affordable homes. 3. Cleveland is pumping millions into revitalization. 4. A city committed to avoiding developing a reputation like Detroit, and determined to maintain and lift local property values. 5. A county invested in the success and protection of real estate investors through ‘point of sale’ check, home inspection reports, monitoring contractors and ensuring investors are not overcharged on rehabs. This is backed up even further in recent news headlines: • Q3 2013 figures from Ohio banks show $2B in REOs and $35B in non-performing residential loans on their books. • On Oct. 17th, 2013 it was revealed Starwood Hotels & Resorts Le Meridien brand was joining the Cleveland rebirth with a new luxury hotel. • Nov. 4th, 2013, Crain’s declared “Cleveland is in the vanguard of urban revitalization strategies.” • Forbes says more than $3.5B is currently being invested in redeveloping the Cleveland area. Most real estate investors are probably familiar with the concept of turnkey and remote investing. So what really separates Black Belt Investors from the rest and has fueled the firm’s success? Sensei says the real differentiating factor in working with BBI is that unlike other investment firms and the endless line up of gurus out there which all appear to be punting their own inventory, much of which is being sold at, or even above market rates is “built in value, and being able to make acquisitions at wholesale rates.” Rather than picking from an old menu of stale listings which have been turned down by other investors, those investing through the Remote RehabsSM program are helped to find hot and fresh opportunities, which meet their individual criteria and investment objectives. Find out more about Sensei Gilliland, Remote RehabsSM, and request your free copy of Black Belt Investors’ Cash and Wealth Report online at: www.BlackBeltInvestors.com

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Flipping Houses with Duncan Wierman & Anthony Patrick

oint ventures are common in the real estate industry. Many people in the business team up to do deals or for other opportunities, usually they reside near the other, but these two investors are so experienced they’re able to make it work while living in opposite sides of the nation. Anthony Patrick and Duncan Wierman are so talented in their craft that distance is not an issue for them. Each brings a different skill set to the table, and they combine their talents in order to lead others into the profitable, yet often, risky world of real estate investing. I recently had the opportunity to meet up with Duncan and Anthony and learn first-hand about their latest venture. Learn how this duo lands deal after deal in one of the most competitive markets in the world: Southern California. Linda: Well, fellas, it’s such a pleasure to catch up with you. Please tell us about your Flipping Houses Bus Tours. Anthony: Well, Duncan and I demonstrate our methods and reasons why we do things the way we do, so you can be assured of success. We reveal everything! You will actually participate in the process and we will be by your side to correct you as you go. (You will not make mistakes with us advising you.) We take pride in teaching you how to succeed. 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.

A Question & Answer with Linda Pliagas Duncan: The workshop is an exclusive opportunity for those investors who are tired of reading the books, listening to the same CDs over and over, and who are ready to finally take action and learn “hands on” from people who do this every day. Q: Why did both of you decide to partner up for the Flipping Houses Bus Tours, and what are your strengths that you bring to the table? Anthony: Between the both of us, Duncan and I have over 25 years of experience in the art of investing. From marketing, deal evaluation, rehabbing, and most of all, giving the most value and knowledge for our students. Duncan: Yes, and we both have mentored our students one on one in all aspects of real estate. Because of our success in this business, we have decided to join forces to teach people hands-on instead of theory. Q: Where are some of the areas you focus on for investing and why did you choose those markets? Anthony: We look for below market homes on the MLS because if we don’t, we could miss out on a gem – homes with opportunities to create their highest and best use. Most investors aren’t doing this simple search! Also, we target for sale by owners (FSBOs) and out of state owners because when vacancies and repairs

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 them 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.

happen, this type of owner is likely motivated to sell. Probate is also our niche. Q: Are the properties your team is visiting foreclosures, short sales or auctions? Anthony: They are REOs, Short Sales, FSBOs, deals on the MLS and also internet leads. Q: Tell us what students can expect to walk away from once they take your training program? Duncan: This is a true, “Hands on and step-by-step” experience. There is no better way to learn than having us and our power team there to “hold your hand” every step of the way. In our workshop we will be previewing and introducing you to various deals and projects that we have already run the numbers on. We also teach our students how to find lots of “hidden deals” on the web and train them on how to find the most motivated seller leads using internet marketing methodologies. Q: Can you take us on a typical day of the tour, how is the event organized? Anthony: 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

Q: How much is the tour and what does it cover? Duncan: The investment is very reasonable, we wanted to make this an affordable price point for everyone. It is only $197.00 for a three-day tour. Yes, that includes Friday, Saturday and Sunday. Two full days in the classroom and one action-filled day in the field. Q: The property trips sound fantastic! How often do you have the Flipping Houses Bus Tours? Duncan: 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. We always sell out too so be sure to book your spot early. Q: Will students be ready to do their own rehabs after taking part in your tour? Anthony: Absolutely! We never hold back in providing all the information and knowledge needed to get started making money in your market. 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. Q: Do you share your crew and contacts with your students? Anthony: Yes, 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: We give our students access to great people, individuals who are the best in their fields, such as Realtors, escrow and title companies, contractors, electricians, home inspectors, hard money lenders, and we even let them work with our marketing team. Linda: Well thanks for your time, Anthony and Duncan, continued success with your phenomenal flipping tours!

Photographs - Opposite page: The Flipping Houses Bus Tours provide in-depth live education. This page, Anthony Patrick, Duncan and their team rehab seven or more properties a month in Southern California, featured are some before and after examples. Realty411Guide.com

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reWEALTHmag.com

Investing Secrets of the Rich!

from Jason Hartman’s Financial Freedom Report

rom corporate CEOs and entrepreneurs to sports icons and political figures, very wealthy individuals invest for success.

While your investing career may not have quite the scope of those multimillionaires, you can share in some of the investing strategies that they and their financial managers use to keep those mega- bucks coming. They Invest nationally Very wealthy investors cast a wide net, putting money into solid investments in places far beyond their local area. They keep an eye on trends in emerging markets, often putting money into lesser known markets and enterprises under the radar of conventional investing wisdom. Investors in income property can use this strategy too, by taking Jason Hartman’s advice to diversify, looking beyond local markets for potential good deals. Investing in another city – or another country – creates a hedge against downturns in any one market.

They Don’t Speculate Very wealthy investors stick with known quantities and stay away from hot new deals promising quick money. Although they have money to risk, they listen to smart financial advisors and keep their wealth in proven assets with a long track record of success, such as property, solid businesses and physical commodities. For income property investors, the same is true. House flipping and real estate schemes promising fast money don’t deliver for the long term. Creating an income stream that lasts calls for patience and perseverance backed by good financial advice and an investing strategy with clear goals. They Get Good Advice Rich investors have a plan and they look for good financial advice to help them implement it. Although they’re in charge of their investing decisions, they

recognize the need for qualified money managers to execute those decisions. That’s good advice for the independent property investor – and one of Jason Hartman’s investing commandments. You don’t have to be a multimillionaire investor to learn about investing and locate the best advice you can afford.

They Invest in Themselves Whether they’re the face of a corporation or a face on a billboard, ultra-wealthy investors invest in themselves. They recognize that their image and their brand plays a role in their investing success and they put money toward developing and protecting that brand. And you don’t have to have that high a profile to recognize the importance of seeing your investing career as a business, with a story and a personal brand all its own. That means investing in the right tools for managing your enterprise, from courses to computer software. And it also means creating and presenting a professional image when you’re conducting investing business, such as interviewing tenants. It’ often said that the rich are just like you and me. And while that’s not necessarily true in all ways, even the smallest income property investor can make good use of the investing “secrets” of the ultra-wealthy.

House flipping and real estate schemes promising fast money don’t deliver for the long term. Realty411Guide.com

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Image: Pixel Bliss / 123RF.com

They Invest in Solid Assets The ultra-rich are pretty conservative when it comes to investing. They sink their money into tangibles like property, precious metals and even art. Stocks and securities make up a surprisingly small part of their portfolios. The takeaway for real estate investors: as Jason Hartman says, real estate is a vehicle for building long term wealth – a tangible commodity that will be in demand as long as people need places to live.

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or many people, the first foray into creating income from real estate comes from renting out a home they already own. Life changes and economic conditions can quickly turn homeowners into landlords. But making that shift successfully requires re-thinking your role and your relationship to the property.

Close Out Utility Company Accounts Although some landlords choose to cover certain utilities, that usually happens with a multi-unit property. Before renting out a house, though, it’s important to ensure that you’ve closed out any utility accounts held in your name. Tenants will need to start their own utility services so that the new landlord isn’t held responsible for missed bills.

Change Your Insurance If you decide to rent out a home that once was your primary residence, an important first step is to switch from a standard homeowner’s policy to rental home insurance. This covers the property itself and provides liability protection, but it doesn’t cover possessions, furnishings, and the like. That becomes the responsibility of tenants, who can get renter’s insurance to protect any possessions they bring onto the property.

Prepare to Deal With Tenants One of the most daunting tasks facing new landlords is actually renting out the property. It may be simple to advertise the house for rent, but then come steps like screening tenants and finalizing the lease agreement. Inexperienced landlords may fail to screen tenants carefully, or leave important clauses out of the lease or rental agreement. Getting the help of a real estate professional or

Jason Hartman has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. His company, Platinum Properties Investor Network, Inc. helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Jason’s Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs. Contact Jason at www.JasonHartman.com or 714-820-4200.

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even a lawyer to create a good rental agreement can help forestall issues down the line. Plan for Tax Time As a rental property owner, you’ll be reporting rental income on your taxes. But you’ll also be reporting a variety of deductible expenses. Although tax laws are subject to change, the long list of deductibles begins with your

mortgage interest and includes such expenditures as real estate taxes, costs of advertising the house for rent, travel, accounting and depreciation on the house. Repairs and renovations can also be deducted under certain circumstances. And you can also deduct expenses related to your home office, which brings us to the last point: Think Like a Professional If you’ve made the shift from homeowner to landlord, you now have a business, so it’s important to see your income property in that light. Even if you choose to outsource aspects of managing the property to a management company, you’re still the one in charge. Maintaining a home office, keeping goof records, and establishing a businesslike relationship with tenants builds credibility and establishes authority. Renting out your residence may be a response to unexpected circumstances, or the first step toward an investing career that involves multiple properties, as Jason Hartman recommends. With careful planning, though, learning to think like a landlord can save headaches and open doors to building long term wealth.

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markets

Birmingham Bus Tour Summit Assets Group Shares an Undiscovered Investor’s Dream

ummit Assets Group, a leading provider of turn-key passive income properties for real estate investors, hosted a buying property tour in Birmingham, Ala., on Saturday, October 19th. After many successful tours in Atlanta the company has expanded into the Birmingham Lori Greymont market because of its strong economy, growth projections, and ability to generate dependable cashflow for real estate investors. The bus was filled with local, national, and international investors, as well as a film crew from the largest Japanese television network. The company showed off some of the assets that make Birmingham a leading investor city in the U.S., in addition to a small sample of property opportunities. The tour started off Saturday morning when investors had

called Miss Myra’s BBQ Pit for a taste of Southern Hospitality and flavor. With full stomachs, the investors then toured the downtown area, University of Alabama at Birmingham, and other key development areas. A local attorney, turned tour guide, entertained the investors with critical economic facts interlaced with humor. In addition to learning about the different economic growth factors that create the right investment environment in Birmingham, investors were able to walk through properties and see neighborhoods first hand. The viewed properties were in different states of the rehab process, and the investors were able to meet and mingle with some of the contractors on-site! On Sunday, the Summit team and investors took full advantage of the entertainment factor with NASCAR at the Talladega Super Speedway. The race was amazing (even if they didn’t finish the final lap)!! Watch the video at http://youtu.be/FLYrY3QIqSg

Summit Assets Group Prepares For New Buying Tour

Image: Sepavo / 123RF.com

an opportunity to learn from Summit Assets Group’s CEO and radio host, Lori Greymont. Education was one of the main focuses of the weekend as investors heard about the economic impact of recent developments in Birmingham and how local government and civic organizations bringing in long term job growth. Greymont shared that real estate has historically increased faster than wages and inflation and now is the time to take action while prices are still well below the cost to rebuild. After the education from Lori, investors loaded up the bus and the tour began. The first stop was lunch at a local haunt Realty411Guide.com

ummit Assets Group and CEO Lori Greymont continue the “Make a Difference” mantra. But this mantra is actually a way of life. They make getting to know their clients on a personal level a pivotal business component and hosting the buying tours is just one way to meet and connect with their valued clients. “It’s all about helping the investors secure a financial future with successful real estate investing – and having an ally to assist in the process. Our combined 65 years of experience bring peace of mind to our investors,” Greymont said. Summit is working on the next tour and dates will soon be available. Whether you are a veteran investor, just getting started, or even thinking about investing in your future, join Summit on their next tour for both the real estate education and the opportunity to buy investment properties that generate dependable passive income. Summit Assets Group invites real estate investors to download their *FREE* market checklist for identifying the best markets for dependable cash flow at: www.summitassetsgroup.com/ ideal-market or call them at 888-298-0652 to learn more about available turn-key properties.

Lori Greymont

Take Care,

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Manifest Miracles By Sam Sadat

Image: Roystudio / 123RF.com

ou’ll be happy to know that, last I checked, the laws governing miracles have not been repealed. Moreover, manifesting miracles is not exclusive to a lucky few. They’re available to all who refuse to believe in the concept of “impossible”. After all, couldn’t “impossible” be simply read as “I’m possible?” Although the mechanics of creating miracles in one’s life remain mysterious, many of us, consciously or unconsciously, have already made them happen in our own lives - or at least we know people who have. Let’s be clear; we’re not talking about parting the Red Sea or bringing the dead back to life. The word miracle simply means any marvelous, wonderful, or amazing occurrence. Being the cause of such an occurrence is ability innate to all of humanity and, though dormant in most of us, this ability can suddenly emerge under the right circumstances. No one really knows the precise mechanics of how miracles are manufactured, but I’ve been researching this phenomenon for years and I think I’ve been able to compile some pieces of the puzzle. Below are just a few principles to experiment with. I hope you will begin to see that you too can make miracles happen in your own life. Believe that miracles are real and can happen to anyone. After all, whatever you want is already here in the world. Where else would it be? All you need to do is make them appear in your life. Believe it and you’ll see it. It’s not the other way around. Examine what you believe to be “impossible” and then change your beliefs. This is done by changing your thoughts. For this, self talk is crucial. Talk to yourself in a positive

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In Your

Life

empowering way every day to replace those limiting thoughts you were programmed with since childhood. Don’t expect a miracle. Be a miracle. This is achieved through knowing who you are, separate from your reputation, labels and possessions. Who are you really? A clump of matter suspended in time and space, or a magnificent source of love, energy, and potentiality? Find a quiet place, close your eyes, and try to perceive your greater self. You’ll soon realize you’re not a human being having a spiritual experience; you’re a spiritual being having a human experience. You often hear me talk about how we’re all energy. This is not New Age chatter but Quantum Physics talking. Energy in

Photos by John DeCindis

different frequency or vibration becomes matter in all its varied shapes and forms, us included. Miracles don’t happen when you’re hard and closed up. They happen when you’re soft and receptive. You can do this by getting connected with and resonating with the rhythm of life. The more you can harmonize your thoughts, words, and actions the more life responds to you. And this response can sometimes take the form of the miracles you so desperately seek. Meditate often, walk in nature, and look up toward the skies rather than down toward the ground. That’s one big difference between humans and animals. We can hold our heads high and look at the skies while animals are gazing down. Miracles are up above not down below.

Now go out there and be a miracle!

