Realty411 Featuirng Terica Kindred by REALTY411

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www.realty411guide.com | Vol. 4 • No. 2 • 2012

411 A Resource Guide for Investors

TERICA KINDRED

Founder & CEO of

From Local to Global Learn to Invest Outside Your Backyard to Accelerate Cashﬂow

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The FUTURE of The Real Estate Industry

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contents 6 9 10 14 17 18 19 20 22 23 24 26 28 30 31 32 33 34 36 37 38 41 44

Ready to Buy Differently with HomeUnion? Spring Has Sprung, but Has the Market? Realty Auctions with RealBay.com From Local to Global: An Investor’s Journey Retire in Style with Property Partners 1 Find Real Deals in Just Four Simple Steps Kaaren explains How to Control Your Retirement Lease-Option Deals with Black Belt Investors Learn About the Rental Property Analyzer Bill Gatten Shares His Wisdom Note Buying Made Easy with Asset Ventures Buy, Hold & Rent in Cleveland with Sean Whalen Investing in Dallas with Tom Wilson Is It Honest to Use a Land Trust? WhiteRock Capital Creates Wealth in CA & AZ Premier Equity Group Offers Twice the Cashflow Is Flipping Property Good for Your Wealth? Market Spotlight: Discover San Antonio, TX Is the Phoenix Market Starting a Recovery? Sam Sadat Dishes Words of Wisdom Going Global to Meet Investor Demand Diversify Your Portfolio with Stocks How Hard is Your Money Working?

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omeUnion Services is a unique investment platform proQ: What are some challenges to viding high income single-family cash ﬂow homes naproviding investors with great cashﬂow properties? tionally for real estate investors. The company brings A: The challenges lie in selecting the together a network of property providers who have an excellent right partners in the markets that we track record and are certified through an extensive due diligence like. We place a high bar on the propprocess. HomeUnion Services offer tenanted properties and they erty providers. They need to have a stay on as property managers after the purchase. This ensures a critical size, i.e manage several hunsingle point of accountability and significantly reduces risk for dred properties, credible property out of state investors. In addition, rent and maintenance guarRavi Renduchintala management metrics, good financial antees are available on homes in some markets. HomeUnion proPartner, HomeUnion Services strength and impeccable investor refvides post-purchase market intelligence, portfolio analysis, and erences. The market is full of real estate management oversight for investors. Single family real estate is rapidly evolving as a legurus that peddle great properties and then gitimate asset class, yet it still does not enjoy the abundance of decision support data that disappear into the sunset. The investor is surrounds other asset classes. Their goal is to bring legitimate analysis and transparency left holding the bag with a less than adeto the investment process. We recently interviewed Ravi Renduchintala, a partner with quate local manager. HomeUnion Services, to learn more about their due diligence process.

Remote Investing with HomeUnion Question: What makes HomeUnion different in the cashﬂow real estate investment market? Answer: HomeUnion is a platform to reduce the risk of remote out of state real estate investments. We study markets, identify cashflow zones and quality providers in that area. The turn-key providers are put through a stringent certification process with sixsigma approach before their properties are made available to our investors. Our goal is to establish single family real estate as a legitimate alternate investment class. Q: Do you have speciﬁc markets you prefer over others? And, how do you know where to invest? A: We have a proprietary analysis process for every market. At a macro level we look at employment rates, employer diversity, population growth, and a number of other city and economy factors. At a micro level we look at neighborhoods and properties within an “investment zone”. These properties are typically to the left of the mean prices in the bell curve but not at the tail. It is an optimum balance between high rent to price ratios and risk. We have six markets nationally that are on our platform Q: Does your company manage the property for clients? A: Our providers manage the properties, we provide oversight and continued diligence Realty411Guide.com

on provider performance. We also provide consolidated portfolio reporting for clients that have bought properties in multiple locations. Clients will also receive ongoing important economic information on the zones where they have invested. Q: Have you been investing in real estate for a while? A: The founders have been involved in many facets of the real estate market for over a decade. Founders come with an extensive background in mortgage, real estate, investment banking, process management, and technology. Our unique value proposition lies in the quality of due diligence that we perform in the selected investment zones and the turnkey providers in our investment property market place. We are able to share some of the best practices across multiple investment zones and improve overall quality. Q: Tell us a bit about the people behind HomeUnion Services? A: The founders are engineers, MBAs — serial entrepreneurs with a track record of building and scaling successful companies. This is their third company in the real estate space. The goal is to bring professionalism, trust, and transparency to the singlefamily real estate investment space. Our primary investor is Soma Enterprises, an $800 million global infrastructure development company. PAGE 6 • 2012

Q: What type of ﬁnancing is available for your deals? A: There are preferred Fannie Mae lenders in every market. In addition there are several non-recourse lenders that will lend to IRAs or international investors. Q: What is the ﬁrst step to get started? Investors can register online at www.home unionservices.com or call (866) 732-3220. We have customer service professionals who work with investors to help them build the right real estate portfolio. Q: Do you have any advice for new investors starting out? In the market investors can either be day traders and stock pickers or invest with a well-rated mutual fund or money manager. For most people it makes more sense to take the latter strategy. In the real estate investment business this means working with a trusted company that has done the due diligence for them so they can reduce the Continued on pg. 45 reWEALTHmag.com

TAKING THE RISK OUT OF REMOTE INVESTING

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Now thereÕs a way to remotely invest in single-family cash ßow homes for high income positive cash ßow. HomeUnionÕs unique Investment Marketplace provides transparent visual access to the best national cash ßow Real Estate Investment Opportunities.

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HomeUnion platform brings together a supply chain of CertiÞed Property Providers. The Property Providers sell fully tenanted properties to investors and stay on as Property Managers. Several homes come with rent guarantees and maintenance warranties. HomeUnion provides post-purchase market intelligence, portfolio analysis, and management oversight to the investor.

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email cashflow@HomeUnionServices.com Visit www.HomeUnionServices.com HomeUnion Services 2 Park Plaza, Ste 770 Irvine CA 92614 HomeUnion Services (CA DRE Lic# 01526904) operates investment property market places for traditional and IRA based property investing. The company is not a Financial Services, Legal or Tax Advisor Company. For any such services please seek help from appropriate professionals.

Spring has Sprung

but has the real estate market?

by Lori Greymont

ne of the repeated questions I have been asked is, “Is it time to buy real estate and if so, where?” In Silicon Valley there is a lot of talk about how the economy is recovering, rents are up, unemployment is down and everyone is excited about the financial uptick expected with the Facebook IPO. Northern California real estate investors that have been sitting on the sideline are wondering, is this the right time to buy? My answer is a resounding YES! And that has been my same answer even through the darkest of times. For most passive investors, real estate investing should not be a onetime event timed perfectly like a game show contestant trying to leap onto a moving object or face landing in the muck. We saw what happened when families bet their financial future on appreciation and many are still living with the wounds today. Instead, investing in real estate ought to be a long term plan of buying cash-flow properties in several markets over a several year period. This simple risk mitigation technique may not bring you the highest returns, but will allow you to sleep at night knowing you have cost averaged your purchases. It’s taking investing step-by-step instead of making one giant leap. The point I want to make clear is that American real estate has been on clearance over Realty411Guide.com

the past four years and if you haven’t been buying when it was on sale, don’t wait too much longer because the prices will be going up. The rule of buy low and sell high still exists. And the unfortunate truth is that the only way you know you are at the bottom is when you have past the bottom and you are looking back. Now to the second part of the most commonly asked question, “Where should I buy?” That depends! Really, what you need to do is plan your exit before entering the real estate market. You need to know how long you plan to hold the properties. Are you buying for cash flow and wealth building? Or do you need to be more active in real estate right now to replace your daytime job? I typically tell people that they should invest in two-tothree growing metropolitan areas that are geographically diverse from each other. For example, don’t buy in three California cities, but rather if you can find cash flow in California, pick one city in California and also purchase someplace different like Atlanta. Having your investments in different major metropolitan markets will reduce the risk of your losses due to local economic failures. When I look into a new investment market, I analyze and look for seven key success factors: 1. Strong Demographic Growth, 2. Strong and Diverse Economy Sectors,