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reWEALTHmag.com

The Package Deal Brett T. Immel

By Robb Magley

n an increasingly crowded real estate investment company market, Hanover Equity Group’s founders recognized they needed a way to make their company’s offerings truly stand out from the competition — to differentiate themselves in a way that didn’t Preston Despenas just bring new clients, but would keep existing ones coming back again and again. For senior partners Brett T. Immel and Preston Despenas, the key was looking at the element of real estate deals that seemed to cause the most problems for self-directed retirement account investors getting the necessary non-recourse financing. “The self-directed retirement account investor would go in and find the property that they wanted to purchase and go to contract,” said Despenas. “When they then went to find their own non-recourse financing, they found out that there wasn’t much available; there are really only a couple of nationwide banks that provide non-recourse financing, and they’re very small institutions.” With relatively little money to lend, Despenas added, those institutions naturally became more selective when evaluating new deals, and many investors’ applications were declined. Seeing the opportunity to bring value to their clients by leveraging their own existing relationships with private lenders, banks and other institutions, Despenas and Immel decided to offer their clients a package deal that’s become the cornerstone of their business model — a genuinely “turn-key” real estate investment that comes with all the trappings that traditionally entails, bundled with non-recourse financing that’s already in place. “When you’re walking into an investment with Hanover Equity Group, the properties have already been rehabbed — or they’re new construction,” said Immel. “The management team is in place, and there’s a paying tenant in the unit. But you’re also getting financing that’s completely lined up, from day one, with no qualifications for the individual.” “It’s something no one else in the country offers,” said Despenas. “Pre-qualified, pre-approved, non-recourse financing available on every single one of our assets.” And remarkably, according to Despenas, that non-recourse financing they offer sits just south of 5% — a market-leading position that’s part of the attractiveness of the package. It’s not magic, just simple due diligence bringing its own reward; because Hanover Equity Group’s process for vetting properties is so thorough, their lenders feel comfortable enough loaning on the asset at highly competitive rates. “We’re doing all the necessary front-end diligence,” said Despenas. “We’re professional real estate investors ourselves, we do this 14 hours a day, 7 days a week. After a property Realty411Guide.com

Matching Non-Recourse Financing with Investment Properties Puts Hanover Equity Group On The Map passes our acquisition criteria, we take that over to our third-party banks and private lenders; they put those assets through their vetting process, and they come back to us with the pre-approval.” Eliminating that big hurdle in the buying process is one of several steps Hanover Equity Group takes to make investors feel more comfortable, according to Immel; there’s a certain amount of fear felt when tinkering with one’s retirement funds, and anything that makes the process more familiar helps. “A lot of investors have become so used to people making decisions for them,” said Immel. “For example with their stocks, bonds or mutual funds, all they’ve had to do is open up an envelope, look at their accounts once a quarter, and see how it’s doing.” But, he added, they also know they could be doing better if their money was in cash-flowing real estate. “Deep down they know that there’s a better opportunity for their investment and their retirement, and they’re sick of people making the wrong decisions for them. When you go into self-direction, the investor is really able to write their own story.” “We’ve got a lot of people out there looking at fix and flips, or rehabs on property, a lot of them are out there using hard money,” said Despenas. “But when you’re paying for hard money, that’s eating into your return, you have to ask: Are you better off doing a longer term buy-and-hold with 5% on a non-recourse mortgage, or paying 15-20% interest on hard money to rehab a property, before you even get it rented?” Thanks to its network of lenders, Hanover Equity Group can follow the deals wherever they go, without being locked into a specific market; it’s a flexibility that Immel said lets their clients do better, more often. Their clientele remain loyal and purchase multiple deals. “When we have investors that come back to us month after month, year after year, re-investing with us and purchasing real estate with us, it’s because they know we’re not just selling them a piece of real estate and washing our hands of them. This is about building a relationship with each and every one of our investors.” “The price points that we have are very introductory, where your mom and pop, novice investor can get in and really change their future,” said Immel. “Whether you’re working class, a small business owner, a successful doctor or lawyer, or just anyone who knows they can do better than they’re doing with their retirement.” For more information about Hanover Equity Group, visit their website: www.hanoverequitygroup.com

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very profession has tools of the trade, products which help us get ahead in our industry. Thanks to innovative technologies, investors now also have a fantastic tool to zero in on neglected properties. Find Motivated Sellers Now is a new product that can help investors locate vacant homes around the country or right in their own backyard. Created by entrepreneurial investor Chris Richter, who partnered with veteran industry leader Kent Clothier, the software is helping many sophisticated buyers find their deals. In fact, a loyal reader in San Francisco, Jimmy Tu, a master wholesaler and rehabber, was able to land three vacant property deals in less than three months utilizing the Find Motivated Sellers Now system. I recently had the pleasure of interviewing Chris and Kent so they could explain this exciting new technology and how it can benefit more of our readers. Linda: Tell us a bit about the Find Motivated Sellers Now system. How did it come about? Kent: Find Motivated Sellers Now is the product of necessity and data insight. In 2008, co–founder and creator Chris Richter embarked on a three month research mission to uncover insights in the property data that would act as an early indicator that a property had a high likelihood of being sold at discount. One glaring indicator associated with many of the deeply discounted sales, as well as those that sold quickly, was that they were vacant. Linda: What are some of the benefits to using Find Motivated Sellers Now? Chris: The benefits are time and money. The platform is designed to allow any user, regardless of experience, to log in and, quickly and easily, create and distribute marketing to a highly targeted list. It’s quick and easy, with just a few clicks of a button. Due to the list being targeted to an audience with a far higher likelihood of turning into a seller, the ROI is increased dramatically. Linda: Tell us about the partnership you formed for this new marketing tool. Chris: I reached out to Kent Clothier in November of last year and demonstrated how I was using this method to find highly motivated sellers, off market. Despite being in a market with one of the tightest inventories in the country, I was able to effortlessly locate phenomenal deals. Linda: I like that a mailing campaign can be executed directly from the system, which makes marketing easy to do. Can

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Vacant Properties = Motivated Sellers! you please discuss that further? Kent: The system is designed to be dropdead simple to use, even for folks who are not tech savvy. Users can simply log in, click their state, county or city, then run a search based on their criteria. Investors can zero in on vacant homes, vacant commercial, high-equity properties, etc. From there, users can export to excel or simply mail directly from within the system to their list. It is the built in simplicity and functionality that really makes it such a powerful tool.

Linda: Why are vacant property owners a great audience to zero in on? Chris: Vacancy is what we call a leading indicator of distress. What the numbers tell us is that although not all vacant properties have distressed owners, most distressed home sales are vacant. What makes it the most profitable among lists for direct mail is the fact that the property is generally vacant before it is an REO, before it is probate, before it is listed, before you see a lien, etc. The vacancy is typically the first warning sign that someone may need to sell soon. Previously, this list wasn’t publicly available. Linda: Why do good homes end up being neglected and abandoned? Kent: Homes become vacant for many reasons, not all of these reasons would

tools

By Linda Pliagas

make someone want to sell. Some common themes we see in vacant homes where people do want to sell include: pre–probate, family member moved to nursing home, eviction, seller moved out of area, rental vacancy, death with no probate, and even an occasional jail sentence. Linda: What other insight can you add that investors can learn from? Kent: Don’t be afraid to mail more and do extra marketing, it will make your phone ring. Linda: Does your system have sample letters that can be used? Does it also provide phone numbers? Chris: Yes, the system includes letters for both investors and brokers that have been tested repeatedly and proven to work well. Again, this is a push-button system, we have done all the heavy lifting for you. Once a user has set up their account, they are literally a couple minutes, and a few clicks away, from having proven copy in the mail and out the door. We do not provide phone numbers, we want them to call us. Linda: How can we learn more? Chris: Readers can see our demonstration on www.FreeVideoFromKent.com Thanks and let us know how it goes.

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FINDMotivated SellersNOW PAGE 47 • 2014

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More than 1,000 real estate investors and experts will gather for a 2-day event for education, training, networking and business development. The St. Louis Real Estate Expo is the only full-scale real estate event and conference exclusively geared towards real estate investors and professionals.

P R I VAT E

411

Sean Morsi (right) and Ajay Mehra (left) from MOR Financial Services, Inc.

Meet the Leaders of Real Estate Finance

FirstKey Lending

America’s premier financing resource for 1- to 4-family rental housing portfolios — provides loans from $1 million to $100 million. Whether you own 5 rental properties or 5,000, FirstKey Lending can provide you with the financing you want and the service you expect.

CONTACT FIRSTKEY LENDING TODAY Call us at 1-855-299-1944 or email info@firstkeylending.com www.firstkeylending.com

FirstKey Lending Unleashes

ince it’s inception FirstKey Lending has been specializing in the finance of single family portfolios in the $5 to $100 million range. Several months ago the media was abuzz with news of private equity giant Cerberus Capital Management lending its billions to owners of 1 to 4 unit rental portfolios. Now, New York-based FirstKey Lending has further expanded this initiative with the unveiling of its Lending Express program, designed specifically to accommodate owners of 1 to 4 single family portfolios who are looking for financing in the $1 to $5 million range. Cash is now flowing to an expanded group of investors through FirstKey’s new program, creating new opportunities for smaller rental portfolio investors to tap into.

FirstKey’s Randy Reiff Leaks the 411 on Express Lending

FirstKey is known for their $1 to $100 million loans and boasts an impressive executive team of some of the top minds, money managers and mortgage experts in the industry. Randy Reiff is the firm’s Chief Executive Officer, whose resume is a lineup of notable positions, including heading up the Global Commercial Mortgage Business for both J.P. Morgan and Bear Stearns. In an exclusive interview with Reiff, he broke down the advantages of the new Express program for Realty411 readers… It’s no secret that it has historically been challenging for real estate investors looking for funding under $10 million. Reiff explains that it was this void and need in the market, as well as a unique advantage in efficiency and infrastructure, which were behind the decision to launch FirstKey’s new small balanced lending program. Specifically the CEO says: “FirstKey’s infrastructure and expertise have enabled us to role out this exciting new product, which caters to customers borrowing $5 million or less. The FirstKey Lending Express program offers a streamlined documentation and closing process tailored specifically to this customer base.”

Why You Want This Loan

The FirstKey Lending Express product provides swift funding for deals in the $1 million to $5 million range. Reiff explains it has been “specifically designed for smaller port-

By Tim Houghten

folios of 1 to 4 family rental homes. The company employs a team of individuals who are intricately familiar with the nuances of financing these portfolios effectively.” In other words you are not just dealing with an out-of-touch lender that doesn’t understand the title, documentation and performance history hurdles that can come Loan Amounts: with acquiring $1,000,000 to $5,000,000 or refinancing a pool of cash Rate Type: Fixed flowing properLoan Terms: 5 and 10 year ties. Other factors to love about this Property Type: 1 to 4 mortgage program Single residential family include the poLoan-to-Value: Up to 75% tential to borrow under an LLC or Amortization: 20 to 30 year commercial entity Interest Rate: Competitive pricing with non-recourse loans, very competitive rates, up to 30 year amortization, and the speed of getting to the closing table. Borrowers can take advantage of 5, 7 and 10 year loan terms, across the U.S. with LTVs as high as 75%, to enable portfolio growth and/or continually optimize investor performance. According to Reiff, current turn times are “generally around 4 to 6 weeks,” depending on portfolio size, which is pretty impressive in this arena. Given the granularity of a portfolio, third party reports and title work are the biggest lead-time items and are generally tackled immediately, to expedite the approval process. Reiff welcomes investors to “bring us your Randy Reiff portfolio and let us evaluate your options.”

FirstKey Lending Express Program Features:

For fast loan assistance, real estate investors can either call 855-299-1944 or visit FirstKeyLending.com.

Borrowers can take advantage of 5, 7 and 10 year loan terms, across the U.S. with LTVs as high as 75%, to enable portfolio growth and/or continually optimize investor performance. Realty411Guide.com

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An Interview with Managing Partners of MOR Financial Services, Inc., Sean Morsi & Ajay Mehra

Meet the Future of Private Money By Tim Houghten

n the words of the great Bob Dylan: the times “they are a-changin,” for Sean Morsi and Ajay Mehra — CEO and CFO of MOR Financial, respectively — the notion of shaking things up has been woven into their company’s genetic code. It may come as a surprise to hear that an asset-based lender, known for utilizing cutting-edge marketing and high-tech analytics, assert for a traditional approach in customer service and building lifelong client partnerships. With an average yield returning 10.5% for their lenders, Morsi and Mehra have compiled more than $70 million in committed capital from their investors, with roughly $35 million in their active in-house servicing portfolio. Built in a relatively short period of time with a focus in Southern Cali-

Realty411Guide.com

fornia, where both were raised, the two have also set their sites on penetrating the Florida, Nevada and Arizona markets. Ajay came on board as a partner in MOR Financial in 2009, with both partners coming from established lending backgrounds before re-shifting focus after the market crash. “Since then, we’ve grown into a premier private lender here in Southern California, specifically around Los Angeles County,” notes Morsi. As the new kids on the block, the business moguls captured a very large percentage of the market in a very short span of time. A large percentage of their competition has been in the private money lending sector for 20 years or more. Mehra

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added that the industry had always been something of an “intuitive-based” one, which both men felt kept it from growing like it could. “We wanted to deliver structure,” said Mehra. “We wanted to shift the industry from the whimsicality it had.” The demographic for private money investors today, according to the executives includes much of the younger mindset than was seen 10 or 15 years ago. The MOR Financial Team The change in development is spawned mainly from “Maybe 20 years ago, that was the case, but a lot has changed. disappointed and lack of confidence with the stock market and Banking guidelines being as stringent as they are have really the desire for more tangible investments. opened things up for private money lending. Where else are peo“Thanks to the stock market crash, several savvy financiers ple supposed to go to get the access to leverage?” have a sour taste in their Morsi adds, “Today’s mouths, yet are still huninvestors are strong and gry for yield,” said Mehhungry.” Since MOR comes ra. “We are seeing people, from the customary lending who would otherwise side, the company strives have investment portfolito maintain and deliver on Listen To Your Head. View every house you buy as a busios centered around Wall customer service. And deliver ness transaction; don’t let your heart interfere. “You’ll Street now, deviating they did. MOR Financial has get carried away,” said Mehra. “You’ll get wrapped up in into real estate.” Today, set themselves apart by taking making things the way you would want them if you were instead of owning Micthe insight of due diligence going to live there – and that’s not necessarily attractive rosoft as a growth stock, and recalibrating it in a way for an end buyer. That’s how you end up overspending.” youthful investors would to center on becoming trusted rather invest in assets they advocates for their borrowers. • Have A Plan. Take the time to map out an implecan hedge. The emerging “We always try to play the mentation plan and do your homework on the industry generation with access to devil’s advocate for their ben– in particular, the area where you’re buying. “Often capital doesn’t have faith efit,” said Mehra. “Not to kill our buyers have great ideas, they’ve got a lot of knowlin the stock’s paper and the deal, but to make sure our edge they’ve accumulated from clubs and seminars, would rather place funds affiliates aren’t walking into a but they’ve got no idea what to do with it,” said Mehra. into something concrete. black hole. “They want to implement, but they don’t know how.” At the end of the day, a As the company’s directors, He adds that their MORSYNERGY events help people hard asset like real propSean and Ajay look at every stay focused on implementation. erty is never worth zero. deal as though it was their They can hang their hat own so they can provide bona • Have A Team. The best deal can be derailed without on that! fide feedback to their clienhaving a team together to back it up -- specifically, conAnother way the industele. tractors. “You’ve got to have a really fantastic contractry looks different today With repeat borrowers, tor in place before you even start writing offers,” said is the high-creditworthiMOR has rapport in the Mehra. “Get references for your contractors, and call the ness of the borrowers. For industry. The company aims references – that contractor can be the ‘make or break’ of the most part, the “flipto educate everyone from their your deal.” Morsi agreed: “That’s typically what destroys pers” and other borrowers able borrowers to individuals a flip,” he said. MOR Financial provides an approved list MOR Financial scopes just breaking in — and they of contractors who are reliable and experienced. have great credit. In the work with a lot of beginners.” past, hard money lending “We’ve always felt that the • Take Action. “Nothing beats getting out there and was often seen as the most durable relationships are doing your first deal,” said Morsi. “Once you have your realm of the hard-luck built through education,” mensystem and team in place, then you can go out there and borrower. Mehra suspects,

“Tips for Successful Flips”

really hit it hard.”

Realty411Guide.com

Continued on pg. 62

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Five Steps to Raising Private Capital

Jillian Ivey Sidoti, Esq.

any people assume that in order to raise capital all they have to do is go out and find potential investors to whom they may pitch their idea. However, the laws regulating the sale of any security are such that operating in such a matter would be illegal.

Too often, people learn fact and decide that their aspirations are out of their reach… or worse, raise the capital illegally, putting themselves at risk to suffer very serious consequences should the SEC catch on to what they are up to. Truth is, with the appropriate planning and effort, anyone can raise the capital necessary to execute their business plan. At a very abstract level, there are five steps to raising private capital, and they are as follows: 1. Develop Your Business Plan: One cannot very well start a company without a plan! At the very least, you want to put together bullet points of the “who,” “what,” when,” “where,” “why,” and “how” you will put your company to work and start generating income. From there, you can flesh out the details. 2. Set Up Your Company: Your next step is to decide what type of entity is appropriate for your business plan, and in which state. A corporation, limited liability company, and limited partnership each have their respective positives and negatives. The particulars of your situation will dictate what best fits your company.

your capital raising efforts in the correct manner, then you will be well on your way to meeting your capital goals.

3. Decide What To Offer Investors: If people are going to invest money in your company, one of the most important questions they will have is “what do I get out of this?” First and foremost, you have to analyze your business plan to determine your baseline of what you can afford to offer investors in addition to what the market dictates in your particular industry. You must then determine what you are comfortable offering investors and land somewhere between those points. This could be a percentage return on their capital investment, simply just a share of profits the company earns, or a combination thereof.

Jillian Ivey Sidoti is a partner in Trowbridge, Taylor & Sidoti, a boutique securities law firm with locations in California and Florida. Jillian may be reached for consultation at 323-799-1342 or at: jillian@jilliansidoti.com

4. Put Your Offering Documents Together: Not only may you be required by law to present offering documents (called a “Private Placement Memorandum”) to your prospective investors before taking their money in order to ensure you have made all the appropriate disclosures, but such documents will provide all the information they need to decide to make the investment. The private placement memorandum encompasses the three “D’s” – disclaimers, disclosures, and details. 5. Find Investors: For many entrepreneurs, finding investors is the most intimidating step in the process. However, if you organize and execute

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Image: Pogonici / 123RF.com

Yes, this is a very boiled down step-by-step. Yes, you will need the advice of a professional to help you along the way. However, you need to realize that if you do give all the above steps the appropriate amount of attention, there is no reason that you cannot raise the capital you need.

No Fluff! The Godfather of Hard Money on Private Money Lending in Today’s Market

By Robb Magley

“Hard money” lending gets its Leonard Rosen name from the practice of basing loans strictly on the hard equity and hard asset – “no fluff,” said Rosen, no long stories about a borrower’s 20-year plan for a particular property. “The only questions are, one, what is the property’s value, and two, how much equity does the borrower have in it?” said Rosen. “The loan is based on the amount of equity they have in the real property – that’s it.” These loans have been a part of the marketplace for half a century, according to Rosen, but since 2008 and the real estate “implosion,” private money lending has grown to fill the gap left by traditional lenders. “(The banks) have extremely tight lending criteria now, from a creditworthiness standpoint and a regulatory standpoint,” said Rosen. “They are not taking the normal business risks they were over the past 10 years; unless you have stellar credit, and a piece of real estate that you have significant equity in, the chances of getting any kind of real estate financing from them is very slim.” Enter the “hard money” investors. The loans are primarily used in commercial real estate, investor fix-and-flips, or any short-term project where borrowing is used to solve a problem or bridge a situation until the implementation of an exit plan – for example, to refinance or sell a property within a year or so. “Sometimes investors will buy property on the courthouse steps, or REOs from the bank, and they’ll get them at wholesale prices,” said Rosen. “Imagine a property’s worth $100,000, and an investor has $35,000 into it. In comes the hard money

eonard Rosen is known alternately as “the Godfather of hard money” (he’s been in the business for 35 years) and “the Pitbull.” Unsurprisingly, the second nickname has a good story behind it. “Back in 1982 was my debut as a six o’clock anchor on the national cable network, Financial News Network,” said Rosen. “My very first night going on I was nervous. We had put all of what I was going to say on a teleprompter – 13 minutes of me speaking. As I was getting ready, and the director was counting me down, he said ‘6 ... 5 ... 4 ... 3 ... Leonard, I’m sorry, we lost everything on the teleprompter ... 2 ... 1 ... you’re live.’” He laughed. “And I do this,” he said. “I went 14 minutes, live, first time on national television. The guy walked up to me after and said, ‘Only a pitbull could make that happen.’ And it just kind of stuck.” It’s hard to find a more fervent booster for the industry, whether you call it “hard money” or just “private money lending”; Rosen’s “Pitbull Conference,” which teaches the insand-outs of these loans for real estate, has produced 31 national conferences, with the next one set for February 20th in Ft. Lauderdale. And he doesn’t see enthusiasm for the product dying down any time soon. “I think it’s one of the best investments in today’s marketplace,” said Rosen. “I think being a hard money lender is a great opportunity, and I think being an investor who invests with a hard money lender is a great opportunity.”

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lender with the remaining $65,000; the investor improves the property, puts it on the market, sells it, pays the hard money lender back, makes a profit – everybody wins.” And, if the borrower doesn’t pay, the hard money lender is in first position to take the property. Rosen points out that most lenders have no interest in being in the real estate business. “They want to be in the lending business,” he said. “But if they have to take it, they can.” One of the big keys to making the investment more secure for the hard money lender, according to Rosen, is to underwrite the asset correctly; loaning too much for a property can spell disaster should the need to liquidate arise. “Every asset, and this includes real estate, has a retail value and a wholesale value,” said Rosen. “A retail value is what a property is worth given a 12-month marketing time to liquidate the property; the wholesale value is whatever the property is worth in a ‘fire sale’. If I had to sell this property in 30 days, what is it worth? Those are going to be different numbers.” A hard money lender has to lend based on that lower value, so they have comfortable “cushion” built-in – just in case they suddenly find themselves in the real estate business. Rosen’s conferences put a lot of focus on a trend he’s watched become increasingly important in his industry: the creation of real estate funds, where a lender deploys not only his own capital but also that of a group of small investors under him. Continued on pg. 61

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Market Intelligence with Robert Fragoso anchor Loans

And while the acquisitions arm is significant – in 2011, Anchor Loans itself flipped around 500 properties in L.A. County – the lending is still the company’s “backbone.” Fragoso said Anchor Loans is, in important ways, more of a private equity firm than a traditional “hard money” lender. “We don’t have a set matrix,” said Fragoso. “It’s very easy for us to adapt and tailor make a loan program required to meet any needs.”

by Robb Magley

arket statistics roll off the tongue of Anchor Loans’ Robert Fragoso with the practiced ease of a true industry wonk; he’s got a real interest, not only in what makes things tick, but in knowing about it before the next guy does – and in making sure his investors can act on that information. Having the best information means the difference between having a great year and living through a financial disaster, according to Fragoso, Anchor Loans diverse organizational interests is part of what gives them their “edge” over the competition. In addition to offering private financing for investors who fix and flip properties, Anchor has an escrow company, a construction company, a software development division and an acquisitions arm – each offering ground-level market intelligence to one another that can prove invaluable. “Most lenders look at loans strictly from a lending standpoint,” said Fragoso. “But because we’re actually in the market ourselves, we can adjust more quickly than others might. We’re able to see construction costs the day they change. Every time there’s a shift in the market, we can see the effect in our own listings.”

Realty411Guide.com

flow perspective,” said Fragoso. “During the downturn in 2008, We had a positive – albeit slightly positive – year because we were able to read the writing on the wall and prepare and guide our clients through the murky waters.” Today, Fragoso pointed out, inventory is lower even than it was in 2005; the challenge, however, is that in addition to low inventory and low interest rates, the market is facing low buyer demand. “Nationally, 58% of all sales are cash sales,”

“It’s very easy for us to adapt and tailor make a loan program required to meet any needs.” When new information comes along, Fragoso and Anchor Loans tell their investors to adapt too. Two years ago, according to Fragoso, a lot of people were having difficulty finding deals for fix-andflips in the cash-flow attractive, lower-priced properties. Because the company had carefully studied the goals and buying parameters of the large hedge funds investing in the area, Fragoso and Anchor were offering what seemed like counterintuitive advice: spend more per deal. “We told our clients, look, you realize all these hedge funds are coming in to buy these properties, and it’s like trying to fight an 800-pound gorilla,” said Fragoso. “They don’t care about the price, and they have a billion dollars to put out there.” So their guidance was to step out of that price point and look at higher-priced opportunities. “The big guys couldn’t buy properties at $400,000 and above, because it didn’t make sense from a cash

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said Fragoso. “That means cash sales have surpassed not just the first-time home buyer, but every home buyer.” That means the fix-and-flip investor needs to re-think their rehabs to match the market – and the all-cash investor isn’t necessarily looking for the same things as a first-time home buyer. “Especially the guys who fix and flip in high volume, they tend to have a cookie-cutter approach – where they do the same thing to every house, every time,” said Fragoso. “The problem with doing that is you miss out on opportunity when changes occur. If you look at the all-cash investor, they’re looking for value add and additional opportunities. Gearing your rehabs toward those people might mean, for example, not completely 100% remodeling the house – the opposite of what a first-time home buyer would want. Analysis in every region is more importContinued on pg. 58

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JasonHartman.com The Complete Solution for Real Estate Investors

So you love real estate... but you hate management?

Passive Income 12.25% First Trust Deeds We have access to very unique "insider" private lending opportunities. You’ve never seen hard money lending like this before. If you have $100,000 or more to invest and you want conservative, diversified, quick-turn, non-pooled investments that repay in about four to six months contact us for details. Our private lending program is simple and proven. The simplicity of our private lending program is unmatched. Visit www.JasonHartman.com or call 480-788-7823 today. Listen to The Creating Wealth Show, Jason's Highly Acclaimed Investor Podcast: CW 274 -

Market Intelligence with Robert Fragoso, pg. 56

ant today.” According to Fragoso, income levels now are about a third lower than they were in the previous real estate cycle, and home prices are off only by about 20%. The result is an unsettling disconnect, an insecurity that’s contributed to weak demand every bit as much as the higher bar conventional lending has set. “When home buyers find it more difficult to qualify for conventional loans, you’re going to see a buildup of inventory and a lack of demand,” said Fragoso. “Forecasting for 2014, I think it’ll seem like a sluggish year but still positive due to low inventory. But there are niches in this market that are going to identify themselves that will make some people a lot of money, if they can capitalize on them.” When a market trends downward, according to Fragoso, a lot of investors worry themselves into inaction, thinking they can’t buy anything. But the beauty of fix and flips, he added, is that you’re not in the market that long. “You’re in and out relatively quickly,” said Fragoso. “As long as you don’t have a depreciation factor of 2% or more per month, you can adjust your percentage of profit and you can still make money.” And, while it might not be as much as you might have made in a different market, you’re still in there. “It’s easy to forget, but people made money in 2009, 2010, and 2011,” said Fragoso. “You can’t be afraid of a down market. You just have to be able to identify where it’s headed.” For more information about Anchor Loans, visit their website: www.AnchorLoans.com

Fiscal Hangover & Global Change with Keith Fitz-Gerald

CW 273 The Decline of the EuroZone with Alasdair MacLeod

CW 269 SWOT Analysis of Income Property, Facebook IPO & Case Study

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6 Tips for a Successful

Private Lending Practice By Mark Hanf, CEO of Pacific Private Money

five $50,000 loans than one $500,000 loan or even a $1 million loan! You can charge more points on smaller loans, plus the fees. They close quicker and easier. Larger loans fail to close at a much higher rate than smaller loans.

Tremendous opportunities exist today for private money loan brokers. We found the following disciplines helped tremendously in growing a thriving private lending brokerage.

Image: Alex Millos / 123RF.com

Stay local. The private lending business model is most successful when you focus locally. Most of your loans should be within 100 miles of your office. Most of your private lenders will be local to your community. You will succeed in funding loans because you are a local expert and you understand your local marketplace. Remember that a reputable private lender is really in the investment business first, and the lending business second. Invest in what you know and where you know. For example, we are Northern California-based, and we don’t spend time on most Southern California loan applications. Find your sweet spot. If the funding capacity of the majority of your investors ranges from $50,000 to $250,000 then market this range as your niche. Be honest with your referral network as to your sweet spot. Besides, a guy that needs a $50K loan will not be well served by a broker who regularly funds million dollar loans. Build your book of business by starting out small, creating volume, then working your way up to larger loans. You can earn more in fees by doing Realty411Guide.com

Focus. Be specific in your advertising and marketing. Don’t say that you are “nationwide” and you fund “all loan types” and loan amounts. I guarantee you that brokers who market themselves as such do not have a thriving business. Strive for total transparency. If you check out our website you will notice that we don’t have pictures of skyscrapers or smiling people in suits shaking hands. We have pictures of actual deals we have funded. We have our names, addresses, pictures and email addresses for all the world to see. We use our direct phone number with area code so people know our business is located in the San Francisco Bay Area. Google us and you will find our detailed LinkedIn profiles. We’ve never pretended to be something we weren’t. Your authenticity and transparency will attract customers to you in a big way. Refer, don’t broker. We originate loans. We rarely broker loans to other brokers. But we refer deals

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almost every day. When a call comes in for a loan that’s outside of our area, expertise or capacity, we will refer that caller to one or more brokers from our database of reputable private loan originators. Brokering, in most cases, is a waste of your focus and time. Especially if the lead is coming from another broker. You do not want to be in the middle of a daisy chain. Daisy chain deals mostly fail because the borrower does not get well served. The reason they fail is that there is no way for every agent to get paid without over-charging the borrower. The universe will reward you if you selflessly refer to other brokers those leads which don’t fit your niche. Because of the literally hundreds of leads we have referred to other lenders over the past several years, the goodwill it created has resulted in referrals coming back to us daily from people to whom we selflessly referred business months or even years ago. Coaching, Mentoring & Consulting. The best investments you can make are in yourself and your business. Success and leadership coaching are an important part of my life. The books you read, the seminars you attend, and the videos you watch will help you to master the disciplines you need in order to succeed in a world full of distractions and naysayers. Attend industry conferences and seek out those who have achieved success in this business and follow their advice. Hire an industry professional to review your practices and help you achieve compliance with state and federal regulations. Conduct this business properly, and soon you will have a steady stream of new leads as you grow your local reputation for performance and thoroughness. For more information about Mark Hanf, please visit: www.pacificprivatemoney.com

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The Godfather of Hard Money, pg. 55

“That’s where the market is going,” said Rosen, “and that’s what I specialize in, helping investors create real estate funds.” Rosen said he’s seeing more and more investors deploy capital utilizing different types of retirement accounts, such as self-directed IRAs, and start (or join) these funds to enjoy better returns and increased security; there’s little not to like. “At the end of the day, the borrower gets to borrow money,” said Rosen. “The investors in the fund get a good dividend yield, secured by a good position on prime real estate. The hard money lender gets the origination points, the arbitrage spread – the difference between what you pay your investors and what you charge your borrowers – and fees for management and servicing of the fund. In a perfect world, everybody walks away happy.” And Rosen will continue to spread the message: Shifting at least some of your investments away from the equities market and into the real estate market by becoming a hard money lender can increase returns and, done correctly, make your investments more secure. And it’s just the right time for it, he said. “I’m a big advocate for the private lending sector in this economy,” Rosen said. “I think it produces jobs, it produces commerce, it puts people to work. It does a lot of good things.” For more information about Leonard Rosen and hard money lending opportunities, visit the website at: www.pitbullconference.com

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two notices of default have occurred. One of MOR Financial’s core principals centers on the belief of education and the conventional techniques of equity partnership arrangement, mainly structured for borrowers who are just starting out. “You can literally walk into a deal with no cash out of your pocket,” said Morsi. “We’ll provide the investors willing to bring capital to close and supply the rehab funds. All you need to have is a great asset and an ability to manage a property. The financing side we’ll take care of.” The program has allowed many of MOR Financial’s clients to evolve. With their eminent skill and market presence, they’ve won over the masses. Clients effortlessly transform from wholesaling a deal to doing their first flip. MOR Financial is giving beginners an opportunity that cannot be captured elsewhere.

The MOR Financial Team

The Future of Private Money, pg. 53

For information about MOR Financial and their upcoming MORSYENRGY event in February, visit wwwMORFinancial.com

tioned Mehra. Since MOR has considerable professional relationships with their borrowers, it brings perhaps an unexpected benefit: fewer defaults. Mehra and Morsi both feel strongly on not being viewed as a corporation, but as a part of a business network working conjunctively to meet each other’s needs. Out of 360 plus transactions that they’ve written, only

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PAGE 62 • 2014

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Lisa Hoegler

Builds Her California Dream Team

Photo of Lisa Hoegler by John DeCindis

By Hannah Ash

aving recently returned to Southern California this summer, Lisa Hoegler is still pinching herself every day. After 15 years in the Southeast, her excitement at being back home again is still palpable. Yet the real reason this accomplished woman is grinning from ear-to-ear is because, at 43, she has recently retired from a career as a corporate finance executive and is now a full-time real estate investor and serving as Executive Director of the newly-launched LA South Real Estate Investors Association (REIA). According to Hoegler, she is finally living her dream. Hoegler’s escape from Corporate America did not happen overnight. If fact, it was not even what she set out to do when she began volunteering nights and weekends with a local Habitat for Humanity affiliate in 2000. New to Atlanta at the time, Hoegler says she got involved as a way of meeting people outside of her day job. Yet nearly four years and 4,000 volunteer hours later, including a term as affiliate President, she had learned the nuts and bolts of real estate development and received a crash course in running a small business. Hoegler had been bitten by the entrepreneurial bug. When a job transfer relocated her to Charlotte, NC, Hoegler transitioned her real estate career from non-profit to for profit. The rest is history. Though she continued to scale the corporate ladder of Fortune 500 companies over the next 10 years, Hoegler never stopped moonlighting as an active real estate investor. Now, nearly 150 residential transactions later, there is no doubt why this hard-working woman has been a success. Just as some fans will gush about baseball, Hoegler spiritedly discusses her work as an investor. It’s clear that for her, real estate is more than just work: it’s an absolute passion. She sums it up by saying, “Even my worst day in

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real estate was better than my best day in Corporate America.” And she means it. For all of her successes, Hoegler has not forgotten how it all started. Though she credits finding her love for real estate during her Habitat experience, she undoubtedly credits Metrolina REIA in Charlotte for making her, as she calls it, “a player in the sport of investing.” By networking with other investors and vendors at the Metrolina REIA, Hoegler was able to quickly get the right education, learn the rules of the game, and start hitting home runs with her fledgling rehab business. Whether you invest by yourself or not, smart investors know this is a team sport. Your main goal is to build your team with the best players (tradespeople, bankers and fellow investors) you can find. Your team is often the difference between a deal turning into a win or a loss,” Hoegler proclaims. But networking with other investors means more than just doing deals to Hoegler. For her, it is about being part of a community where like-minded people come together to support and encourage each other during the highs and the lows. “For me, the last 10 years have felt like an investing rollercoaster at times.” Hoegler explains, “When I got started in this business, I underestimated how difficult that can be emotionally.” As a single person, with family and friends that didn’t fully embrace her same enthusiasm for real estate, Hoegler attributes her perseverance in this sport to the camaraderie and sound business advice she received from fellow REIA members, or “fans” as she calls them. Originally from Orange County, Hoegler has dreamed of returning to Southern California since leaving to pursue her MBA at the University of North Carolina in 1998. Hoegler’s retirement from Corporate America offered perfect timing to turn that dream into reality. This past July she settled in the Los Angeles area and, according to Hoegler, “I’ve been smiling ever since.” When asked what she loves about being back home, Hoegler enthusiastically responds, “Everything…even the traffic!” Her excitement is about more than low

“

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Continued on pg. 70

reWEALTHmag.com

Multifamily Properties: Should It Be in Your Future?

ne of the most common questions I get is: Which are better investments, multifamily properties (apartments) or single-family homes? My answer is, both, but not multifamily without experienced or qualified and experienced partners. A multifamily property is defined as 5 units or greater, and single-family homes, duplexes, triplexes, and four-plexes are referred to as “1-4s”. For someone with a goal of building a medium to large real estate portfolio, I generally recommend considering the inclusion of a commercial or multifamily property with one caveat: Don’t start by yourself and don’t put all of your real estate working capital into one large investment. After purchasing and selling over 2,000 units and 12 multifamily properties over 37 years, my experience is that the best investment property I ever owned was a multifamily property and the worst investment property I ever owned was a multifamily property. These properties have ranged from 10 units for $400K to 176 units for $10M. Multifamily properties offer higher potential reward along with higher risks. On the surface, an apartment building seems to be nothing more than many units, like single-family detached homes, but in one address, however, their proper management is a specialty. There are many more variables and expenses than in 1-4s including utilities, landscaping, contract maintenance, on-site maintenance, office management, tenant profile, advertising, lender and government inspections, requirements, and more. So why are the largest investors attracted to them? For one factor, the rent ratios are usually higher and, therefore, the potential Net Operating Income (NOI) and the cash-on-cash return can be higher. In the multifamily world, rent ratios are represented as the GRM (gross rent multiplier): The property price divided by the annual gross income, the lower the better.