GreenBlasts Green Blasts.com Blasts .com We send your eMail, eFax or Voice Blast to any Demographic, Industry or City 310.499.9545 or info@realty411guide.com

Continued on pg. 42 PAGE 9 • 2012

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RealBay.com Set to Launch this Spring! Article by Bonnie Laslo Eleakis & Elder Photography

eal estate professionals flood to RealBay.com for its Spring 2012 launch, and the silent buzz begins. RealBay.com is a unique real estate online marketplace, which has arrived to serve as a revolutionary platform in which its members can not only market their real estate listings, but also market themselves as real estate professionals and real estate service providers. The company just signed industry giant Trulia as a marketing sponsor. Trulia will help drive traffic to RealBay.com by promoting their launch to their millions of members. “We anticipate about 40,000 members within the first few months of our launch based on all of our strategic partnerships,” says Stephan Piscano, RealBay.com CEO and co-founder. We recently sat down with Piscano to get an inside look at how RealBay.com came to be and what void it will fill in the current marketplace. Upon review, www.RealBay.com will serve as an online marketplace in which its members both “RE Pros” and “Everyday Joes” can list their properties on the site for sale in the form of live bidding auctions or listing-style property offerings. There are currently a few competitors out there offering RE auction services online but none of them that we have found offer the ability to connect in a social network setting while doing so. “One of the goals we had here was to try to really bring the entire experience of buying a home online, not only with the research process as you can do on Real tor. com and others, but to actually allow you to make a buying decision and buying action, all from the comfort of your home, and do it all for free,” Piscano explains. “I feel like everything that I have done throughout my life and in real estate was to bring me to a point in which we could

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Stephan Piscano, CEO/co-founder of RealBay.com

create this,” he adds. Piscano manages an investment fund based in Napa Valley, Calif., he first got interested in online real estate in the summer of 2008 when he began seeing astonishingly cheap properties in Detroit, MI, selling on eBay of all places for as little as $2,500 or less. This was at the height of the market crash and Piscano was greatly intrigued. “I nearly purchased several of those cheap homes I saw on eBay, but I said to myself, if they are selling them online that cheap they must be buying them somewhere else even cheaper”. Piscano, from the other side of the country, began cold calling asset managers and listing agents in Detroit on nearly a daily PAGE 10 • 2012

basis trying to round up inventory to purchase and then liquidate instantly online. He purchased his first home for $600 (a duplex) and sold it less than a week later on eBay for $6,900, and after that, he was off to the races. These experiences were condensed into a short two-year period that yielded consistent results of success and profits. From 2008 to January 2011, Piscano estimates he engaged in more than 250 online real estate transactions, most of which being through eBay. Throughout this process Piscano realized the many gapping holes that were in eBay’s system, as it related to real estate. On Ebay they had ramped fraudulent bidding activity. Bidders would bid properties up, win the auction and then reWEALTHmag.com

“In effect we want to be seen as a one-stop-shop to meet all your real estate needs online, allowing members to not only market their listings but market themselves as real estate pros.” never pay and never be heard from again. One could report these members to eBay, and they would issue a non-paid item strike to that bidder, but they would not refund any fees to the seller. So the investor would be out $100 to $150 for the listing. Also, eBay had problems with fraudulent sellers auctioning off properties they did not even own. Because the cheaper homes were typically sold via quit claim deed, it would be months before victims realized that they had paid through Paypal for something that they did not actually own. By then, they typically could not track down the criminal that had sold it to them. All of that mistrust created a marketplace that by 2011 was hurting the overall industry, as well as the properties. Piscano envisioned a web site that had verified ownership of all properties sold, verified bidders in which if you had a fraudulent bidder on the site, you could auction that same property again for free in confidence — basically Piscano wanted a site where real buyers and real sellers could connect with trust and have it all take place online — from this desire RealBay has been born. Piscano searched other competing sites and actually had some of them contact him allowing him to list on their sites completely for free just to get the inventory. He found that none of them, in his opinion, “Got It”. “The competing sites are all charging a percentage of the transaction after the fact — Either with a buyer’s penalty (premium) or acting as the list agent and trying to pocket more money from the seller — That creates a negative scenario for all the users of those sites, which hurts all the members in my opinion — At RealBay it is always free to bid, no buyers penalties or premiums, and our sellers never pay fees after the transaction it is simply free that is it!” Piscano and his partners believe that this strategy of nearly making the entire marketplace free will create exceptional moral in which more transactions will take place at higher rates as well. Piscano working with his trusted business partners, Patrick Madison and Reece Realty411Guide.com

Madison began to craft the details of the site while he set up meetings with the top web site designers in Silicon Valley to design what would become in their minds “The Future of the Real Estate Industry”. “There is no other website out there like this,” stated Piscano. The website includes features necessary to change the way real estate professionals do business online over night. Some of the most notable functionalities are: •Real Estate auctions with live bidding, like eBay. The auction can be set at different timelines, and buyers can contact sellers in real time to get critical information about the properties. •Open social networking, like Facebook, allowing members and RE pros to market themselves to potential partners and clients. •Professional networking exposure like LinkedIn allowing members to have connections, receive recommendations, and truly market themselves as well as their listings online. •Multiple video tutorials for speed and ease of understanding. The markets are always changing and education is key. The resources are available for learning. Topics will include what other investors in your area are doing to learn what is working and what is not. Trends are different and localized to specific areas. •Allows users to search real estate service providers in the specific target criteria. “In effect we want to be seen as a onestop-shop to meet all your real estate needs online allowing members to not only market their listings but market themselves as real estate pros,” Piscano says. A survey was conducted among real estate professionals about their opinions on PAGE 11 • 2012

which facets of the website caught most of their attention. According to real estate investor Patrick O’Donnell, his top five are listed below: 1. Free membership to bid on property and no buyer fees. 2. Beginning property inventory of 4,000 providing buyer variety. 3. No cost for business professionals to market themselves through the social network.

4. Low-cost auctions starting at approximately $5 per property. 5. Access to local resources, service providers, auction, and social atmosphere all in one place. In addition, auction winners are provided with a list of local product and service providers in the local area at no charge. This proves to be an excellent retention feature as the buyer and/or investor most likely will be in need of a contractor, agent, or general service providers in the area. The time saved in researching this information is also money kept in the buyer’s pocket. Piscano notes that nearly 100% of the buyers who buy cheaper online real estate are outside of the state that they purchased the subject property, making this need very dramatic. The buyers looking for investments and/or assets will be able to search using detailed search fields like location, Continued on pg. 42

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on’t be deceived by Terica Kindred’s youth, inside lies an experienced investor with millions of dollars worth of deals under her belt. Her first transaction, at age 19, was based in Atlanta, GA. By the time Terica turned 24, she was a self-made real estate millionaire. A native of Southern California, Terica understands the needs of long-distance investors who choose to do deals far away due to economics. She started purchasing out of state and managing long-distance flips herself while still living in Los Angeles. Terica has purchased, renovated and sold properties throughout California, Alabama, North Carolina, Texas, Tennessee, Georgia, Missouri and Indianapolis. Her company Out Estate Investments, is a full-service firm offering multiple products, including her popular Zero Money Investments. “It’s basically a ‘no money down’ investment program where we help investment buyers acquire houses,” she explains. Terica adds: “The program incorpo-

Terica: Yes, I grew up in a real estate family, so I always knew I was going to end up in real estate. I was looking at a triplex [in my original deal] and all I had was an ‘offer letter’ from Deloitte, the company I worked for before I went out on my own. They wouldn’t take my ‘offer letter,’ but at Sun Trust they would, and that’s when I bought the property. And it was a lot cheaper and I got more bang for my buck. That’s when I realized that, although my father — who’s been in real estate for over 40 years — he usually does a lot of investing in his own back yard; for me it was

From Local to Global Terica teaches how to Invest Out of State

rates a rent-to-own strategy, where the type of people we put in [the homes] want to buy the property for the future. They usually have bad credit, so we enroll them in a credit repair program.” One of the advantages to this program for investors is that they are able to cash out on their deals. Tenants benefit because it’s cheaper to own than to rent in the markets they’re investing in. The deals sold by Out Estate Investments have 25% equity at the close of escrow, which is one of the many advantages to this program. Recently, Terica moved to Atlanta, the city where her first deal was done. She traveled south to zero in on this thriving market. I caught up with Terica recently to discuss her new book, The Global Millionaire, and to learn about her company’s brand new financing option for foreign investors and their VIP Flip Program. Question: Did you really do your ﬁrst real estate deal at the age of 19!? Realty411Guide.com

a little different. Although I was working in LA, I thought that I might as well leverage my income and buy something bigger and better and cheaper outside of California. And so, I invested in properties in Atlanta and also in Texas. That’s how the business was built. It started in 2006. A couple of friends from Deloitte wanted me to help them out and teach them how to invest. It started from a network of friends, family and acquaintances. I remember the day I got my first client that I didn’t know and now the majority of them are unkown. We have a waiting list for all of our properties and there’s a new program we’ve just created that I think is noteworthy. We have a thing called a VIP Flip program. That started because some clients were saying, “Well Terica, you’re flipping the deal. How do I become YOU in the transaction?” So I created a program where my clients and I joint venture together. We buy, fix and flip houses to fussy housewives of Atlanta. The average out-of-pocket for my VIP PAGE 14 • 2012

Flip Program is about $25,000. He’s going to be able to do about three deals. The average net profit on those deals is $10,000 in six months. So on those three houses, he’s making $30,000 in six months. So in twelve months he’s making $60,000 dollars. It’s basically what I did personally to get out of Corporate America. And I’m not telling people to get out of Corporate America; but we put you in a position where, if you want to leave, you have residual income that matches your corporate dollars. If you put all of my programs together, I can help anyone — with some money and some credit — get out of the rat race. Question: You work with clients all over the world. Describe the type of investors who make up your typical client base? Terica: Our typical client is a corporate guy who wants to invest, wants to get out of the rat race, but they don’t have the time to find property. They’re stressed. We help them put together a strategy. We provide private reWEALTHmag.com

financing, property management, tenants, construction, the whole ball of wax. So that way they can sit back and be hands free. Question: I know the foreign investor market is exploding. Do you assist many foreign investors? Terica: Yes, we do have many international investors. With the foreign buyers, it’s a little different, only because they’re not able to get traditional financing. But they want to invest as well and right now their only option is to put down 100 percent out of pocket. We also have in-house financing resources that allow our investors to put down 40 to 50 percent with an interestonly rate of 5 to 9 percent with an eightyear balloon. This is really popular because it allows dollars to be leveraged. Investors really benefit from being able to get financing that they would not otherwise be able to obtain. Question: How does the Atlanta market compare with markets in other parts of the country? Terica: I’m partial to Atlanta because our first investment opportunity occurred there. It was a purchase in Snellville [a suburb of Atlanta]. I’ve been investing in this market now for ten years. I think that Atlanta is one of the best markets in the country: mainly because of all the job opportunities that are available. And so, as an investor, you want to be put in a place where your tenants will stay gainfully employed and also be in a position to purchase if you ever want to liquidate. Also, it’s a lot larger than any other southeast market and, when we look at Atlanta, it’s the entire metropolitan area. And the metroplex has about 5.9 million people. So it quadruples the opportunity to have access to great inventory as well as polished tenants. It’s a win all around. Question: What are the biggest advantages being in your own business? Terica: Time. Time. Time. At the end of the day, I can go [home] to visit my little doggy and I don’t have to tell anybody about it. I love having the freedom of time. That’s worth its weight in gold. That’s a finite resource we have. We don’t ever get it back. Having freedom of time is huge. Number two, being able to spend every day doing something I’m passionate about. I’m very passionate about real estate; about making a difference in the communities we serve. Everything we do is socially conscious at Realty411Guide.com

the end of the day: to wake up every day and know that I’m changing the lives of generations of people. A lot of the tenants that we help are first generation home owne r s . T h a t ’s huge. We’re changing a generation of people and I’m right there on the front line. In corporate America, there are so many layers of bureaucracy and politics that you never really get to see the full impact. I’m able to make decisions myself. I’m able to maintain a high level of integrity and not have to worry about all the things that come with corporate [involvement]. Question: The fact that you learned all about real estate from your many family members already involved, how much of an advantage do you consider that? Terica: My dad’s in real estate, all my uncles and aunts. Back in the early 1900s, my great grandmother built houses on her land in Mobile, AL, and rented them out. My family also owns land that they sell timber and hunting rights to government, investors and other individuals. That’s a big advantage because I’m not afraid of the investing scene. I meet a lot of people who are stricken with fear, that’s why they don’t act. A lot of people who go to seminars, they’re working and they get all excited, but they don’t move. I think the thing that freezes people is fear. I’ve been around investing and entrepreneurship all my life, I’ve never seen my dad go to a 9 to 5 ever. Knowing that helps me not be fearful. I have a higher risk tolerance than most and technology doesn’t scare me. Question: Do you ever call on family members for advice? Terica: Yes, all the time. I call my dad the most because he’s really good. My dad PAGE 15 • 2012

moved out to Atlanta as well. He has a new portfolio, he’s Mr. Southside [of Atlanta]. Whenever I have any properties on the Southside, I always call him. My uncle, he’s in the Philippines now. He has a hotel out there. He’s involved with owner financing and things like that. Back in Los Angeles, he was telling me about his owner financing program and that’s how I came up with my international program. Question: I can’t let you get away without telling us about your book that’s coming out. Terica: The book is all about not being in your back yard. My dad and I, we’ve had so many fights about this topic. He’s what I call ‘old school.’ And ‘old school’ tells you, do what you can see and nothing else. What I’ve learned is that you can definitely make some huge profits going outside of your comfort zone, going outside of your back yard. If you live in California, not being afraid to go and invest in Atlanta. I teach people all about that. I’ve also started businesses on five different continents, so I have significant experience on entrepreneurship in general, not just here in the states. Question: How would you advise a new investor to go about getting into this business? Terica: I would say step one, get educated. Knowledge is power. Read some good books. If you don’t have access to those tools, there are seminars out there, bootcamps, etc. At least get your feet wet. Join an investment club, where there are other investors around. And, without sounding biased, call me. We’re a one-stop shop. Contact us at 866.488.1820 or online at OutEstate.com and what we’ll do, for free, is look at your circumstance, look at your goals and put together a comprehensive strategy just for you. And you can learn as we do it for you. But I wouldn’t recommend you go out there and just do it. I had tons of support, I grew up in real estate and I still lost over a half million dollars. I’ve lost big. So the education I have right now cost me a great deal of money. Continued on pg. 27 reWEALTHmag.com