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There is also generally an efficiency of scale for maintenance and other expenses, and with good management, expenses are easier and more efficient to control. The advantage of scale best manifests itself when the monthly income is great enough to afford full-time, on-site management and maintenance. For non-high end metro areas this is usually about a $2.5M property or higher. With a typical 60-70% loan this is a

PROS • Potential Higher Cash Flow

PROS • Lower Risk • More Liquid • Simpler & More Predictable • Higher Appreciation • Simpler, Cheaper Loans

• Avoids Current 4-10 Loan Restriction CONS • Higher Risk • More Due Diligence • More Employees & Supervision • More Eggs in One Address

CONS • Lower Cash Flow • More Difficult to Manage • Restricted to 10 Loans

stiff barrier to entry that may best be solved by partnering with other experienced investors. And then there is the issue of the loan. In these post crash years, getting a government-backed loan such as from Fannie Mae is virtually impossible in today’s tight money market without current or significant past multifamily ownership experience. Regional banks and private lenders may sometimes provide loans at the cost of higher rates, shorter terms and amortiPAGE 66 • 2014

zation, and lower LTVs. For investors who are “tapped out” at 10 loans for 1-4 residential properties and can’t get more loans because of Fannie Mae loan quantity restrictions, a multifamily purchase has the advantage of not being forbidden just because you have 10 or more loans on 1-4s. For an investor who would like to own a multifamily product, but who does not

Images: 123RF.com

By Tom K. Wilson

have the experience or local residency that the lender wants, one can work with a syndicator who can connect you with an investor or investors who can qualify for the loan, reduce your risk and exposure, provide the expertise needed to evaluate a deal, and to manage the property for maximum return on investment. Many investors are drawn to small multifamily “Tweeners” (5-50 units) because it is a lower entry price. However, the problems include:

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•Loans are generally more difficult to obtain •Loan terms are not as good •Price per unit is higher •Banks prefer local borrowers •Properties are generally older •The economics cannot justify full-time, on site management and maintenance And, it is usually difficult to manage effectively. Stories of offsite management showing up after a week or two at small multifams only to discover that drug dealers have run off decent tenants are common stories. Also, a single vacancy in a small mulitfam has a greater percentage impact on cash flow than in a larger investment. Again, one valuable way to mitigate these factors is to purchase a larger product with partners through syndication. Due diligence is much more critical than with single-family rentals but there are also more resources available to get a lot of the general information because there are a lot of marketing firms that support the REIT and institutional investors who mostly purchase large multifamily and commercial properties. A multifamily seller’s proforma (projections of the potential income and expenses in a perfect world) should for the most part be disregarded. True expenses are seldom less than 50-60% of gross income, otherwise be suspect. And study local de-

mographics carefully. Visit the prospective property unannounced, walk it, and then sit in your vehicle to observe who is living on and visiting the property. Take note of the time of day and night. Yes, evening observations are the most enlightening. Go to the local schools, parks, and retail stores and see whom your prospective tenants and demographics are. Do you feel at risk parked so near your potential property, or would you feel comfortable joining the tenants for a barbeque? Please do not rely on website data about the neighborhood. There are a lot of variances in a one-mile radius. Lastly, my post data analysis is always punctuated with the satellite view question: Would I be comfortable with my daughter living here? In addition to syndications an alternate way to have many of the benefits of a multifam with less money down, an achievable loan, and much less risk is with a portfolio of single-family properties. Throughout my investment career, I have always also owned many 1-4s. This approach spreads your risks by building a “mutual fund” of properties in various locations. In addition to having a variation of rent, price appreciations, and occupancies that tend to converge on the averages for a region, single-family homes are more liquid, have less expenses, are less complex to manage, and tend to appreciate

more because they are based on owner occupant demand rather than on income. In the next decade, most economists project a higher upward trend in occupancies and rent for single-family homes and for multifams. The most important ingredient is to select that right team of professional resources. How much experience and knowledge do they have in the region and product of interest? Are they invested in the products themselves? If you are considering partnering to own multifamily properties, do they have experience with syndications and access to experienced and qualified investors, lenders and property management? When you invest in real estate, don’t start with the “deal.” An honest assessment of the amount you have available to invest, your risk tolerance, your experience, and your long-term goals, along with the right professional team, will lead you to the right deal or deals: A multifamily investment or a portfolio of cash-flowing single-family properties? I choose both. Tom Wilson is a 37-year real estate veteran who has executed over $100M and 2000 units of real estate investments. Wilson is also a weekly host of the Real Estate 360 Radio program on KDOW 1220 am every Wednesday at 2 pm. Listen to his podcasts on iTunes or his website: www.tomwilsonproperties.com

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Typical Property Price $139,000 Rent $1,395 Year Built 2001 Price: $110,000, fully renovated, built 2005 Currently Rented 4 Bed for 2.5$1,195 Baths e: $110,000, fully renovated, built 2005 ently Rented for $1,195 Mention Voice Magazine and receive one-year1 of free MentionREI Realty411 or reWEALTH and receive year property management premium home warrantywith withyour yourfirst firstpurchase. purchase.

iscover the lowest-risk, highest-quality residential investment properties in t

country. Using sophisticated methodology, the best investment iscover the lowest-risk, highest-quality residential investment properties in theproperties a country. Using sophisticated methodology, the best properties are to secure carefully selected by an experienced investor andinvestment rehabbed beautifully carefully selected by an experienced investor and rehabbed beautifully to secure the flow, you best tenants. With competent property management, and instant cash best tenants. With competent property management, and instant cash flow, your investment pays worry-free dividends from day one. investment pays worry-free dividends from day one.

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“Contact me for a “Contact for a free cash flowme analysis.”

free cash flow analysis.” TOM WILSON, President 408-867-1867

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reWEALTHmag.com TomKWilson@earthlink.net TomWilsonProperties.com

strategy

uDirect rt in the ucation. dian to and edccounts g a self derstand ustodian ss. This st. ts, projto grow real esprecious e of the

you are you’re e else’s e Comareness careful, able. So ly helpal links

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Retire wealthy

with IRA Investing

By Stephanie B. Mojica

elf-directed individual retirement accounts or IRAs are rapidly growing

IRA doing the investing, Hall adds. “So that’s confusing because they get into trouble by maybe signing a purchase contract (in their own name),” she says. “Your IRA can’t buy an asset that you own.” Consequently, people should wait until they actually open an account with a qualified custodian before funding it and making transactions, Hall says. Generally, a custodian rather than the actual investor should sign purchase contracts relevant to self-directed IRAs. While representatives of companies such as uDirect IRA do not give actual investment advice due to potential legal liability, they can help people follow ever-changing IRS guidelines. Hall, a former mortgage broker whose work history includes Bank of America and Indymac Bank, has educated tens of thousands of investors into deciding whether self-directed IRAs are right for them. She and her associates have directly worked with thousands of clients.

in popularity, but experts warn that it is important to only get into such an investment with proper education and professional guidance.

aaren Hall, owner of uDirect IRA Services in Orange County, Calif., says even after more than two decades in the financial industry and four years of running her company she too must continually stay on top of her investment education particularly regarding Internal Revenue Service guidelines for retirement accounts. Self-directed IRAs allow people to invest their retirement funds into a variety of options outside of the traditional stock market, including real estate, land, and private notes. “Financial literacy is not taught in schools, but our future depends on understanding it,” Hall says. “Only real estate experience, Kaaren Hall has as4 percent ofbase U.S.ofinvestors have a self-directed IRA. Why? Because sistedabout her nationwide clients for manymost years. investors and many advisors simply aren’t aware of it.” She isBut alsoeven president founder of uDithoseand who are aware of the potential financial power of selfrect IRA Services LLC, and speaks at many directed IRAs often do not fully comprehend is the IRS guidelines of real estate club meetings and events to eduaccording to Hall. cate “prohibited the public ontransactions,” how to use self-directed “You’reShe notisallowed haveexpert any personal benefit from your IRA prior to IRA accounts. a soughttoafter in the field and has assisted retirement,” Hall says. national real estate experts with their own deal structurA common misconception among investors is that they can use the ing and accounts. The service and fees are self-directed IRA funds to purchase the aspects to consider when choosing a real estate or other property from themselves closetorelatives such as a spouse, a child, a grandchild, custodian. Havingoraccess the experience a parent, aisgrandparent andwith any this spouses of such relatives. These and knowledge the added value company. transactions are not permitted under self-directed IRAs, according to After many years of beingcould a busy Hall. However, anHall investor purchase property from a more distant mother of two and traveling throughout the relative such as a sibling, a cousin, a niece, or an uncle. state of California, life has gotten much “Make you know easier now that sure her children are what older. you’re This doing,” Hall says. “We’re here to people soand theyexpansion understand the twists and turns as much as possible.” allotshelp for more time on educating the harnessing the control Thepublic term on self-directed in itself misleads some people because it is the of their own retirement futures. There are many employees who are no Realty411Guide.com longer at their original job locations and are looking to rollover their 401(k). Some

PAGE 68 • 2014

To learn more about self-directed IRAs, call 866447-6598 or visit www.udirectira.com

reWEALTHmag.com

Turn-key&Ready

he town of Bethel is one of those sleepy, quintessentially New England villages nestled into the green mountains of Vermont; a state known as much for its fine craftsmanship as its sprawling ski resorts. John Gifford chats with me from his family’s 200-year old Bethel farm; it is still in operation to this day. “We’ve got over 150 animals here,” he tells me, “and a covered bridge.” It’s clear; John Gifford is a man who is proud of the care he puts into his work, from his family’s ancestral estate to his numerous investment properties available around the country. At his company First 100 Homes, Gifford focuses on acquiring and repairing desirable, turnkey properties in high-performing American markets. Gifford is passionate about creating opportunities for long-term wealth and worry-free returns for investors. What makes First100Homes.

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com, and Gifford, unique in the turnkey provider market? First 100 Homes offers investors a complete product, right down to lists of preferred property managers. Before Steve Jobs hijacked the consumer computer market, if you wanted to buy a computer, you had to buy all the different components. You had to get the monitor, the keyboard, the hard drive, the case and of course, the software. Then you had to install it. Buying a computer was a complicated process. Jobs had a different vision; buying a personal computer should be as easy as buying a refrigerator. No tinkering needed, no need to buy several components, no repairs. First 100 Homes offers their buyers a complete package. For example, when you buy a refrigerator, it works. When you buy an Apple computer, it works. When you buy a First 100 Homes property, it

PAGE 69 • 2014

By Hanna Ash

simply works; no extensive rehabbing of interiors, dealing with unreliable property managers or trying to rent in a poor market. It’s ready to do what you want it to: Bring in instant cash flow. Like Jobs, Gifford believes in producing streamlined, quality products, or rather, properties that gives buyers the returns they want without hassle. Many of his properties even come with a one-year bumper-to-bumper warranty. First 100 Homes is able to provide investors good returns with little to no repairs because of how they do business. Taking advantage of the current market, Gifford states, “...never before have there been so many REO rent-ready properties

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available.” By buying condos and homes en masse, the First 100 Homes team instantly gentrifies a neighborhood or development; other investors, Gifford says, soon follow suit. “We love waterfront property,” Gifford tells me, “because they’re not making any more.” He’s got a good point and I laugh. First 100 Homes has a keen eye for where to buy and when. What are some of the metrics that Gifford considers before zeroing in on a market? “Location. Demand. Transportation,” Gifford lists out. He says the company focuses on buying and selling properties that have the features buyers and renters want. Though they have many properties in the Las Vegas market, Gifford is not a betting man when it comes to real estate. They’ve zeroed in on the Las Vegas for many reasons. There are many upscale housing units available on the cheap and further, the city is rich in students and gainfully employed hospitality professionals who always usually want to rent, not buy. While First 100 Homes has taken over Las Vegas, they are now focusing on Florida and North Carolina. Wilmington, North Carolina, for example, is an appealing market for First 100 Homes as it has it all; hospitals, universities, waterfront property and a transient population. “Half-backs”, as Gifford calls them, “are a big part of the population there”. Half-backs are defined as renters who winter in Florida and come ‘half-back’ to summer in North Carolina. Sustainability matters to the First100Homes.com team. Gifford selects his properties like a seasoned military general who knows his soldiers and his battlegrounds well. First 100 Homes has an airtight strategy that works. Through purchasing HOA liens, the properties Gifford selects are the kinds of properties renters want to rent and buyers want to buy. Most of the properties they deal with were built after 1990 and have very little wear and tear; they Lisa Hoegler Builds Her California Dream Team, pg. 65

humidity and an ocean view, though. These days, in addition to investing, this multi-faceted business woman has just launched the newest chapter of the National Real Estate Investors Association right here in the South Bay, called the LA South REIA. After years of experience in this business, like any good coach, Hoegler is eager to share what she’s learned to help others be successful too. “I can’t think of a better way to show appreciation to all of the supporters, mentors, colleagues and friends who have helped me get where I am today than to pay it forward.”

hen asked what key advice she offers to the members of LA South REIA (or “All-Stars” as she calls them), Hoegler recommends that investors think of themselves as athletes, and as with any sport, they should dedicate hours to train for success. She stresses that long-term wealth building through real estate or any other type of investing should not be perceived as a get-rich-quick scheme and reminds her group that “no one makes it to the pros overnight.” Beyond that, she says the rest comes down to education and networking, which coincidentally, is the mission of the LA South REIA. Though Hoegler is the first to acknowledge that quality real estate education is both more available and accessible than it was when she began, she believes that education at the REIA goes beyond the nuts-and-bolts of a singular strategy to connecting-the-dots needed for a turnkey business. In her experience, this is the biggest hurdle that investors fail to overcome. While her goal is still to feature speakers sharing Realty411Guide.com

often come fully applianced right down to the washer and dryer. “Our properties are largely in gated communities,” Gifford explains. Gated communities are inherently attractive to the kinds of renters that investors want and, for investors, gated properties are generally less of a hassle, “property owners in gated communities don’t have to deal with nuisances such as graffiti and vandalism, for one.” The opportunity to buy properties in such good condition, Gifford says, is the unique result of the 2008 real estate crisis, “it never happened in the REO business before. “Now is the time to buy property,” Gifford declares. He continues, “Warren Buffet has named single family homes as the best new asset class for investors.” As First 100 Homes plans to buy and sell thousands of homes in the next year, investors may be interested in buying a few from them. Whether an investor wants to flip or hold, First 100 Homes makes things easy. For new investors, a First 100 Homes property is an opportunity to get into investment quickly and painlessly; for seasoned investors, high returns and a discount as much as 25% over other properties in a given market are a big draw. For investors interested in learning more about First 100 Homes, their website has everything from profit calculators to current listings. The team typically gives one monthly-guided tour of their available properties in Las Vegas; it is not uncommon for an investor to see as many as 12 properties in one day. First 100 Homes forges long-lasting relationships with their clients, Gifford tells me, “a typical client buys four properties with us a year.” Like Jobs did with Apple Computer, Gifford has, in many ways, simplified and streamlined real estate investment. As do all Vermont craftsmen, Gifford takes pride in his work. His investment deals are well crafted. the timely and relevant real estate topics, Hoegler hopes that meeting features like “app-of-the-month” or the LA South Tech Squad, a sub-group dedicated to staying current on new real estaterelated software and technologies, will complement the traditional REIA education. A life-long learner herself, Hoegler admits that education will only get you so far. Relating again to sports she says, “Book learning is the equivalent of running drills, hitting the gym, and memorizing the plays. It’s the foundation of your skills, but not much more.” According to Hoegler, investors need the support of great coaches, trainers, teammates, and cheerleaders to get in the game and score some points. Whether it’s an extra set of eyes to glance at a contract, walk a property, or fund a deal, the resources are there to help — if you know who they are. Building your own investing “dream team” can begin by networking at groups like LA South REIA. It has been a mere 3 months since Hoegler launched the LA South REIA, but Hoegler is already focused on 2014. Though she has successfully rolled out exclusive National REIA member discounts including a 2% rebate at The Home Depot and a substantial discount program through SherwinWilliams, Hoegler is most excited about announcing her upcoming involvement in advocating for investor rights and supporting proinvestor legislation in California, a role this experienced coach should shine at. And she is only getting started… Lisa Hoegler invites new and veteran investors to join her the second Tuesday of each month in Torrance at the LA South REIA Main Event meeting. You can find out more information by emailing LisaHoegler@LASouthREIA.com or by visiting www. LASouthREI.com. Guests are welcome.