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Retire In Style, Here’s How by Stephanie Mojica

n a down economy, buying a property for investment purposes and renting it out to a tenant might seem a risky proposition. But Chris Dannenfeldt and his team at Property Partners I are helping people across the country create passive income through residential investments and literally “save their retirement.” Dannenfeldt, based out of Dallas, anchors the retirement funds or other cash assets on behalf of his clients into the purchase of residential real estate. The potential annual return on investment is 12 to 16 percent. As of February 2012, occupancy rates for about 8,500 houses managed through Property Partners I are 97.4 percent. The company also manages about 32,000 mortgage notes with a default rate of about .4 percent. A typical Property Partners I client is between the ages of 45 to 65, earning a six-figure income, has at least $100,000 in investable assets and is not an experienced real estate investor. “They are people that have been used to doing the traditional things like stocks, bonds, and mutual funds,” Dannenfeldt said. “And they’re dissatisfied with their returns. They are tired of taking losses. They’re worried about what they’re going to do for retirement.” Unlike many of his competitors, Dannenfeldt’s company also takes an active role in the management and maintenance of clients’ real estate investments. Representatives handle payment of taxes, insurance, repairs and any problems that may require the eviction of a tenant. This literally creates monthly passive income for investors. Property Partners I purchases maintenance contracts and weaves the cost into their clients’ initial investment. Using maintenance contracts can save thousands of dollars in one transaction, Dannenfeldt said. A roof for which a general contractor would charge an independent real estate investor $3,500 costs Property Partners I about $700 through its maintenance contracts. “[Clients] will not ever get any kind of phone call ever on, ‘You owe me money Realty411Guide.com

for maintenance,” Dannenfeldt said. “And we do all that work with our own in-house employees.” The firm also mitigates vacancy risks for its investors through an income rental guarantee. Investors can use a modest portion of their monthly profits to purchase the guarantee. This step will keep the monthly revenues coming even if the property becomes vacant due to a renter moving on or being evicted. Property Partners I representatives work with qualified attorneys who can help investors legally shift their assets. The lawyers also help clients create the corporate structures necessary to limit their financial liability in the event that a tenant or visitor to the owned property is injured or has another type of legal claim. The company protects its investors as well as its reputation by conducting a thorough financial analysis before working with a client. Dannenfeldt wants to ensure that each investor has reserve accounts of liquid assets in case of unexpected job loss or another financial emergency before he invests into purchasing real estate. Likewise, Property Partners I strongly encourages potential clients to use existing assets such as retirement accounts rather than borrowing money to invest. Some exceptions apply, such as for investors who have at millions in assets and wish to take on some debt to purchase multiple properties rather than use up all cash reserves. “As a corporate decision, in today’s economic circumstances I am opposed to

PAGE 17 • 2012

debt,” Dannenfeldt said. “So I would rather someone purchase one property for cash instead of three properties with debt.” Dannenfeldt encourages clients to think of buying real estate that they do not intend to live in as a business. “For example, people buy a franchise

Chris Dannenfeldt

like a McDonald’s,” Dannenfeldt said. “And they don’t buy McDonald’s because they want to buy the hamburgers. They buy McDonald’s because there is a system in place to produce results, which is income to them.” Property Partners I representatives thoroughly study the demographics of each market before setting up investors with properties in the region. Their goal is to become the number one provider of safe and well-maintained low-income rental housing in each market they target, without getting involved with government-subsidized programs such as Section 8. “Over the last three years, we’ve completely phased out of Section 8,” Dannenfeldt said. “The reason being that we have seen across the country some really dramatic cuts in funding that people qualify for because of the cutback of funding in those programs. So before that had become an issue, we had already started phasing out.” Once someone begins renting a home managed by Property Partners I, they typically stay in that residence or move to anContinued on pg. 25

reWEALTHmag.com

by Matt Theriault

ot your attention? The title of this article works because it’s what investors are always seeking, but not only are they seeking

It’s specific to YOU. A “real deal” defined is a property that meets your criteria and a seller that meets your terms. Anything outside

what area(s) are you willing to look for this type of property? And what price range are you willing to consider? Knowing your property criteria is first. Second, what are the minimum terms you’re willing to consider? If your intention is to create cash through short-term strategies such as wholesaling or “fixing and flipping,” is

sess determination, persistence, timing and an extraordinary willingness to work hard. Having said that, here’s how to find real deals in 4 simple (I didn’t say easy) steps: Step 1 - Establish your property criteria and the minimum terms you’re willing to accept. You should’ve done this already. If not, read this

Find Real Deals in 4 Simple Steps “real deals,” they are always in search of new ways of finding them. Before finding a real deal, however, one must know what a real deal is. Seems logical, but it’s a basic principle of real estate investing that’s frequently underrated, or flatout ignored and overlooked by novice and experienced investors, alike. A real deal is very specific.

of that is not a real deal. There are two parts to what constitutes a real deal. First, what’s your criteria for an investment property? Is your investing intention “cash” or “cashflow?” Being clear about your intention can significantly impact the price and terms of your deal. Once your intention is established, what type of property will create your intention? In

Yes, YOU can do deals even if you have no money, credit or experience.

a 20% return on your investment in 90 days your minimum terms? Or, is it $20,000? Or, is it 20% of market value? If you’re intention is to create cashflow through lease options or “buy and hold,” is $200 of net cashflow per door your minimum? Or is it a 20% overall cashon-cash return? Knowing your minimum terms completes your criteria of a real deal. You get to choose. Nobody has any say in your criteria, but you. A deal for me might not be a deal for you, and vice versa. A real deal defined is a property that meets YOUR criteria and a seller that meets YOUR terms. It seems counterintuitive to most, but the more narrow the focus of your criteria, the more real deals you will find. Once you know your criteria and your terms, you can begin your search for real deals. Locating properties that meet your criteria is the easy part. Locating property owners willing to sell to you on your terms is the hard part, and locating these property owners is key to creating wealth in real estate. There’s only one way to find property owners willing to sell their property to you on your terms, and that is to mount an ongoing search to seek them out. Finding such owners is not for the weak-willed person who gives up at the first experience of resistance, by the way. Successful deal finders pos-

article from the beginning and follow the instructions in paragraphs two and three before continuing to... Step 2 - Identify property owners that need to sell, as opposed to those that want to sell. The center of every real deal is in the owner’s motivation to sell. No motivation? No deal. “Want” is not motivation. “Need” is motivation. Motivated sellers can be found just about anywhere, however, your greatest likelihood of locating clusters of motivated sellers will be through notice of default (NOD) records, probate records, expired listings, inheritance records and outof-state owners (absentees). Convenient resources for these records can be found at www. EpicProDownloads.com Step 3 - Keep your name, contact information and a consistent message in front of these property owners. Avoid the games and gimmicks that many real estate investors play. Advertise only what it is that you do. •Immediate debt relief. •No commissions. •No repairs required. •Close fast. Be straight with people. Tell them what you’ll do, then do it. It’s appreciated. As previously mentioned, Continued on pg. 27

I CAN Control my Retirement Account?

by Bonnie Laslo

ne of the first questions you will be asked when investing is: Do you have an IRA or 401(k)? If the answer is yes, then the next question is: So who decides where your money gets invested? The answer should be you. Many do not realize that there is a way to have control over your own retirement funds. It has been available for years, but very few people know about it or understand it. We know you’re not one of those individuals, or at least in the next 10 minutes will not be fully in the dark on this interesting subject. IRA owners after reading this article will find value in the knowledge and resources to empower them with a wealthbuilding tool. In today’s financial environment, the knowledge can be worth thousands to millions of dollars for a normal household family. It is a newfound business skill for thousands, or at least a topic worth discussing with a professional in the future. Many business owners and real estate investors have created profitable businesses, especially in today’s market. After researching the information, we will show you how to get started in a matter of minutes. So here are the basics: You must open or have an IRA account (Individual Retirement Account). There are two main ones to choose from Traditional or Roth. With a Traditional, you take the tax deduction when you put money in, and pay taxes when you pull money out. The Roth is the opposite; taxes are taken when money is contributed, but it is tax free when pulling the money out. The Roth IRA is a very powerful account to have because one can use, for example, $100 to invest, and if those funds create a large profit, no taxes are paid on it. Individuals can transition current IRA accounts to a self-directed IRA custodian. A new account can also be opened. Kaaren Hall is the president and founder of uDiRealty411Guide.com

rect IRA Services LLC. She is an expert in the field and has a high priority on education. This is a good aspect for a custodian to have, as being able to communicate and educate a client on how to use their accounts is the most important part of having a self directed IRA. A person has to understand the rules and having an educated custodian to hand hold you through the process. This is not only necessary, but it is a must. Then you research and find assets, projects, and/ or companies to invest in to grow the funds. Many people purchase real estate, give private mortgages, buy precious metals, buy companies, etc., as some of the investment projects. Hall states, “Remember you are the one making all the decisions, you’re the advisor, and it’s not on someone else’s shoulders. The Securities Exchange Commission (SEC) promotes public awareness on letting the public know to be careful, and what type of recourse is available. So in our welcome packages we supply helpful information, and also educational links on our website.” Final step, when you decide on where to place your funds, review your intentions with your custodian to ensure it qualifies and all rules are being followed. This is the most important step, and it’s wise to have a set of expert eyes looking over your intended investment. These companies are in place to answer questions and to guide you along for proper uses to keep your selfdirected IRA in compliance. “Anyone can visit www.IRS.gov pub 590, which talks about IRA guidelines and goes over the rules,” according to Hall. After reviewing www.uDirectIRA.com, any individual can go to this resource location for free information. There are many advantages for the public to convert their existing IRA accounts to self-directed, and many people already have. “Because a self-directed IRA lets you invest in anything (except life insurance and collectibles), there are hundreds of possibilities,” states Hall. With a background of over 16 years of real estate experience, Kaaren Hall has asPAGE 19 • 2012

Kaaren Hall

sisted her nationwide base of clients for many years. She is also president and founder of uDirect IRA Services LLC, and speaks at many real estate club meetings and events to educate the public on how to use self-directed IRA accounts. She is a sought after expert in the field and has assisted national real estate experts with their own deal structuring and accounts. The service and fees are the aspects to consider when choosing a custodian. Having access to the experience and knowledge is the added value with this company. After many years of building her business, Hall’s life has gotten much easier now that her children are older. This allots for more time and expansion on educating the public on harnessing the control of their own retirement futures. Hall is a busy mother of two, and she travels throughout California for real estate events. There are many employees who are no longer at their original job locations and are looking to rollover their 401(k). Some individuals are looking to rollover from their employer plans, and self-directed IRAs are an option for people to become educated on, in order to better their lives and their family finances. The old saying that knowledge is power is obviously visible now to many, due to Hall’s hard work and sharing of her years of experience with every day people who can benefit from it the most. Hall confirms, “I am here to enlighten readers about the self direction process in an effort to inspire them to be more proactive about their own retirement.” Visit www.uDirectIRA.com for more information or to get started.

reWEALTHmag.com

LEASE OPTIONS

Make Waves in Real Estate

by Isaac Newkirk III Beneﬁts for the buyer include: •You get the opportunity to buy a home bringing in larger gross rents compared to when your credit is seriously impaired other landlords in the neighborhood. (and the opportunity to substantially There is a big difference in the way the repair your credit) deposit and the rent premium are viewed •You can save up for a down pay- by sellers and buyers. The buyers are thinkment on the home while living in the ing in terms of their future home, and conhome (often times the down payment is sider these items as equity. The sellers are very low) considering these items as sort of a hedge •A portion of the rent or rental premium against default, a guarantee that the deal is added to become a forced savings will go through because if it doesn’t, the The West’s To•At Real Investor’s anke p Rthe endd of the Estate option, the tenant is Club payments will be retained as income. This not obligated to purchase the home is what makes the lease option deal a winner all around. Beneﬁts for the seller include: There are various market conditions that •Collecting rent on the home while it would dictate the proper time to sell using the otherwise be sitting vacant lease option process. If the market is acKīĞƌƐ /ƚƐ DĞŵďĞƌƐ͗ •The opportunity to receive a high pur- tive (there is a big demand for sales) and Training & Coaching to Keep 3 Reality Based Education, chase price the prospective buyers understand and apYou in Tip Top Shape ability sellRealyour home instead of preciate the value of home ownership, but ensei Gilliland is a man who Diversified be- •The 3 Exciting Topics That Revolve to Around Business Opportunities just renting it just can’t do it on their own, lease options lieves in diversification.Estate Hisandreal 3 Networking to Help Build Your Team & Sharpen Your •The opportunity to increase your cash fl ow are a valuable alternative. Slow markets estate investment firm, Black Belt Skills and higher rate of return 3 Aits Connection Youreceive Engaged andaMotivated can mean either the re-sale market has deInvestors (BBI), derives nameto Keep Discounts From Local and National Businesses to Help •Having some of the landlord/seller respon- creased significantly or there is a difficulty from his first real passion of 3the martial Increase Your Margins assumed in the acquisition of lender financing. In arts. As a martial arts instructor3and owner Support From Blacksibilities Belt Investorsbe to Assist You 5 by the tenant/buyer Daysputs a Weekin •The ability to sell a home dŽ ƌĞĐĞŝǀĞ ŵŽƌĞ ŝŶĨŽƌŵĂƟŽŶ Žƌ ƚŽ ĂƩĞŶĚ͕ ƉůĞĂƐĞ ĐĂůů in a challenged this case, if an investor wants to sell and of several martial arts schools, he 3 All This Information at Our Club Meetings and More! increase their ROI (return on investment), some very full days managing his real es- market (slow re-sale market) the lease option is an excellent strategy. tate investment opportunities. Originally Black Belt Investors is a full-time professional network offering /Ĩ ǇŽƵ ĂƌĞ ŽƵƚ ŽĨ ƚŚĞ ĂƌĞĂ͕ ƚŚĞŶ ŶŽ ƉƌŽďůĞŵ͊ Black Beltreferrals, Investors particularly Actually, this strategy is so potent that BBI involved in the rehabbing (flitsipping) real networking, members of education, business consult- are^ƚĂǇ ĞŶŐĂŐĞĚ ďǇ ƉĂƌƟĐŝƉĂƟŶŐ ŝŶ ŽƵƌ and exciting cash opportunities. keenbuilding on the moneymaking aspects of lease believes there is no time when its use is not estate properties, Black BeltingInvestors hasand wealth FREE Whether you’re a white belt investor just getting started or a the upfront options. Initially, there’s over the last decade also developed an afand(and a viable proposition. black belt investor looking for new resources, we can assist you webinars teleconferences. non-refundable) deposit. This finity for lease option properties. in reaching your goals. BBI helps in the following areas. The lease option plans came into vogue is the option fee that represents tĞ KīĞƌ dǁŽ ĂůŝĨŽƌŶŝĂ >ŽĐĂƟŽŶƐ͗ •They can find and acquire the propbecause so many people desirous of pur- an agreement (between seller Corona/Norco, Riverside County – Meet the 2nd Wednesday of the Month and buyer) to ofpurchase the erty for the client at deep discounts chasing homes were finding Downey, greatLosdiffi culty Angeles County – Meet the 2nd Thursday the Month EĞƚǁŽƌŬŝŶŐ͗ ϲ͗ϯϬ Ɖŵ ʹ DĞĞƟŶŐ͗ ϳ͗ϬϬͲϵ͗ϬϬ Ɖŵ at a fixed price at a later •They can organize contractors and in qualifying for loans. Lease options, at a home rehab the property if needed minimum, gives potential sellers an oppor- date. In most markets, sellers Visit Black Belt Investors at: •They can use guerilla marketing tunity to get a retail price for their property will add a monthly rental pretactics to find a tenant/buyer and an enhanced monthly cash flow. In a mium (non-refundable) to inlease option, a property owner and tenant crease the investor’s cash flow. This can be •They can do all the lease option agreement agree that, at the end of a specified rental applied to the principal balance or to build paperwork for the client period, the renter has the option of purchas- a down payment (whichever the tenant/ •They can put their property management ing the property, but not the obligation to buyer prefers). And, of course, there’s the component to work taking care of the clido so. It is the ‘obligation’ at the end of the equity from the sale that’s paid at the end ent’s asset Sensei Gilliland considers it to be all in agreement that makes the lease option dif- of the option period when the home is purferent from the lease purchase, where the chased. The landlord/seller has made mon- a day’s work, albeit a rather lengthy day’s renter is required to follow through with ey at every stage of the lease option process work. But there’s so much more of the (the beginning, middle and end). This gives story to be told. Why not drop by www. the purchase. Lease options can provide tremendous an investor a big advantage over the com- BlackBeltInvestors.com and begin to get petition: increasing monthly cash flow and an eyeful for yourself. advantages for both buyers and sellers.