PAGE 70 • 2014

reWEALTHmag.com

Land Trusts vs. Limited Liability Companies

ecently I read an article by an attorney telling his readers not to use a Land Trust. He recommended titling your investment property in a Limited Liability Company. His reasoning was that Land Trusts are only a “deterrent” to a lawsuit and they do not provide “true” asset protection. The attorney went on explaining how any lawyer “worth his salt” would find out you are the beneficiary of a Land Trust as the result of a judgment debtor’s exam (which is a hearing in a court room…sometimes called a Citation to Discover Assets). The attorney writing this article concluded that you have “zero” privacy with a Land Trust and if you want privacy you should “save the expense” of a Land Trust and title your investment real estate directly into an LLC (Nevada or Delaware). After over 40 years in the real estate investment business, I can spot an attorney who understands the law but does not have practical real world experience. I agree that LLC’s have better asset protection than a Land Trust, but Land Trusts have far better privacy elements than LLC’s. I use LLC’s in my business but NOT to hold title to investment property. Let’s review the benefits of using a Land Trust.

• Can have an LLC, Corporation or Personal Property Trust as its beneficiary Experienced real estate investors understand that putting all of your properties into any one entity (be it an LLC, Corporation or a Land Trust) is a nexus for a lawsuit. Remember grandma’s advice to not put all your eggs in one basket? It makes logical sense to put each property into its own separate Land Trust and then make the beneficiary of the trust your LLC or Corporation. This yields the best of both worlds from a privacy and asset protection standpoint. Since the Land Trust Agreement is not recorded anywhere no one can find out who the true owner of the trust is without a full blown lawsuit…which is expensive for your adversary. Furthermore, if the property is in one state, the Land Trust is formed in another state, and the LLC beneficiary is registered in a third state you get a dy-no-mite structure that is not only difficult to unravel but legally expensive to pursue. Most contingency fee lawyers would give up and start looking for another sucker to pursue. Real estate investors are more susceptible to a lawsuit than most other Americans.

Land Trusts:

• Do not require a registered agent • Pay no franchise taxes

FREE Land Trust Webinar at: wwwLandTrustWebinar.com

• Cost nothing to form (you can form them yourself)

or For more information, call Randy Hughes at:

• File no tax returns • Require no tax ID number

Randy Hughes

866-696-7347

Mr. Land Trust 40 Years Experience

• Can be formed in a state other than where the property is located (for terrific privacy and asset protection)

For Information, Visit Online:

LandTrustsMadeSimple.com

• Can easily hold each property separately from other properties to keep all investments insulated

To receive a FREE copy of my booklet “50 Reasons to Use a Land Trust” send me an email at: randy@mrlandtrust.net

Learn from THE National Expert on how to use Land Trusts for Privacy, Profits & Asset Protection

• Are NOT registered anywhere on the planet

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The general public’s perception of a real estate investor is that they do not have any debt on their property, have lots of cash in the bank and tons of positive cash flow. So, even if the investor is upside down on their property debt and suffers monthly negative cash flow they are still at the mercy of the contingency fee lawyer and his/her dead-beat client. Keeping property isolated in separate Land Trusts makes logical practical sense to those of us in the trenches every day. A huge benefit to holding title to each property in a separate trust is the ability to finance without affecting the other properties. You can also sell property on an installment contract basis without affecting other properties. If you title multiple properties in one LLC the lender will want to tie up all the assets of the LLC as collateral for the loan on just one property. Take your advice from a streetwise investor with decades of real-life experience. Use a Land Trust to hold title to your investment real estate…you will be glad you did!

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Image: Denchik / 123RF.com

By Randy Hughes aka Mr. Land Trust

Trusted Hands-Free Real Estate Investing Flexible Investment Options

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Whether you are interested in appreciation, cashflow, or a combination of the two, HomeUnion has properties suited to your specific needs.

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Buy with cash, leverage or from your IRA.

homeunion.com

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By Stephanie B. Mojica

he CEO of Southern California-based HomeUnion hopes to turn the business into the Amazon.com of real estate investing. Don Ganguly, an entrepreneur and chief executive with an impressive record of building successful businesses in the technology and financial services markets, stepped into his role as the chief executive behind HomeUnion this October. Ganguly, who earned an MBA at the prestigious Wharton School of the University of Pennsylvania, serves as a mentor for current Wharton students. HomeUnion was developed alongside three other partners, Ravi, CP and Nani, all of whom have worked together in two previous successful startups. All four entrepreneurs are engineers with graduate degrees. What also unites them is their belief that the current experience of investing in real estate can be dramatically improved. Ganguly’s business eyes are tuned in to providing the real estate investor a hands-free experience where HomeUnion eases all the pain points of investing in real estate. HomeUnion will provide flexible investment options.

Investors can buy the whole asset or a fractional interest via crowdfunding. “Crowdfunding allows accredited investors to invest in ready-made diversified portfolios,” Ganguly explained. HomeUnion will allow people to invest according to their preferences in a secure and trusted manner. Investors will finally be able to buy the best investment property remotely regardless of location. Investors can use cash, qualify for an investment loan or use funds from their IRAs. Ganguly and others running the company only work with properties that they ‘certify’, located in known “cash flow Realty411Guide.com

Don Ganguly

zones” nationwide. Cash flow zones have excellent rental income potential when compared to the price of a single-family home mortgage, a stable job market, and an excellent rental culture, according to Ganguly. Some of the properties, which investors can add to their general investment or retirement portfolio, are located in Chicago, Atlanta, Houston, Jacksonville, Cleveland, Indianapolis, Austin and San Antonio. “We are making single-family real estate investment an institutional play where investors can buy this as they would any other stock market instrument. Our platform brings fully vetted investments. This is different from companies that sell opportunistic deals of the month and merely connect people with sellers and collect their money. ” Ganguly said. Though there are, of course, never any guarantees of absolute success, representatives with the HomeUnion firm utilize proprietary methods of selecting the best investment locations. Additionally, company associates work closely with clients to ensure they understand the ins and outs of the current investment and rental markets. Full management service, including collection of rents and upkeep of homes and help with tax documents is offered to all clients. HomeUnion is the only company providing a fully managed investment experience in more than 10 investment locations in the U.S. “I recently invested in real estate using a self-directed IRA,” said P.K. Neelu. “ I had no idea how to go about this, but thanks to HomeUnion, I was able to navigate the various steps with ease. They are building the real state investment platform of the future.” To learn more about investing in single-family homes through crowdfunding or other types of means, call HomeUnion at 866732-3220 or visit www.homeunionservices.com

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strategy

Hands free, Anywhere Changing Real Estate Investing

Flip Flop? or

Meet Reality TV’s Favorite Real Estate Couple,

Tarek & Christina El Moussa by Stephanie B. Mojica

he hit reality show “Flip or Flop” has not only changed Tarek El Moussa’s life, it literally saved it. “2013 was a life-changing year,” El Moussa said. He and his wife Christina are prolific real estate “flippers” and host a related reality show on HGTV. One of his viewers — a registered nurse — noticed a lump on El Moussa’s neck, which turned out to be thyroid cancer. Fortunately it did not spread beyond his neck and he considers himself to be well on the road to recovery. “The worst part was the radioactive iodine treatment where I was confined away from my family,” El Moussa said. “Today I feel better, my energy is lower, but I won’t let that slow me down. I will keep chasing my dreams.” At age 32, El Moussa never expected to host a popular television show and battle cancer. It’s a drastically different lifestyle from seven years ago when their brokerage business dried up as a result of the market shakeup, forcing them to reinvent themselves. In 2010, they took a huge gamble and started flipping homes. “We went from selling to flipping,” he recalled. At first, the couple was forced to significantly downscale their lifestyle, trading in a $6,000 a month mortgage for a $700 a month

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apartment. “Being on TV is the last thing we ever imagined doing in our lives,” he said. “I always tried new ways to grow our business and one night I said, ‘Honey, I am going to get us a TV show,’ kind of as a joke. She laughed and told me to go to bed. I looked online and randomly found a casting and here we are three and a half years later. It was the biggest long shot in history and somehow it worked out.” Those brief but still vivid days of scrimping and saving are over, as the El Moussa family has moved into a luxurious Orange County home due to their business of flipping houses along with their television show. “The best thing that has come from this experience is our family creating something that years from now we can go back and watch. It is so exciting to watch our baby girl on TV and see how much she grows and changes throughout the season. Basically it is watching our family and business grow and develop, and we are able to go back and watch the progression. It is also amazing to spend so much time with my wonderful wife.”

“I study real estate and pricing all day every day and in order to become successful at flipping you must commit to learning every aspect of the business and understand failure is the path to success.” El Moussa wants newcomers to the art of flipping houses to understand what exactly they are getting into before they start purchasing properties in hopes of making a hefty profit. “It is not as easy as it looks. Learn and study a lot of real estate before jumping in,” he said. “You make your money when you buy, not when you sell.” The biggest piece of advice El Moussa offers to people at all levels of real estate investment is to never give up. “The truth is everyone will fail and fail and fail until it happens and you get that win,” he said. “Once you get that one

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Tarek and Christina El Moussa

win, you can do it over and over again.” With or without the television cameras rolling, flipping houses is sort of like a legal “high” for El Moussa. “I enjoy the chase of the properties, the rush you get when you find them, the design and transformation, and the profit at the end,” he said. “There are many stressful steps in between with a lot of gambling but this is the best way I can simplify it. I study real estate and pricing all day every day and in order to become successful at flipping you must commit to learning every aspect of the business and understand failure is the path to success.” There’s a saying that behind every successful man there’s a strong woman, and that definitely applies to El Moussa’s life. “We are pretty much together 24/7,” Christina El Moussa said. “We have been together for over 7 years and we are still best friends. He keeps me on my toes and there is never a dull moment with him. It is fun and rewarding to start a business and a TV show together and watch it grow. We both have a lot at stake and we provide a strong support system for each other. Plus, we both know our own strengths and weaknesses and they play well together.”

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into one more boarded-up building to trash out, air out, and fix up. Plumbing and electrical, paint and carpet, once interesting and challenging, became a grind. “After awhile my wife and kids got tired of it. It’s hard work!”

By Pam McKissick

mall and mid-tier investors are not only an important part of the real estate marketplace, but they’re the backbone of the free-enterprise system. They’re sourcing, buying, renovating, managing, renting, and selling the assets they purchase on a daily basis. Their emphasis on speed, and their streamlined approach to management, facilitates rapid change in cities and towns. Their fixer-uppers may end up as a young couple’s starter home or older couple’s retirement condo. Their commercial assets become coffeehouses and dance studios, lofts and bistros, bringing back deserted downtowns and revitalizing neighborhoods.

With mutiny as close as their living room, why are these investors at their desks at three a.m. roaming through websites looking for more properties to buy and sell? Their mantra, “I’m gonna retire rich at fifty.” But when I rang a few investors who’d reached age fifty, they weren’t retiring at all! They were moving up to bigger buildings or a new strategy. Investing was in their blood. They got excited just talking about it. They were going to retire but not just yet! They were addicted…“mainlining” multi-family, high on high-rise. Cutting the deal, making the place “shine on a dime,” and realizing a big profit is a heady experience when it all hinges on their own vision and tenacity. When I asked what would make their lives better, what could a company like ours do for them, they said, give us a first look—give us somebody to talk to who doesn’t waste our time, give us a chance to make an offer before it goes to market—and if a deal falls out, call us first. Their requests became the genesis of our Investor Market Desk.

The mid-level investor has a turn-ofthe-century work ethic that should be applauded and, more importantly, encouraged. A late-night-oil entrepreneur, he does most of the work himself—searching dozens of websites to evaluate hundreds of homes in a single evening, running the numbers, creating his own analytic models, evaluating past-performance of similar assets. For the most part, it’s entirely his money, or his family’s money, at risk. No wonder he’s adamant about low purchase prices, quick turns, and big ROI.

The Investor Market Desk revolves around a simple three-step process: 1) Investors call our market desk and ask to be placed on our proprietary investor list. We don’t have a phone bank full of people, just a couple of smart market makers who will very quickly know them by name. 2) We determine what they’re looking for: commercial, residential, multi-family, and in what value range—three hundred thousand, three million, thirty million—and whether they’re a national, regional, or local player…or maybe just buying within a fifty-mile radius of where they live. 3) Our market rep will give them advance notice of investment properties heading for auction; and after the auction, if for some reason the property didn’t close, the investors will get a call saying a particular asset is available.

In talking to many small investors with portfolios ranging from ten to a hundred assets, I’ve asked them how they staff to keep so many projects going at one time. Almost to the man (yes, it’s mostly men) they laugh and confide that their wives and kids have resigned from their work force, refusing to go

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strategy

Williams & Williams

PAGE 78 • 2014

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Williams & Williams Auction lists inventory daily, markets immediately, sells at auction every thirty days, and closes in another thirty. We see a lot of real estate, and we know a lot of small and mid-sized investors. We are effective at pinpointing which deals are going to sell traditionally, which will hit reserve at auction, and which will go to investor after-market.

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While we pride ourselves on strong high bids at auction and a stellar closing rate, not every deal can receive seller confirmation. Those assets are immediately transferred to our Investor Market Desk, where we’re heads up and hands-on, contacting investors with the right opportunity. Whether an investor is buying a fifty-million-dollar commercial portfolio or a two-hundred-thousand-dollar duplex, our Investor Market rep finds out what they need or helps them sell what they have, to free up cash for their next deal.

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At the end of the day, I think the small and mid-sized investors know that we know them. We understand who they are and what they want. Every day, on every deal, we have them in mind. In today’s real estate world everyone has to move fast, be smart, and never pass up an opportunity. And why not help these mid-tier investors who in turn help brighten the landscape…cleaning up neighborhoods and revitalizing towns.

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Rules of Successful Real Estate Investing market, and times when it does not. Only invest in markets when it makes sense to do so, not because you live there or you bought property there before. There’s an element of timing and you don’t want to buck the trend.

By Marco Santerrelli, CEO of Norada Real Estate Investments

I came up with the following rules of successful real estate investing over my many years of successes and failures. These are the same rules I follow today and share with our clients at Norada Real Estate Investments.

6. Take a Top-Down Approach Always start by selecting the best markets that align with your investment goals. Most investors start by analyzing properties with little to no regard of its location. This can be a big mistake if you don’t consider the investment in light of the market and neighborhood it’s in. The best approach is to first choose your city or town based on the health of its housing market and local economy (unemployment, job growth, population growth, etc.). From there you would narrow things down to the best neighborhoods (amenities, schools, crime, renter demand, etc.). Finally, you would look for the best deals within those neighborhoods.

1. Educate Yourself Knowledge is the new currency. Without it you are doomed to follow other people’s advice without knowing if it’s good or bad. Knowledge will also help take you from being a “good” investor to becoming a great investor, and that knowledge will help provide a passive stream of income for you or your family. 2. Set Investment Goals A goal is different from a wish; you may wish to be rich, but that doesn’t mean you’ve ever taken steps to make your wish come true.

and it’s usually 6 to 9 months after the fact when you find out. Don’t chase after appreciation. Only invest in prudent value plays where the numbers make sense from the beginning.

Setting clear and specific investment goals becomes your road map and action plan to becoming financially independent. You are statistically far more likely to achieve financial independence by writing down specific and detailed goals than not doing anything at all. Your goals can include the number of properties you need to acquire each year, the annual cash-flow they generate, the type of property, and the location of each. You may also want to set parameters on the rates of return required.

4. Invest for Cash-Flow With few rare exceptions, always buy investment property with a positive cashflow. The higher, the better. Your cashon-cash return is directly related to the before-tax cash-flow from your property. Cash-flow is the “glue” that keeps your investment together. Your equity will grow over time (through appreciation and loan amortization), while the cash-flow covers the operating expenses and debt service on your property.