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PAGE 20 • 2012

reWEALTHmag.com

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Black Belt Investors is a full-time professional network offering its members education, networking, business referrals, consulting and exciting cash and wealth building opportunities. Whether you’re a white belt investor just getting started or a black belt investor looking for new resources, we can assist you in reaching your goals.

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Powerful Software for Analyzing Real Estate

by Gary Geist

few years ago, a young man practiced his craft, day in and day out. Every chance he got, he was perfecting his technique and approach. Every swing, every club, every shot, under all kinds of conditions; his swing was always the same. His name was Jack Nicklaus, arguably one of the best golfers of all time. When you look at his whole career, his best trait was being consistent — always finishing at the top. The same trait needs to be the cornerstone of your real estate investing career. So the question is: “How does consistency apply when you are investing in real estate?” First and foremost, consistency means you have a well thought out approach you always use to evaluate new deals. This prevents you from forgetting key components or data from your analysis on properties you really like. No matter how long you have been investing in real estate, you must remove your emotions from the process (good or bad feelings you have about the property). If possible, each deal must be evaluated on the same baseline (or identical sets of data) so you can do proper comparative analysis between properties to find the “best deal”. To do this you need the same approach (or software model) just like the professional golfer’s magic swing. HomeReplay, LLC has developed an Excel-based analysis program combining over 75 years of real estate investing experience and analysis of thousands of investment properties. Realty411Guide.com

This software tool is easy to use and forces a consistent approach to analyzing each property that enables the investor to have repeatable success in all types of market conditions. Key elements of this approach include — property selection, property evaluation and reporting, cost analysis for long-term investment purposes as well as calculating renovation costs prior to renting the property. Furthermore, the software provides the investor with realistic estimates of the property value in its current condition as well as after repair value, all of which are good data points for comparing multiple PAGE 22 • 2012

properties prior to purchase. One of the best ways to achieve a stable, repeatable process for evaluating property is to have a software tool that addresses all of the issues, such as — Which property to buy? How much to pay for this property? What are the repair costs going to be? And what is the expected value after repairs? These questions and more are answered by HomeReplay’s exciting new software product called Rapid Property Analyzer (RPA). This software tool provides a sysContinued on pg. 42 reWEALTHmag.com

asset protection

Are You A Target For A Lawsuit? by Bill Gatten

et’s start this article off stant by those who use the law right. First of all, take this to accomplish nefarious ends. Whether we’ve done anything simple test: wrong or not, defending one’s self in court often costs more a. Are you in business? than losing the case would; b. Do you have employees? and the Prius-driving, apartc. Do you have a teen-aged ment-dwelling polyester-suitdriver? wearing “Consumer Advocate” d. Do you own property? knows that his prey (you and f. Do you manage real propI) will likely give-in and settle erty? with him/her for thousands of g. Do you drive a car? h. Do you have assets that oth- dollars, at least a third of which goes to him/her, just for stopers are envious of? i. Are you considered a profes- ping the (unfortunately) judicially-condoned extortion. sional? Anecdotal to all of this, an j. Do you have a steady inaction that I was involved in a come? If you answered YES to any of few years back had to do with these questions, you are a walk- a homeowner in Virginia who ing dart board in legal parlance. came to us with a real probAmericans today are being as- lem and asked for our help. sailed by a group politely re- He needed $96,000 cold-hard ferred-to as Contingency-Fee at- cash with which to bring his torneys, or so-called “Consumer mortgage current and stop a Advocates,” a sweet sounding foreclosure on his $400,000 term perhaps, but a term, which home in Virginia (he had never all too often means, “Let’s find made a single payment on his someone who is innocent and mortgage since its inception sue him anyway until he runs two years earlier, and he had out of money and has to pay us thwarted foreclosure by repeated BK filings). He agreed to stop suing him.” In my not-all-that-humble that for the $96,000 he would opinion, the American legal sys- gladly equity-share his home tem is out of control now a days with us on a 50/50 basis. He and the Average Joe has to be had about $100,000 equity more protective and proactive once the loan was brought curnow than ever before. The com- rent (which we did for him). mon hard-working American We all agreed that the $96,000 citizen must remain constantly would be forgiven in exchange on the alert relative to protecting for the 50% ownership interest his hard-earned assets for those in the property and there would who spend large portions of their be no monthly premiums paid lives and their parents’ money in to us (we assumed we’d make our money on future appreciathe study of Juris Prudence. We non-attorney types all tion). Upon consummating the spend our lifetimes trying to transaction and giving him (Mr. acquire money and other assets Williams) a fresh start, he confor our family’s financial wel- tinued his pattern of not makfare and safety, but it can all be Continued on pg. 43 snatched away from us in an inRealty411Guide.com

BILL GATTEN CENTER for Wealth & Education 6520 Platt Ave., St. 548 West Hills, CA 91307 1 800 409 3444 FAX 1 800 967 0333 home@landtrust.net www.landtrust.net

PAGE 23 • 2012

Bill Gatten

Renowned Author National Lecturer & Investor

reWEALTHmag.com

by Tony Martinez

re you looking for the right investment? Are you caught in the confusion of what is working with the greatest return? Have you heard people talking about investing in notes? There are so many questions and maybe even a mystery to this form of investing. Questions such as, “Is this a good time to invest in notes? What the heck is a

Tony Martinez

park their investment dollars. Competition for investment opportunities can be very difficult and limited in this volatile market. The note business has fewer players because of a general lack of knowledge. Understanding the differences and advantages helps note investors keep the best

Is it a Good Time to Invest in Notes? kept secret to themselves. Asset Ventures provides our investors everything from A to Z. We know all the secrets. Therefore, we established Asset Ventures as a full-service and training company to mentor educate and service our clients. With experience handling over 1,000 notes, we provide the insight to this unique opportunity. In an attempt to enter into the note business, here are seven of the biggest secrets to note investing to keep in mind:

note and how do I make money? Where do I find them? Where do I go to learn about notes?” These are the questions I asked myself when I started. I found I couldn’t go to one place for all the answers I needed. With all my knowledge in real estate and real estate investing, it was not an easy journey to learn what I know. I spent 7,000 plus hours learning the business and researching this industry. I started Asset Ventures with the sole purpose of bringing the blueprint to success for investors in notes. Asset Ventures has become a leader in working with experienced and novice investors, to educate them in acquiring notes as a solid investment. We are setup to provide a complete one stop, done for you, knowledge-based note company headed by national speaker and trainer Tony Martinez. Although notes are always a good investment, there has never been a better time than right now to get involved. With the collapse of the housing industry, the banks are overloaded with bad debt/collateral. The note still has value if you buy right and offers investment opportunities like never before. “One man’s trash is another man’s treasure” As an investor you can begin with very little capital. Plus, your yield or return on investment can return incredible results. Most real estate investors are challenged in this market, competing with others to Realty411Guide.com

Secret #1 Appreciation VS Amortization Appreciation is tied into the strength of the economy (it can go up or down) where amortization is constant. In the retail side of selling; pricing and timing are pivotal to your exit strategy. Many investors became real estate rich and cash poor — limited options when the market changed. Amortization means buying right, which allows you to always make a profit. There are several exit strategies with lower risk and shorter terms if necessary, based on the investors’ individual needs. As the bank, you control the deal from a distance. Secret #2 - How much does it cost? You can leverage your risk while using less initial capital, usually just a few thousand dollars. Experience high ROI’s of 12% or more guaranteed (generally more). You will see lower maintenance costs — no re

PAGE 24 • 2012

pairs, no personal time and no labor. You will have much more buying power. You are not tied into how everyone else is doing business — while letting your money work for you. Secret #3 - How do they Work A note is a document that states: I.O.U. and dollars are owed. The note also details the amount owed, interest rate, and years to repay a debt. The note controls the deal — much like the Wizard of Oz from behind the curtain. With proper knowledge the note is difficult to erase. The loan doesn’t go away. The owner may lose the property, but the note remains. When you buy smart you have a safe and low-risk investment. You can purchase at deeper discounts than most wholesalers and investors on the retail side, typically for pennies on the dollar. Secret #4 - Where Do Notes Come From The banks are flooded with bad debt, which creates note buying opportunities as they rush to sell off collateral. The banks know they will get less money from a foreclosure or short sale. The banks are overwhelmed with non-performing (delinquent) notes and they can’t sell to each other any longer as the collateral is undervalued. Secret #5 - You can leverage the note to obtain ownership of the property While notes can be bought through seller/ private financed, probates and lawsuits, the investor can position themselves to be first in line to obtain the property. This can be done in several different ways and usually less of an investment than buying retail. #6 - Why the Banks Sell So Cheap There has never been a better time to buy right as the banks inventory is flooded and they must sell cheap. The bank’s cost for collection activities are not cost effective relative to the result. The banks have to freeze liquid assets to carry bad debt (NPNs). Selling allows the banks to create more dollars for new loans. The banks want to avoid future lawsuits and simply don’t want the problem any longer. There is also the TVM — Time value of money (worth more today than 30 years from now). Notes offer investors the security and benefits of real estate without the burden of maintaining a rental property! Avoid the 4 T’s: Tenants, Toilets, Trash, and Termites!

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Secret #7 - How do I Make Money? There are several exit strategies possible with a note. 1. Settlement – borrower to settle at large discount 2. Re-sale Re-sell note to a third party investor 3. Modification – Creating long term ROI 4. Deed in Lieu of – Taking ownership of the property 5. Foreclosures – Creating leverage 6. Sell the property – Sell, refinance or short sale If you are looking for the best way to invest with returns of over 12% then this is for you. Notes can mature at a much higher rate. Asset Ventures doesn’t promise you extraordinary returns each and every time; however, there have been returns at over 100% or more in some cases. If you want to learn more or invest in notes, please contact us. Feel free to visit our website at www.assetventuresllc.com. Or, if you still prefer the personal touch, please feel free to contact our office for a free consultation on all our services at 855-798-1411.

National REIA elects Tim Norris to 2012 Board of Directors

ongratulations to Tim Norris, an investor and president of the National Real Estate Insurance Group and Affinity Group Management, for his recent appointment to the National REIA’s Board of Directors. Norris continues his commitment of service to the National REIA, he is a former board member of the Cincinnati REIA. The National REIA (Real Estate Investor’s Association) is a 501(c) 6 trade association made up of investment clubs throughout the United States. The interests of approximately 40,000 members are represented by the National REIA. One of the changes that Norris is excited about is the implementation of local chapters within the organization, which he feels will help drive memberships into the organization. Realty411/reWealth magazine is a member of the Santa Barbara REIA, a club affiliate of the National REIA.

Retire in Style, Here’s How pg. 17

other company-managed property. Some tenants become homeowners in a lease-toown scenario. “It’s traditional in the areas that we do rental properties that it’s very rare for people to move more than a few blocks away

Want to Make a Fortune in Notes? We have the Blueprint for Success

from where they grew up,” Dannenfeldt said. “So we feed into locations that have that kind of cultural bias where then we can keep people with us for the long-term and also attract their family members into our system as well.” For more information, please visit online: PropertyPartners1.com

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Buy, Hold & Rent in Cleveland

eet Sean Whalen, the CEO of BH&R (Buy, Hold & Rent) Properties in Cleveland, Ohio. He started his company three years ago, ostensibly to take advantage of the market downturn, but he’s no rookie. Whalen has been involved in real estate for 20 years. He grew up in a depressed area of Cleveland. His family eventually moved, but his dad maintained the management of the property they owned (and lived in) and eventually deeded the property to him. Whalen decided to maintain his residence there and work on the property. It was a fortuitous decision as the neighborhood began to transition with the influx of artists and new restaurants. Whalen points to the fact that the neighborhood had distinct boundaries that set it apart from other

communities, and this greatly aided its transition. The area is now one of the most expensive in Cleveland and Whalen’s career was born. He says the market in Cleveland has definitely leveled off, as there was no bubble to burst in the area, as happened in so many other markets (including Los Angeles, San Francisco, and New York). All of his investors are from outside the area, most from outside the country (e.g. Canada, China, Australia). Rather than selling to a potential residential customer, Whalen specializes in selling to investors (typically they buy more than one property, he says). He gets his customers the old fashioned way: by word of mouth from having previously done a good job for a customer. He has a lot of relationships with affiliates

by Isaac Newkirk III in the business and through traditional advertising. He firmly believes in the necessity of thinking outside the box due to the economy becoming increasingly smaller and the market becoming global. The properties of BH&R are turn-key; the investors buy, BH&R re-habs the property from top to bottom, and then, they advertise for tenants. From there, the in-house property management component of his firm takes over (continuing to provide for the property as if it has never been sold). Essentially it’s a worry-free, hands-free operation for the investor. In years past, BH&R had done substantial business with the government through its Section 8 Housing Program. That represents a much smaller segment of their Continued on pg. 42

True Wealth is Created by Holding Property Long Term We offer completely re-habbed 1 and 2 family homes in Northeast Ohio. Home range from $50,000 - $75,000 bringing in rent from $700 - $1,100 Enjoy a HUGE return on your investment We manage properties We have 20 years experience

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To learn more about us and view our inventory, visit BuyHoldRent.com or call 216-240-7363. PAGE 26 • 2012

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Find Real Deals, pg. 18

there is a strong element of timing involved when locating motivated sellers. The most effective way of getting this aspect of timing to work for you is through consistent marketing. Direct mail, classified advertising (both online and off) and websites are the tools of the trade. Use them all. Regardless of the “silver bullet” that was just promoted by the last guru that came to town, it’s still a numbers game. The more marketing mediums working, the better. Step 4 - Answer the phone. Seems simple enough, but it’s this step that’s most frequently missed. There are many schools of thought on how an investor should receive incoming calls, but in my book there’s only one way. Answer the phone when they call you. There’s no better time to talk with a motivated seller than when they call you. Because they called at a time when it was convenient for

them, you’ve got their undivided attention and they are ready for your solution to their need. Investor Tip: Pick up a “cheapy” dedicated cell phone exclusively for the purpose or your motivated seller marketing. Place this phone’s number in all of your ads and use it nowhere else. When it rings, you’ll know... game on! In summary, a real deal defined is a property that meets your criteria and a seller that will meet your terms. By knowing, and sticking to, your property criteria and minimum terms, finding deals isn’t so difficult. Take it from someone that has transformed their investing business (0 to 60+ deals) in the last eighteen months adhering to this wisdom. It’s amazing once you know exactly what you’re looking for and where to find it how much more often it appears. To your success! Matt Theriault is an author, entrepreneur and host of the

Terica teaches how to Invest Out of State, pg. 15

What I’ve learned in real estate is that the only way you learn is when you lose. And so I would say, ride the backs of other people so that you can shorten your losses. Question: For as long as I can remember, the key to personal wealth has always been real estate. Is that still the case? Terica: I think so. I think it lies in the diversification. When you compare stocks to real estate, the returns are slower, but right now, you’re able to get double digit returns secured, and the tax shelter aspect [of real estate], plus you have leverage, so you don’t have to use all fastest growing real estate investing podcast on iTunes. Visit www.EpicProfessionals.com for more information and to retrieve his free real estate investing course “How to Do Deals — No Money Required.”

your money, but you have the benefits of the entire asset. It’s a gold mine. Question: What are your goals for 2012? Terica: My personal goal for this year is to remain healthy. Professionally, I want to continue making an impact in the lives of the middle class investor by helping them build real estate portfolios that get them out of the rat race. I want to convert all of the tenants we have into home owners so they can build a legacy for their families. I would like to continue to expand into more markets, thus creating new jobs, revitalizing more communities and doing my part to help America rebound from this depression. To reach Terica Kindred, principal of Out Estate Investments, please call: 866-488-1820 or email Tkindred@outestate.com