3. Never Speculate Always invest with a long-term perspective in mind. Never speculate on quick short-term gains in appreciation, even in a heated market experiencing double-digit gains. You never know when a market will peak Realty411Guide.com

7. Diversify Across Markets Focus on one market at a time, accumulating from 3 to 5 income properties per market. Once you’ve added those 3 to 5 properties to your portfolio, you would diversify into another prudent market that is geographically different than the previous one. Typically that means focusing on another state.

One of the underlying reasons for diversification within the same asset class (real estate), is to have your assets spread across different economic centers. Every real estate market is “local” and each housing market moves independently from one another.

5. Be Market Agnostic The United States is a very large country made up of hundreds of local real estate markets. Each market moves up and down independently of one another due to many local factors. As such, you should recognize that there are times when it makes sense to invest in a particular PAGE 80 • 2014

Continued on pg. 91

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Taking Title by Garrett Sutton, Esq. a policy you won’t buy the property. It is that simple. Follow their lead. Transferring Title The specter of title insurance affects the way you will transfer title to property.

Image: sqback / 123RF.com

There are two ways to transfer title:

itle to real estate sounds grand. As you think of titles let your mind wander back again to medieval England when titles such as Baron and Duke meant you were part of the nobility and peerage system. And not coincidentally, if you had such a title you also owned land. As our legal systems evolved, real estate title–the means by which you owned valuable property rights – remained ever so important. Because title conveyed power (and with power came corruption and fraud), a system to accurately record the chain of title developed. Over time you had to defend your title with the proper paperwork. The ‘checking system’ that evolved means that there are two steps for the transfer of title. The first step is the granting of a deed whereby the grantor transfers the property to the grantee. An investigation of the sequence of deeds to establish an accurate chain of title is then performed. If the grantor actually has clear title,

Realty411Guide.com

according to the public records, a policy of title insurance may be issued and the property transferred. (Please note that property can be transferred without title insurance but that most banks won’t take the risk in making a loan without it.) A noticeable break in the chain of title means that the buyer–even though they believe they are the rightful owner– can be subject to the possible claims of others contesting the title. It can also mean that the property is now very difficult to sell, because future potential purchasers don’t want any doubts about clear title. Accordingly, title insurance is important. Before insuring you against the risk of future claimants, a title company is going to check the public records to see if there are any troubling gaps in the chain of title. If gaps exist they won’t issue a title insurance policy. If they won’t issue PAGE 81 • 2014

1. A Grant Deed. This deed (or ‘Warranty Deed’) implies or warrants that: a. The Grantor (the person granting the property) has not transferred the property before, and that absolute ownership (‘free and clear’ title) is conveyed. b. Unless the Grantee (the person receiving the property) agrees otherwise, the property is free from any liens or encumbrances against it. c. Any after-acquired title (ownership that goes to a Grantor later) is also conveyed to the Grantee. 2. A Quit Claim. This much weaker deed only: a. Transfers whatever present right, title or interest the transferor may have. (If the transferor doesn’t have any rights, neither do you.) b. No warranties are made as to any liens or encumbrances. (So if there are undisclosed mortgages against the property it’s not the transferor’s problem – as it is in a grant deed. Instead, it is now your problem.) c. No after acquired title is transferred. While often advocated by promoters as the easiest means for transfer, the quit claim deed is not your best choice. First, know that in many bank involved REO (real estate owned) transactions the REO lender selling a foreclosed property will only use a Quit Claim deed. Why is this? It is because the lender has no idea what happened on the property prior to foreclosure. During the boom documents were not properly kept or transferred, the banking industry’s MERS electronic recording system failed to keep up with it all, and many documents were just plain lost. This is no way to maintain a good chain of title on the nation’s real estate. Continued on pg. 86

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An Industry Leader Discusses His Deals L

By Hannah Ash

arry Goins doesn’t know it all. “When it comes to real estate, the learning never stops,” he tells me. When one of the country’s leading investors pauses for a moment of self-reflection, it’s worth a listen. “You can learn something from everybody you meet,” he tells me. It’s one of the secrets to his success in real estate; he’s always on the hunt for a way to do it better. “Just this week, I

From South Carolina, Larry Goins impacts investors around the nation with his real estate wisdom.

his wife, it’s not much different, “Pam is a hard money lender too. She also gives of her time generously by leading her church’s food pantry organization.” Both altruistic and driven to succeed, it should come as no surprise that he’s found a way to marry his two loves together: family and success. Following in suit, Goins has seamlessly merged his love of successful real estate investing and his love of educating into a dream job. He works with a large team of professionals who are all as excited about

The properties Goins buys and sells aren’t “turn-key,” he says, they are what he has dubbed, “learn-key.” attended two webinars,” he casually remarks. I must admit, I’m taken aback. For someone who has been engaged in all aspects of real estate since the 1980’s, Larry Goins isn’t full of the slam-dunk advice one might expect; instead, his advice is to ask questions and keep an open mind. That’s what he does, he says. He wants to know how he can do better and wants to meet people who can teach him how; he is full of stories of things he’s learned this week and this month. For a man who once served as president of the Metrolina REIA and is a mortgage lender, real estate broker, agent and licensed general contractor, one would think he might just want to rest. Mr. Goins, however, is one of those rare breeds who love what they do so much, it doesn’t feel like he’s working a job. Goins’s work is stacking up success after success and helping others find their own successes along the way. Goins has a motto, “People and principles before profits.” When he’s not working, he’s with his family. I ask if they share his interest for real estate. His 17 year old daughter loves equestrianism, he says, “and she regularly takes to the ring, riding in shows.” Goins also has a son and wife. “My 9 year old son is already a hard money lender,” he laughs. When it comes to Realty411Guide.com

real estate as he is. Based in his scenic hometown of Lake Wylie, South Carolina, The Goins Group focuses on education while his Investors Rehab is all about actively buying and selling a lot of real estate. A published author, his first book, Real Estate Day Trading, is available in bookstores everywhere. HUD Homes Half Off, his newest release, is available on Amazon and through his website. In his free time, Goins regularly hosts seminars, webinars and gives interviews as a way to motivate other investors to get serious about their money. His real estate blog is full of well-crafted tips for new and seasoned investors. An apprenticeship in real estate investment is the best way to describe what Goins and his team offer students. You can’t get a college degree in real estate investing, but, Goins says, “you can latch onto someone experienced whom you trust to start learning.” He and his team, in many ways, operate like a trade school. There are books to read, active mentors, seminars and real-world investing experience through Investors Rehab. For investors looking to get started or looking for a new edge, The Goins Group aims to serve. Each week, the business advisors Larry trusts to work alongside him in his office, check in with students to touch base, answer questions and provide some motivation. Goins says he too gets PAGE 82 • 2014

on the phone and talks to his students whenever necessary. The skills his investors learn, Goins says, can change lives. “Real estate is what you make of it,” Goins explains, and his programs work for everyone; his clients come from all walks of life. One of his students, Alon, a pediatrician currently living in New York City, is working with Larry to diversify his investments and bring in some extra cash flow. Another client is a former prisoner who was able to change the direction of his life forever. I ask: “Do your techniques work?” The proof is in the pudding: the hundreds and hundreds of letters and video testimonials that Goins and his team proudly receive each year say it all. As an active real estate investor, Goins has a simple approach to buying real estate; his philosophy is one that most investors can rally behind, “I buy houses. I don’t get sold houses.” Goins says people often say to him, “Wow! That’s a great deal. Where’d you find it?” Goins explains, “I tell them: it wasn’t a good deal when I found it. We created the deal.” Investors Rehab, the investing arm of his business, attracts all types of investors. Whether it’s an Continued on pg. 84

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Vet Out Turn-Key Property Providers, pg. 24

Our member told me, “Earlier this year, I had spoken with the guy currently behind bars and explained how reneging on commitments (guarantees, payments) made during the property purchase would undermine confidence in the company. He believed, probably rightly so, that if the company didn’t make such across the board adjustments, the whole company would go under. According to the lawsuit, it was his partner who relied on the above more desperate title fraud approaches to raise cash and keep the company going.” Whatever the reason, no one wants to get stuck in a situation like this, and they don’t have to. There are so many ways to protect yourself when buying real estate. I asked our member what advice he’d give. Here’s what he said:

10 Ways to Protect Yourself 1. Do not invest all your capital or

entire retirement in one geographic area, especially a distressed location. 2. It’s best to avoid highly distressed regions if you are a first-time investor. 3. Use a reputable title company or attorney to make sure the property is properly recorded at purchase. 4. Always purchase title insurance to ensure clear title. 5. Be leery of turnkey deals that isolate the owner too much from rental property operations and financials. 6. Prior to purchase, insist on hiring your own property inspector. 7. Determine how the appraiser was selected. I suspect that Bay Area Equity Group was trying to influence the appraisal process. 8. Visit the property (or at least visit the area initially so you understand what

you’re buying). 9. Look up public records so you know who currently owns it, how much it sold for before and if it has an IRS tax lien or other liens. 10. Ask for a scope of work done prior to purchase, and verify it with an independent inspector. Real Wealth Network has been vetting out property sellers since 2003. These are just a few of the items on our checklist. If you’d like to receive the full due diligence checklist or receive a list of companies that passed our scrutiny, simply visit www.RealWealthNetwork. com or call 888.RWNetwork About the Author: Kathy Fettke is the CEO and Co-Founder of Real Wealth Network. She specializes in helping people build multi-million dollar real estate portfolios through creative finance and planning. Kathy is also host of The Real Wealth Show and is a frequent guest on CNBC, FOX Business News, CNN and CBS MarketWatch.

Let’s Analyze a Deal!

’ve done many deals over the years and one of my favorite deals happened to be a 107 unit hotel that I partnered on with a student and closed January 1st, 2013. Talk about a heck of a start to the new year. The deal was brought to my attention by a broker that we’ve closed other deals with in mid 2012. After going to the hotel and spending a couple of days there, we quickly observed that it didn’t have as many flaws as previously thought. As a matter of fact it was already on it’s way to grossing around $900K in revenue for the year. We did notice that there was a good number of rooms that were down, roof that had leaks, pool that needed repairs and poor sign-age. Most people when going into a property think that the more problems that a property has the less upside. It’s actually the complete opposite, I love problems! The more problems, the more opportunity... for both upside and revenues. I look past the minor flaws with a property and I go straight to the bones, and then location. If those things check out, I move to the next phase. This property had all the components that we look for in our model, good bones, good location, and a motivated seller! When it was all said and done, we were able to pick up this property originally priced at $2.6M for only $1.9M. This was a Quality Inn that only had about 4

months left on it’s contract. So we were able to structure the deal on the front end with a lease option and then exercise the option with owner financing for 5 years. We were able to get into the deal with none of our money and not only that, but the cash flow from the property was able to pay for all of the repairs that were needed. In just one year, we were able to increase the revenue from $900K to over $1.3M. That’s $400K in additional cash flow in just one year! We even enjoyed cash flow of over $50K in a single month a couple of times throughout the year. The repairs that were needed were not too intensive. We had to replace and patch a number of places of the roof over the lobby along with fixing the pool and getting about a dozen rooms up and running. It was nice to have the cash flow from the property be able to cover the repairs of the hotel. I’ve done many hotels with much more repairs needed so this deal was a bit of a cosmetic turn around for us. One of the great things I love about hotels is that if you pick the right one and you buy it right, you can make many repairs and do most of the turn around from the profits of the hotel without having to go borrow more money. It’s one of the main reasons that we don’t do too many closed down hotels, you actually have to have a capital reserve while you’re making your repairs with no

Larry Goins Discusses His Deals, pg. 82

investor looking for a great deal or someone he’s mentored, Investors Rehab has no shortage of buyers. To create such good deals, Goins and his devoted team are always on the hunt for property to buy. He estimates they make a jaw-dropping 2,000 to 3,000 offers a week; they purchase 10-15 properties a month through their office. Once an offer has been accepted, his dedicated team gets three repair estimates and conducts a comparative market analysis. The properties Goins buys and sells aren’t “turn-key,” he says, they are what he has dubbed, “learn-key.” Learn key? “That’s right,” Goins tells me, “Learn-key means you learn as you earn.” Investors buy properties for great prices that need a bit of work, and thanks to the research the Goins team does beforehand, they know about how much work will be needed before a property is rental-ready or can be flipped. The legwork his team does takes away some of the risk for new investors and is a great help to seasoned investors. “Learn-key properties come with instant equity while turn-key properties come with instant Realty411Guide.com

revenue coming in to help. I like the simple fact that I’m making money day one that I take over, and all I’m doing is making improvements and putting heads in beds. We’ve had this property for exactly one year now and we’ve loved every minute of it. Not only did the cash flow pay for the repairs, but it also paid for the down payment that we needed as well. Another reason I love hotels so much is that I have managers at each of our hotels taking care of the day to day activities while I’m out looking for my next deal. Making sure that you have a good strong manager with experience is a big plus. It will only make your life easier. We have a great team in place right now and we’re looking to get the revenues up to $1.4 - $1.5M for 2014 at this particular hotel. With the amount of additional revenues that we created over 2013, we also created almost 2 million in equity. I’m ok with equity, but I really love what actually pays the bills...CASH FLOW.

Jason Schubert President, Rich In Five

cash flow,” Goins explains. He wants investors to get the most equity they can out of a deal. Simply stated, learn-key teaches investors to fish whereas turn-key gives investors the fish. Larry Goins, and his career in real estate, stand apart from the rest. His continuous drive to perfect his craft, learn better ways of doing things and new challenges to win is both inspirational and rare. Though his son and wife have an obvious interest in real estate, perhaps his daughter’s interest in horseback riding indicates that she too hasn’t fallen far from the Goins tree either; in both real estate and riding, there are always different horses to tame, new challenges to tackle, and techniques that can be improved upon. “Keep learning. Take action,” Goins says. Just as in horseback riding, in real estate you can’t go far unless you saddle up and start riding. Since this is an article about a man driven to help others, it should come as no surprise that he’s decided to offer our readers his book about buying HUD Homes Half Off free of charge for everyone reading this. Think of it as a nudge to take action from Larry himself. To receive your copy, simply visit Amazon or get your free copy via this website: http://freehudbook.com/

PAGE 84 • 2014

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It’s about time we show you

Earn Cash BACK A REAL HERO with EVERY Purchase

their customers invest, playing to their own strengths. “In today’s climate, people need new investments they want to finance, to show they have money, they have partly due to rates, but also due to a income, and they have credit,” said relatively new program put in place by Bighaus. “I tell new customers, before Fannie Mae. Bighaus estimates fully Receive a FREE Lifetime you commit to anything let’s gather one quarter of his business right now Membership to the World’s a Steve Bighaus has over 24 years experience in the mortgage industry. He maintains your documentation. Let’s make sure is driven by the so-called “delayed Largest Loyalty Rewards you’ve got income to support your financing exception.”focus on servicing the real-estate investor by offering aggressive financing options and Program, benefits include: existing debt; you’ve got cash reserves “I get a lot of customers who resources for buyers interested in purchasing or refinancing their investment property. to support down payment and closing pay cash for their properties,” said • Global Network costs; and that the credit score is there, Bighaus. “They’ll buy property with Bya concentrating on investment properties and the financing that Million comes Products with them, • 160+ because that’s going to affect your rate.” cash, and then they’ll want to get that & Services Steve is recognized nationally andone industry expert. The knowledge thatare heAvailable has enables Having thatas work in advance money back so they can keep utilizing • 2.6+ Million Members helps exactly him to find financing forinvestors peopleknow even whenwhere they have had difficulty elsewhere. it.” • Over 150.000 Points they stand before getting too deep Just a few years ago, refinancing of Acceptance into an investment that’s not quite with a cash-out option (so you could Earn Cash Back with Every Purchase AND Turn Your Expe Cash Get your free lifetime membership to the world’sEarn largest lo right for them -and since Bighaus re-invest with that Purchase Contact Steve Bighaus Expenses stores everything electronically, when cash) through Fannie investors return forOfficer another loan for Mae wasn’t available Senior Loan Get your f Pre-Qualify Today! to the wor another property they want to purchase, to investors with rewards p 206.930.1801 they don’t have to send a lot of the same more than four Member Bene information over and over. steve.bighaus@snmc.com financed properties; NMLS#: 112825 And, Bighaus says, investors return the new program Steve Bighaus again and targets small investors This is not a commitment to make a loan. Loans are subjectagain. to borrower qualifications, including income, property evaluation, sufficient equity to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting “I was just back in Memphis last who hold five or more, andin the hashome other guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and week, one of the first markets where attractive benefits asconditions. well. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in market NMLS# 3116 mayto reflect of any loan may be subject to payment of points I expanded after the Northwest, and and I fees by the applicant. Security “It allows anpayments investor paya longer cashloan term. Terms National Mortgage Co. is an Equal Opportunity Lender. was talking to one of my clients,” said for a property, immediately turn www.InvestorsRewards.com FREE Registration • No Sign-Up, Bighaus. “Between him, his wife, and around and re-finance it, and get their Monthly or Annual Dues! another family member, over the past original purchase price back -- plus three years I’ve done 26 loans for these they can roll in the closing costs,” said www.investorsRewards.com folks.” He laughed. “They must be Bighaus. And, he added, lenders can pretty happy with me.” utilize the appraised value to drive the loan-to-value ratio. “That obviously maximizes things for the borrower, because when they’re out there looking at property with cash in hand, they’re going to get a little better deal We have experienced advisors to answer your in a lot of cases.” financial and investment questions... By being able to utilize the l 1031 Exchange properties available appraised value, if there’s a little equity in the property -- if they buy Register for our next Investment Strategies Workshop it, say, for $50,000 and it’s worth hosted by Tweed Financial Services, Inc. $80,000 -- Bighaus said they can Call 800-526-1599 ext. 106 or enroll online: www.TweedFinancial.com Rusty Tweed capitalize on that and minimize what Meal included, provided by our sponsors. Seating limited to experienced Certified Estate Advisor investors. Reservations required. they personally have invested in the property. As with any real estate investment there are various risks, including but not limited to: “Theoretically they can continue illiquidity, limited transferability, and variation in occupancy which may negatively impact to keep turning their money,” said cash flow, and even cause a loss of principal. Real Estate values may fluctuate based on Bighaus. economic and environmental factors and are generally illiquid. This does not constitute as an offer to buy or sell any real estate, securities or insurance. Such offers are only made by Part of the industry’s “new Financial & Estate Planning prospectus which should be read thoroughly and understood before investing. Prospectuses will traditionalism” means going back for Real Estate Investors be available at the workshop. CA Insurance License #OB13052. We do not provide tax or legal to lending fundamentals; that’s an (626) 588-1520 advice. Securities products offered through Concorde Investment Services, LLC, member FINRA/ 2060 Huntington Drive, Suite #1 arena where seasoned mortgage SIPC. Advisory services offered through Tweed Financial Services, Inc., a registered investment San Marino, CA 91108 advisor. 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Safety in Numbers, pg. 18

Taking Title by Garrett Sutton, Esq., pg. 81

valued at more than you have with a lien on it that’s larger than the amount of money that you have to invest — you’re just not a player for that a parcel that size, where rates of return can be much higher.” Unless you’re coming into the tax lien industry with substantial resources, Gleason says most of the time you’re going to get squeezed out — and you certainly won’t be able to achieve any of the economies of scale fund-based buying allows. “An investor who tries to walk into one of these auctions by themselves with $50,000 may be able to buy 50 certificates at $1,000 each,” said Gleason. “But working with a group of investors, we can pool our resources and buy 1,000 certificates — further diversifying the risk.” And in the unlikely (but possible) event one of those properties goes “bad,” so to speak, it’s going to appear pretty insignificant in comparison to the overall pool of liens. It’s a model that’s made a historically safe investment even safer — and more profitable. “What we do is we make it a passive investment, and we’re able to enhance the rate of return for investors because of the economies of scale,” said Gleason. “We’ve been able to produce great returns in very safe, reliable investments — that’s very attractive in an uncertain market.” Gleason says he continues to think safety and security are the right watchwords for investing right now more than ever before — and that MMG’s group of investors are like-minded. “You can’t find a more favorable risk vs. return scenario in real estate,” said Gleason. “Pooled investing in tax liens is an extremely safe and reliable investment that’s also very profitable — when you know what you’re doing.” Gleason laughed. “We’ve challenged some very sophisticated people to find us a more favorable risk/reward investment out there, and so far, no one’s been able to do it.”

It was so bad in 2009 that a large national title company announced it would no longer issue title policies to two large national banks. These lenders’ records were just not trustworthy, and the title company was not going to take the risk. Know that for years to come there are going to be title issues arising from the real estate collapse in 2008. It is for this reason that sellers (mainly banks) of foreclosure properties are using quit claim deeds. They don’t know what happened and they aren’t about to warrant or guarantee that they have a clean title to convey to you. The quit claim deed they use instead says, “We don’t know what we’ve got but whatever we’ve got we’re giving to you.” What is offensive is the lengths that some of these lenders will go to get you to bite on a quit claim deed. They will tell you that it grants you full rights to the property. It doesn’t, because neither you nor the bank really knows what those rights are. To further get themselves off the hook after taking your money for the property these banks will bury the fact that they don’t warrant good title in an Addendum at the end of a sixty page contract. They want you to waive any rights you may have in the matter. They may or may not know that the title is so defective that the property will be severely devalued. But they want you to release them from any future problems and sign off that everything is okay. There have been reported cases where the Addendum is intentionally withheld and only provided to you at the closing. (You know, at that last meeting at the title office where you are expected to sign 47 documents without reading them.) Accordingly, please be very careful and have your own attorney review such transactions. The second reason a quit claim deed is not preferred is because the quit claim deed severs an express or implied warranty of title. (Remember, you are just granting whatever you may own which may be something, or nothing.) As such, the title insurance doesn’t follow. While this may not seem like a big deal, let’s consider an example. You buy a property in your name. Part of your closing costs includes a policy of title insurance. Several years later you want to transfer title to an LLC for asset protection. Your friend says a quit claim deed is the easiest and quickest way to go. You file the quit claim deed and now the property is titled in the name of your LLC. Later, you learn that the boundaries weren’t properly surveyed. You seek recourse from the title company since they insured the boundaries were correct. But you now learn that by quit claiming the property into your LLC you have unwittingly canceled your title insurance policy. The boundary issue is no longer insured. The way to avoid this problem is to use a grant deed or a warranty deed. A title insurance policy isn’t extinguished in such a transfer. As well, a grant deed is just as easy to prepare as is a quit claim deed. But in either case, remember that easy isn’t always best. If you are not an expert at title transfers, I would have a lawyer or title company handle them.

For more information on tax liens and MMG Capital’s investment fund, visit their website: www.MMGInvestors.com SBD Housing Solutions Expands to Florida, pg. 21

celebrate your successes! SBD’s Exit Strategy Please tell us specifics of the exit strategy. This was a true flip. We listed it and got a contract on it on day 5. We priced it aggressively to get a fast sale, but hit it right on the head. We poured over the numbers to make sure that we weren’t going to be asking too much. Every day a home sits is a time and money wasted! Q: What insight did you learn from this deal? A: Staging a home is HUGE factor in differentiating us from the competition in Florida. The cash offer actually asked us in their offer, “can Realty411Guide.com

the Seller vacate the home in 14 days if possible for a quick closing”…..which is hilarious as they thought we occupied it! It is obviously a vacant investment home. But testament to our wonderful stager! Moreover, I believe that there are simply some homes that will NEVER sell retail. Whether it is just dirty or totally run-down, with all the stuff on market right now, a home that is not good looking just won’t sell. Herein lies the opportunity for us to come in and do our value add. To learn more about SBD Housing Solutions, visit: www.SBDHousing.com

For more information on this and other title matters, please read my book Loopholes of Real Estate or visit: www.CorporateDirect.com

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PROBATE INVESTING

2014—Invest in Your Future

here have been countless books published about how to profit from real estate investing. In every case, the objective is to buy low and sell high. That’s how you make money: you find a bargain and you resell it at market value or higher.

By Leon McKenzie, US Probate Leads

You might imagine that when a widow passes away at the ripe old age of 101, her children or relatives automatically inherit her house. They Whether you are new to Real Estate investing or you are a seasoned investor currently making a number of new Residential Real estate may continue to live there, however investments each month – you owe it to yourself to look into the Resithe house may eventually be sold on dential Real Estate Market Niche known as Probate Investing. the open market to whoever makes the highest offer. The disposition of Untold Number Leads Always Personal Property a decedent’s property may seem like of Leads Available is Available a private, closed process, but it often isn’t. Many factors can influence the ~ 6 million unsetOver 2 million new 99.9% of Probate tled probates every probate cases open cases have some type way an estate is disposed of: minute of every day in the United States, Estimated value of $600 Billion.

each and every year

of personal property opportunity

Residential Properties in Most

Most Executors are “Out of County”

Many Residential Properties will Be Sold Soon

70-75% of probate cases have some type of real estate opportunity

~85% of the Executors do not live in the county where the probated property is situated

If the Executor is going to sell Residential Property in the Estate, ~65% of the Estate will sell within 4-8 months

Understanding Probate is Not Difficult How do you go about finding below market properties? There are so many people looking for properties how do you find ones that you can buy and sell so that you can make the type of money that you need to secure your future? Investing in properties found in Probate can be your key to Success!

• Sometimes the decedent has no heirs and has not left a will. • The property may be in danger of being foreclosed because mortgage payments can’t be met. • Possibly, the heirs simply can’t agree on what to do. • Maybe, the estate does not have the cash to pay property taxes. • And, possibly, the executor lives out of state and in order to manage the sale of the property must fly in to meet with prospective buyers. Who pays these travel costs?

Probated property is anything that is owned by person when that person passes away and his or her estate is settled. You might think that everything a decedent owned including their home or other real estate property is always willed to their heirs, who then do with it what they please or as they are instructed by the person’s will. To the casual observer the process of probate might seem very straightforward. Realty411Guide.com

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PROBATE INVESTING Do you want to find new residential properties that very few of your peers know about? There is a market niche where

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And there are literally thousands of these available in most major metropolitan areas each year. In fact there are more than $600 BILLION worth of residential real estate properties in the US probate system at any given time.

One of the most rewarding ways to earn your financial freedom is to invest in real estate. People always need housing, and the amount of land available is finite. A home depreciates over time, but with quality repairs the value can soar. Real estate comes in all shapes and sizes, in all locations. To see a house, all you need to do is hop into your car and drive to the address.

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If you want to develop financial security while pursuing something that you love, there’s no better way than to make smart investments that will bring a high return. In today’s economy you have nearly limitless investment choices. You could buy stocks and bonds; you could invest in fine art or gold; or you could provide venture capital to emerging companies.

Once you know how to get the leads to probate properties in your area you will be “off and running”. Once you understand this process you will be way ahead of your competition in identifying new opportunities to work with motivated sellers who own properties they are oft times willing to sell at significantly below market values. PAGE 89 • 2014

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Practical Legal Aide for Investors I

n the real estate industry, certainly there are times when an investor requires in-depth legal counsel on a specific legal issue, such as incorporating and legally protecting your business, signing a contract or document you hadn’t fully read or understood, the risk of being sued from a joint partner deal, a dispute with a tenant or property manager, collecting money from a tenant, property manager, or joint partnership, just to name a few. Even at a cost of $200 or more per hour, the outcome may make that expenditure worthwhile. But not many of us like to call an attorney for advice or help of any sort, as we know upfront, the charges we incur can be of an amount extremely large. This puts many of us in a difficult situation of whether we should spend the money for attorney fees or take the risk of not having council, by doing without the cost or expense and unfortunately without the professional assistance that we might need or require. Prepaid legal plans have been around for

many years, but it has taken a few years for legal service plans to achieve some degree of market penetration and use. Not surprisingly, the “great recession” has been a catalyst for growth for prepaid legal plans. Real estate investors continue to pinch pennies tighter and tighter, squeezing out legal service as a viable option. There are a variety of plans and providers in the market, and there is some degree of specialization among these providers. In one example, real estate investors pay a designated monthly fee, and receive a package of legal services to protect your family and your business. Real estate investors have more things to do than there are hours in a day. There are projects to run, schedules to keep, marketing campaigns, and rent to collect. Many of these activities have legal implications, such as real estate questions, taxation, interpretations of laws and usury rates. But how likely are real estate investors to pick up the telephone for legal advice and assistance when every minute the “legal meter” is adding fees? Legal Shield allows real estate investors to pick up the telephone for professional, person-to-person legal advice and assistance as part of their “prepaid” legal service plan. Over time, many real estate investors find new ways to use their legal service plan and often these applications go directly to the bottom line. “The Home Based Business Rider” is attached to the “Expanded Family Plan” and in combination enables the investor to protect

Image: 123RF.com

Christy-Ann Olivares explains how Legal Shield can benefit investors & entrepreneurs.

their family and business with significant benefits. To become eligible for membership, you must meet the following qualifications. Since the Home-Based Business Legal Service Rider is an add-on to the Expanded Family Plan, you must have an Expanded Plan membership. Your home and business address must be the same. Your business entity must have three or fewer employees, and your business must be for-profit and cannot be publicly traded. For information, call 415-902-8772 or visit www.ChristyAnnOlivares.LegalShield.com to learn more about how you can save your family money and grief.

SFBAREIA offers serious real estate discussions in a relaxed setting and social environment. Connect with us online to learn more about our monthly mixers.

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10 Rules of Successful Investing, pg. 80

Diversifying across multiple states helps reduce your “risk” should one market decline for any reason (increased unemployment, increased taxes, etc.).

Need Leads Of Buyers or sellers?

8. Use Professional Property Management Never manage your own properties unless you run your own management company. Property management is a thankless job that requires a solid understanding of tenant-landlord laws, good marketing skills, and strong people skills to deal with tenant complaints and excuses. Your time is valuable and should be spent on your family, your career, and looking for more property. 9. Maintain Control Be a direct investor in real estate. Never own real estate through funds, partnerships, or other paper-based investments where you own shares or other securities of an entity you don’t control. You always want to be in control of your real estate investments. Don’t leave it up to corporations or fund managers. 10. Leverage Your Investment Capital Real estate is the only investment where you can borrow other people’s money (OPM) to purchase and control income-producing property. This allows you to leverage your investment capital into more property than purchasing using “all cash”. Leverage magnifies your overall rate-of-return and accelerates your wealth creation. As long as you have positive cash-flow and your tenants are paying off your mortgage for you, it would be foolish not to borrow as much as possible to buy more income property. For more information, visit: www.NoradaRealEstate.com

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Connecting with SJREI’s Director By Johanna Ash

Balance.

Geraldine Barry

The key is balance. That’s what Geraldine Barry, host of the upcoming event SJREI Summit in March, says her secret is. Of course, I asked. I had to. You see, Geraldine Barry is a true renaissance woman; an accomplished entrepreneur, successful investor, strategist and publisher. She’s also a mother of two who dabbles in broadcasting. When she’s not working she finds enjoyment in mentoring others and helping them realize their business goals. Is there anything she can’t, or doesn’t, do? Geraldine Barry is one of those inspirational women who stand above the crowd, making success look effortless to the rest of us. The truth is: we need more people like Barry to shake things up and show us just how much we can accomplish in a day (or a decade)... if we put our minds to it. “Rome wasn’t built in a day!” Barry reminds me. Maybe, I think, but it certainly started with a strong foundation. So, too, I learn, did Barry. Her story begins in southern Ireland: a small town called Cashel. The town derives its name from the nearby Rock of Cashel, an awe-inspiring castle built in the 12th and 13th centuries that has withstood the test of time. Though Barry emigrated to the United States with just $500 and a return ticket to Ireland should she need it, she clearly had with her the sort of wealth that many of us spend a lifetime trying to accrue: she was rich in confidence and motivation. She possessed the ability to succeed in whatever field she chose. Barry, like the Rock of Cashel she grew up with, clearly has a strong foundation. Her father, she says, was the sort of man who, though he didn’t travel much, could tell you something about any country in the world. His secret was books. He imparted onto Barry an appreciation for and a love of books at an early age. If you can read, Barry implies, you can do anything you set your mind to. “Read 12 nonfiction books a year to change your life” Barry suggests. She goes on to share some of the books she has recently read; after our chat I find myself with a list of books I can’t wait to check out of the library (and I haven’t been to the library in months). Even in an interview, Ms. Barry can’t help but motivate and mentor. Connections...connecting with others is a key to Barry’s success. As a real estate investor, Barry found the work a

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bit too solitary without any co-workers around. Not one to settle, she took matters into her own hands and founded SJREI, a real estate investor’s association that serves the Bay area. Barry says that she often draws inspiration and discovers learning opportunities from connecting with other investors and professionals in the industry; it’s no wonder that SJREI’s motto is ‘Connecting People... Educating Investors’. Through being an active participant in SJREI, Barry is able to stay on top of new trends, technologies and ideas. She appreciates the fresh perspective that her SJREI community of like-minded investors lend her work. It’s easy in real estate investment, Barry warns, to rely upon a property manager and become complacent. Through talking with others in the business, she is able to look at her work with a fresh set of eyes and added focus. People are key to Barry’s success. Whether it’s reading books (“The One Thing” by Gary Keller of Keller Williams is her current top pick), learning from keynote speakers at SJREI events or trading parenting tips with other moms, Ms. Barry believes that community, camaraderie and most of all other people influence her success. This drive to connect runs throughout her work from serving as president for SJREI to publishing REI Voice magazine, to frequent public appearances sharing her expertise on current trends and investor perspective.” Early mornings in Ireland can be gloomy and uninspiring to its residents. While the people around her chose to sleep through Cashel’s overcast mornings, Ms. Barry learned at a young age to get up and get motivated alongside her father. With others still asleep, Barry would begin her day with a cup of tea and exercise. To this day, green tea, morning yoga and friends keep Ms. Barry in balance while her semi-annual trips home to Ireland are a time for her to completely disconnect from it all. In discussing her home base of Silicon Valley, Barry clearly feels a special kinship to it,“...within a 50 square mile radius, Silicon Valley has the highest percentage of wealth in the history of humanity.” The entrepreneurial spirit and creativity here, she says, makes it a “magical place” to live. For more information about Geraldine Barry, please visit SJREI’s website at: www.sjrei.org

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News Alert from

By Lori Peebles

Lady Landlords of SD

from left to right: Club directors Jasmine Willois, guest speaker Sean Carpenter, and club director Jason Kennedy

ack for a progress report, Lady Landlords of San Diego owners Jasmine Willois and Jason Kennedy were originally interviewed in the October 2012 Issue of Realty411, we are excited to find out what they have been up to since. With the clubs main focus on buying and holding rental properties, they find themselves preaching a more conservative message then most investment clubs in the same industry. LLoSD, is located in sunny San Diego, CA and was founded in 2010 by Jasmine Willois to create a platform and arena where ladies and gentlemen of the craft (turn-key investing), could share experiences, networks, and partner to acquire real estate for longterm cash flow. A process that the club owners themselves take part in, as their overlying message is that true wealth is built by holding assets long-term. The club has been well received by all, currently over 55% of their members are men, and 65% of their online community is from outside of the state of California. When Realty411 caught up with Jason and Jasmine, their real estate investment club, which caters to women and cash flow investments had just opened it’s doors two years ago and they were determined to carve a spot out for the club and its members in this competitive world. And that they have done! In what seems like no time at all, the club and its owners have secured relationships with Christian based AM radio station KPRZ and ESPN sports radio to discuss what’s working and what’s not working in real estate. You can catch the two of them on Jasons new show, “Fliping out with JK” on KPRZ every Saturday from 7pm – 8 pm PST

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and Jason on ESPN 1700 AM with “the Bro Show” every Wednesday from 2pm – 3pm PST. Of course these two never forget about those investors out of state, so each of these programs can be heard with the corresponding app anywhere. This dynamic duo has also put together out-of-state buying tours, in response to the many inquires about how to successfully invest out-of-state. LLoSD now offers inexpensive 2 day buying tours to it’s members and fan base. This tour allows investors of all experience levels to get their boots on the ground in the investment areas that are most intriguing to them. They will be hosting a buying tour this February 23rd in Indianapolis one of Jason and Jasmine’s favorite buy and hold towns. We are proud to offer hands-on; in the trenches tours that deliver what investors really need. Jasmine points out, not everyone can afford to pay $45,000 for an education in real estate investing and not walk away with an asset. Jason reflects on how the times have changed by pointing out, “the flipping frenzy has calmed down a bit, and we are beginning to stand out as a club that has its head in the right place.” The clubs growth has been steady and loyal, Jason explains that, “many of the clubs members travel well over 60 miles” to get their fix of this tag team in action, so the real estate investment club is expanding to Orange County CA and will be called LLoOC! The first meeting was held November 19th, 2013 and will be held the 3rd Tuesday of every month at the DoubleTree, Dohney Beach in San Clemente. The clubs theme in addition to being about conservative real estate investing, will for fun be called THE REAL Lady Landlords of Orange County, as a play off of the canceled realty TV show. These two love what they do, and it shows!! Meeting the third Tuesday of every month, the club boasts local and national educational speakers, complimentary refreshments, PAGE 93 • 2014

networking sessions, role-playing games, a haves and wants section, and a sea of femininity. Residents of Southern California, Jason and Jasmine have been investing out of state for over 23 combined years. The two of them and have successfully held rental properties in Michigan, Arizona, Nevada, Mississippi, Florida, Chicago, North Carolina, Georgia, New Jersey, California, and now hold most of their assets in Indianapolis, IN through their real estate investment firm Wealth By Real Estate Management, LLC. Jason Kennedy, a real estate investing mentor by trade, was the perfect fit for the club, Ms. Willois states, as she describes Jason as a “true gentleman” who loves to promote and encourage women’s involvement in all that he does. “Some men are intimated by the presence of women, and some are very open to the idea of working with them. This is a place for the latter man.” Jasmine Willois is an investor analyst by trade and contributes her Wall Street experience to the club world by bringing what she calls her “bond-like” strategies to the real estate investment world. Jason describes Jasmine as “a feisty woman with direction and focus,” who loves to earn her keep. He laughs at how she is a perfect partner for the east coast business dealings they often find themselves involved with. “Our mission is to create an environment in which our members can build camaraderie, share tested investment techniques, and promote responsible investing through networking, and referral-based partnerships,” Jasmine says. The price of admission to their live club is $25, however investors can begin saving money by pre-registering at Meetup.com or on their website, and they will receive a $5 discount. It’s 2014, step into the pink domain of LLoSD and LLoOC. For info, visit: www.ladylandlords.com

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t is no secret that Real Estate goes through cycles. Sometimes the market is up. Sometimes it’s down. It follows that Real Estate has windows of opportunity. What I mean is that at certain points in the cycle, an opportunity, or tactic, becomes available. That brief time period in which this opportunity exists is when it is “in the window.” Anything that is extremely popular, or really “hot” ends up trending for a couple of years. Then, when that window shuts, the cycles move on to another real estate fad. Currently, the hot topic is “buy, fix and sell.” The window is wide open right now for this type of investment. In northwest Indiana, which is jokingly known as the armpit of America, my “buy, fix and sell” houses are selling nearly as fast as I can get them off the assembly line. Not only are they selling but they are selling above asking price with multiple offers. That is what’s happening in northwest Indiana and it’s not uncommon in other markets that people are moving into, including yours. Scarcely a soul will consciously say, “Hey! You know, I need a change in my life, so I’m going to move to Schererville, Indiana” (insert your market here). The states of Florida, Arizona and Southern California are where people are retiring, or relocating when they want to change their lives, or live in a “cool” area that fits with the job market. You don’t have that in Schererville, Indiana. However, the houses are selling as fast as I can get them ready and there are a couple of different reasons for that. The main reason is that the window of opportunity is open for investors. We also refer to this as supply and demand. Let’s take a small step back in time and I will try to explain what is really going on in today’s market. This is what we call the boom after the bubble. If you were a

real estate investor in what we will call the pre-bubble era, between the years 2000 to 2007, houses were selling as fast as they hit the market. I did a lot of “buy, fix and sell” in the pre-bubble days. I did rehabs, I did new construction, I did tear downs and rebuilds and they would ALL sell as fast as we could make them available. However, in the pre-bubble space, supply and demand was driven by the mortgage industry. Loans were extremely easy to obtain, even if someone worked part time at a fast-food chain as a cook. An individual could get a loan for two hundred to two hundred fifty thousand dollars for a house. Because it was so easy to get a loan, pre-bubble, everybody was buying houses. And since everybody was buying houses, there was a shortage of inventory. So anything that was for sale—even an ugly house—would sell immediately. During the time frame from 2000-2007, supply and demand kicked in, and everybody and their brother were trying to get their houses on the market, because it was so easy for people to get the financing to buy. Well, that rush included the builders—all these contractors building houses, and all the investors rehabbing properties, too. The market was saturated with inventory, but the inventory was moving. Then the bubble hit. Okay. Bubble explodes. Real Estate collapses in 20072008. Looking back from a 2013 perspective, the bubble burst in a very dramatic way. It was no small burst; it was a very erratic burst for real estate and it was bad. As a result of this eruption, the market has changed. Let’s just walk through what happened. When the real estate market bubble burst, there were people who had been living in their house for 15 years. And nearby, perhaps across the street in the same neighborhood, was someone who had bought a house in the pre-bubble year

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PAGE 96 • 2014

of 2005. Quite likely, they bought it on an option-payment type of mortgage, with no money down; perhaps they even got cash back from the bank at closing. There were dozens of these people buying houses in the neighborhood, who could not really afford the mortgage. Or maybe they COULD afford the mortgage, but when the collapse began in 2008-2010, everything went into foreclosure, because of all the bad mortgages that the bank put out pre-bubble. And the bursting bubble spelled trouble. Today it’s eight o’clock a.m. in the world of Real Estate, and here is what I mean by that: The market is just beginning to wake up. I look around and I need to know where I stand. Who is my competition? I am a rehabber. I buy, fix and sell houses. Right now, if I put a house on the market, first of all, I’m competing against what I call REO (Real Estate Owned) properties, also known as bank owned properties on the market. We call these “fixer-uppers.” And also, there are the average homeowners that have lived in their houses, who are now trying to sell them. Finally, there are rehab properties. So, when I go to put a house on the market right now, I’m competing with other investors who have

1/22/2014 11:17: 07 AM

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intends to buy one of these properties, they will need cash. And if they DO have the cash and CAN buy the property, they will have to go through a twenty to forty thousand dollar rehab process to make it livable. Most homeowners are not general contractors—they do not have the skill base or knowledge to follow through on a project of this nature, nor do they likely have the cash for it. So, those are two property types on the market right now. The third type is by the investor. When you look at today’s market, compared to a pre-bubble supply and demand driven market where everyone was building and selling everything, in this post bubble market, investors truly have the edge. There IS still a huge supply and demand going on, but it is coming from our own industry. Homeowners have gotten wiser in their purchases. The lowered value interest rate on loans means that a person can borrow money very cheaply. On a 30year pick, one must only put 3.5% down to buy property. Scores of FHA loans are also going down right now, which means it’s easier for the average homeowner to get qualified to buy a property. Buying property today is still cheaper than it was in 2004 to 2006. (#1) The homeowner says, “Okay. I want THIS type of property,” (#2) he can get it with 3.5% down, and (#3) his payment will be very low. He can get a beautiful home, just like that. Now, let’s tie this all together. There’s a window of opportunity that’s “hot” right now for the “buy, fix, sell investor.” It will probably last for about three to five years. When I put a house on the market, I am not really competing with the REO Bank properties. They are overpriced. I am not competing with the homeowners. They don’t have the cash or the knowledge to buy and rehab. There’s really not a huge amount of inventory on the market coming from homeowners, like in the pre-bubble when the homeowners were “cashing in.” Now homeowners are saying, “NO! I don’t want to sell my property, because I can’t get what I think it’s worth!” The only ones, who might sell, are those who have owned for ten to fifteen years. Even though their homes are not considered “fixer-uppers,” they definitely need small repairs and maintenance—they’re not fresh, beautiful properties. Then you have OUR properties. Our

rehabbed property; I’m competing with the homeowner; and I’m competing with the REO bank. Now, let’s go back to the years 200810. During these years, the homeowners weren’t really able to sell their properties. In fact, they did not want to sell their properties. Why not? Well, they wouldn’t get paid enough, because across the street the neighbors were going into foreclosure. Or, their own house was going into foreclosure, because they bought it in 2005 on a negative end loan. Consequently, when that house faced foreclosure, it diminished the value of their property. Even though they had lived there for 15 years, and even if they had faithfully paid their bills those past 15 years, the value of their property was decreased because of all the other houses around it that were going into foreclosure. So, all these people were thinking, “I’m not going to put my house on the market; no way! “Cause, if I put my house on the market right now, I’ll lose money. So, I might as well ride out the wave, and I’ll wait for the increased value over time in my personal property.” And then there were the REO properties. From 2009-11, there was so much new inventory that the banks were selling these REO properties as move-in ready real estate. This meant that a homebuyer could get it at a great discount, and basically just move right in, without doing much work at all. I know many people who bought a house at this time, for $30,000 to $50,000 below market value. They literally just walked in, cleaned it up, and moved right into it. Today, we don’t see this type of inventory much. What we have on the market now, are the REOs that the homeowner can’t really buy because it would turn out to be a major rehab project. The house that one could walk into and clean up for around three thousand dollars, no longer exists. If I want to buy this house now, I will have to compete with a bunch of other buyers who are also bidding on this property. So, if I do buy it, I must pay cash, because no bank is going to loan me money on a house that is not habitable. Any traditional banker, like Bank of America or Wells Fargo, will not want to lend an FHA type of loan without the house being market-ready or livable on the date of the closing. So if a homeowner Realty411Guide.com

PAGE 97 • 2014

properties are beautiful, ready to move in homes. The houses we rehab have granite countertops in the kitchen, brand new appliances and cabinets, new wooden floors, custom paint, and a brand new furnace. Everything about our properties is for the most part “brand spanking new.” Now, stop and think about this: I have a “flip” that will be ready this Friday and go on the market next Monday, in Merrillville, Indiana. My only real competition is other investors. How many rehabbed, move-in ready homes are readily available in our area? You have to think about it from the buyer’s perspective. When a buyer goes to find a house, what is he looking for? The buyer calls his agent and says, “I’m looking for a three-bedroom, two-bathroom home; I want a master suite, a two-car garage, two story, fireplace, etc.” They have their wish list figured out. And they also tell the agent, “I need to live in this particular area.” Sometimes they draw the lines closer. “I want to live between this road and this street right here.” They give the real estate agent parameters. So, I have a house available in Merrillville and I have a house in another city about twenty miles away. If someone has decided they need to move to Merrillville, they’re not looking to move to Hammond. So the agent is not going to go pull houses from Hammond, which is twenty minutes away, or Lansing, Illinois, which is thirty minutes away. Instead, they will look for houses in Merrillville, or wherever the buyer chooses. So, I will go back to the original question. In Merrillville Indiana, how many “for sale” homes am I competing with? The answer is: maybe twenty. Maybe. It’s probably only a dozen. So my final challenging question to all investors is this: “Can you be the best rehabber out of twelve or fifteen rehabbers in your area?” You don’t have to be the best rehabber in America to make money in real estate. You don’t have to be the best in your state. But you should strive to be the best in your neighborhood! Remember this: most of those people “fixing up” houses don’t know what they’re doing; they’re just winging it. So the advantage is yours and there will never be opportunity like there is today. Visit AndrewCordle.com for information about ordering his book, “The Boom After The Bubble.”

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final word

Whiterock Capital CEO Discusses

Relationship Building R

cultivated by being an already began to fade expert nor through slick for the serious investor marketing. Whiterock looking for real value. A Capital’s success is based solid mix of direct mail, upon demonstrating and online, print marketing practicing this loyalty and referrals avoids the first. reliance on one method, During the interview and the risk of being put Edrosolan specifically out of business with the pointed to three current next inevitable market examples of how Whitechange. rock is investing in the The same is true for success of others. These the types of properties include taking care of and sources that invesagents, giving hard money tors seek. Trustee sales, lenders the business oppor- Photograph of Richard Edrosolan HUD auctions, probate by John DeCindis tunity to make some monproperties, the MLS, ey when their use wasn’t and dealing directly completely necessary, and the creation of with distressed borrowers are all good, but a true win-win situation for a seller who the best performer of these sources at any was previously stuck with a burned out particular time is in constant flux. home. Although these situations may have Edrosolan also places great emphasis cost Whiterock some money in the short on “building on your real estate education, term, these are the types of activities that understanding of how markets work, and create long-term loyalty. how knowledge of trends in jobs and the Things often move in this industry at economy can be used to keep investors lighting speed, but those individuals with ahead of the herd.” great relationships will most likely make it, and continue to grow their business. Whiterock Capital’s Tips for Such entrepreneurs will deliver outCrushing it in the Year Ahead standing products and services thanks to business partners who are willing to go In our exclusive interview with the foundthe extra mile to assist them. In order to er of Whiterock Capital, the CEO said cultivate loyalty, one must reward the loyhe believed that contrary to media hype, alty shown by others, remembering that it that there were still “plenty of deals out is not all about price, but about generosity there.” In fact, he says “even if you won and delivery on one’s promises. the lottery you still couldn’t soak up all of the inventory out there.” On Real Estate Marketing In addition to the above, Edrosolan’s for Success in 2014 top tips for success ahead include: 1) Monitoring the competition and lookWhiterock Capital has been candid about ing for ways to do it better; its love of direct mail in its marketing 2) Be lightning fast when making offers to reach sellers and to uncover yet more (as in making offers on the spot); deals. However, the firm’s CEO is also 3) Value consistent volume over “elequick to point out the vital importance of phant hunting”; maintaining a well-rounded marketing 4) Be ready to adapt to a changing marmix, thereby staying ahead of the curve. ket. Nothing stays the same in real estate For more information about investing forever. As soon as the media Richard Edrosolan, please visit his reports on a hot niche, that trend has website: www.whiterockrei.com

By Janice Bell

ichard Edrosolan is the CEO of Whiterock Capital, whose investment firm focuses primarily on markets in Southern California and Arizona. He is well known as an advocate for developing relationships in real estate. These relationships, combined with the right marketing mix and a flexible business model, will enable real estate investors to grow their volume in 2014. Many people talk about relationships in business today, but Edrosolan lives it. He has earned a reputation for what some might call “intense” loyalty and while simultaneously enjoying rapid business growth by remaining flexible, and investing in others.

Real Relationship Building for Real Estate Investors

Authentic relationship building takes more than just talk in the real estate industry today. Less experienced investors need to realize this, and develop loyalty with others not only to survive, but to thrive. Despite fast talking “gurus” and the hype in various books and programs, newer investors must avoid being led astray. The “experts” who are solely concerned with squeezing every last cent out of each and every transaction are often doing themselves a serious disservice. In fact, they are ruining the opportunity to establish meaningful relationships. Edrosolan says that building relationships is one of the most important priorities for real estate investors who want to ensure their long term success and profitability. Among the most essential professional partners he cites Realtors, lenders, and contractors. Richard says, “Everyone wants to be treated fairly, and to be respected,” and more than “just buying family dinners for connections, it’s really about loyalty.” Such loyalty cannot be Realty411Guide.com

PAGE 98 • 2014

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