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Why Dallas / Ft. Worth is One of the Best Metros in the US

by Tom Wilson

Are there markets that don’t recommend being a have weathered the downreal estate investor…unturn well, are superior in less you have a well-demany of the parameters fined strategy, quantitative above, and have had relagoals and are dedicated to go by tively calmer waters durthe numbers and not by unsuping these past few tumultuported advice or emotions. ous years? My engineering training and Indeed, my experience 30 years of experience managin more than 1,800 unit Tom Wilson ing high-tech profit centers in transactions, over 35 years Silicon Valley taught me how to analyze for has revealed that Dallas / Fort Worth is one the best return on investment in any mar- of the best real estate investment markets ket. in the United States; that is why I chose Today, the principles of analysis remain it for most of my personal portfolio long the same. Anyone can do it, however, one term holdings. needs to be very disciplined and educated The strengths of Dallas / Ft. Worth are: about the submarkets and products, or ride •Business and financial capital of the the coattails of someone who is. South. The primary parameters for selecting •The highest rent per invested dollar for a the best investment markets are: major economic center in the United States, •Rent to purchase price ratio and therefore, the highest cash flow •Population growth and inward migration •One of the lowest risk and safest harbors •Employment growth and business climate in the United States for real estate •Housing affordability •Lowest housing price decline from peak; •Location only US single-digit depreciation metro •Cost of living •Fourth largest and one of the fastest grow•Rental market ing MSAs (Metropolitan Statistical Area) •Current and projected market conditions in the United States. Projected to double Now that speculative investing for fast population to 12 million by 2030 profit has gone the way of the last super- •Broad-based economy that has had double model, the wise investor is focused on cash the employment rate growth of the United flowing assets and safe harbors. States during the past decade •No. 1 ranked business climate in the United States •No state income tax •Leading MSA for corporate headquarter relocations and expansions •Second leading MSA in US for Fortune 500 corporate revenue •Most afford-

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Realty411Guide.com

Dallas Best

PAGE 28 • 2012

able housing of top 20 cities ($116,000 median Q3 2011) •Central location in the United States attracts companies desiring time zone and distribution competitive advantages •DFW airport is the third busiest in the world •One of lowest cost of living major MSAs, yet above average household income •Highest millionaire growth rate in the United States •Strong rental market (95% occupancy Q4 2011 for single family homes) •Very landlord friendly Yes, the national economy crisis has affected even DFW, but not significantly compared to other MSAs. Texas is the second most populous state, so there are indeed many home foreclosures, especially since there is such low housing costs and consequently a high percentage of government backed loans, but in spite of this, the Texas delinquency and foreclosure rate is relatively low compared to other states. I believe that these factors are another strong indicator of whether a metro has hit bottom yet, and that many cities and states have farther to go, so selecting the lowest risk metro is as important as seeking high current cash flow. During the last two decades the appreciation average was about 5% per year. With a five to one leverage with 80% loans investors got a 25% return on their down payments, in addition to the high cash flow. Historically, the last economies to slow down, are the first to go back up. I don’t know when DFW will start appreciating significantly again, but I believe it will be before many other areas, and our window of opportunity to invest optimally in any leading area may be shorter than we think. In this economy, I prefer to invest in homes over commercial and multifamily products because homes have more liquidity, are generally lower risk, appreciate faster, and one can build a “mutual fund” by buying in various neighborhoods rather than putting a lot of eggs in one address.

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your questions on site? That is certainly a different experience indeed! This concise, action and value-packedâ&#x20AC;&#x2026;weekendâ&#x20AC;&#x2026;is sponsored by The Real Estate Guys and it will sell out quickly. For information and a special discount offer, visit www.tomwilsonproperties. com or call 408.867.1867.

arachuting surely is a different experience than just reading about it. Dallas/ Ft. Worth is a much soughtafter investment city, one that you can certainly read up about. However, how many times can you see it and have multiple experts teaching you, touring with you, and available to answer all of

can vary tremendously in any general geographical area, and only experienced professionals can help you minimize that risk. I believe that the wise will not wait and see, but act to grasp the best opportunities of our lifetime before they are gone.

Even in a good region, one must be very careful though in selecting the right product, neighborhood and professional service and management team. Make sure you rely on resources that have a lot of investment experience in that region. If Iâ&#x20AC;&#x2122;ve learned anything in investing, it is that variations in performance from the median

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Is It Honest To Use A Land Trust?

by Randy Hughes

have been using Land Trusts for over 30 years, but every now and then someone will challenge me as to the purpose and “honesty” in using a Land Trust to hold title to real estate investments. Let’s clear the air. Recently I was talking to a real estate investment club owner about speaking to his club regarding land trusts. He said, “We do not believe in using Land Trusts because they are dishonest.” He then went on to explain how someone had come to his club and spoke about Land Trust and that led him to believe that

property (helps with day-to-day management and lease renewal negotiations). 6. Co-owners want to know that a lien or judgment or divorce of one owner will not affect the title to the property. 7. Out of state owners can avoid probate and other legal issues upon death — smooth transition of succession. 8. A group of heirs can inherit a property held in a land trust with ease of management (by the director) and no need for a partnership agreement and a partnership

There are many legitimate reasons to use a Land Trust for privacy and asset protection. the use of a Land Trust was for deception and taking advantage of people. I told him that I was sorry that he had been misinformed about Land Trusts and that he should reconsider their use and benefits. I went on to review with the club owner why it is important to NOT have your name in the public records as owner of real property: 1. A group of investors may be purchasing several properties for a special purpose and it may be that the desired result can be best accomplished if the objective is not made public. 2. Co-owners might desire that the interest of each beneficiary must be kept private. 3. An individual owner might not want to be hassled with inquiries regarding the property. 4. A real estate investor might not want his competitors to copy his acquisition techniques. 5. Real estate investors do not want their tenants to know they are the “owner” of the Realty411Guide.com

are many legitimate reasons to use a Land tax return 9. Co-operative housing corporations may Trust for privacy and asset protection. No elect to hold title to their land and buildings one will protect your assets like YOU will. in a Land Trust. They could then issue ben- Learn all you can now because “old and eficial shares to their residents in place of cold” matters. Ever since 9/11 stock certificates it gets harder ev—simplifying andy is a full time real estate invesery year to be pricontrol and retor who purchased his first rental vate and protect cord keeping. house in 1969. He has purchased your assets. Do it 10. When a Trustover 200 houses and teaches other investors now! Don’t delay! ee of a Land how to put their properties into Land Trusts I have written a Trust signs the for privacy and asset protection. Randy is a report titled, “50 mortgage (that national teacher, author and mentor. Randy Reasons To Use gets recorded in writes the only Land Trust Newsletter in the A Land Trust” and the county court county and is the founder of the Land Trust will send it to you house records) University (an institution that teaches real for FREE. Email the debt will not estate investors how to set up and adminisme with “50 Reashow on the borter their own Land Trusts). Residing in Ilsons” in the subrower’s credit relinois (the granddaddy state of Land Trust ject line and I will port. Land Trusts Law), Randy knows more about Land Trusts return this report have been used and how to link them to other entities than to you immediby American citianyone else in the America today. Reach ately. My email is zens for over 100 Randy at www.realestateforprofit.com or by randy@realestate years for good calling him at 1-866-696-7347. forprofit.com reasons. There

PAGE 30 • 2012

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by Lawrence Ruano

hiterock Capital, Inc., started 2012 off with a BANG, This is one of the fastest-growing companies in the real estate market, and it’s one of our top picks for 2012. What’s driving the big increase in investor interest surrounding this company? Whiterock Capital is aggressively expanding into both the Phoenix and Richard Edrosolan California markets. The brand-new company purchased hundreds of properties in the Phoenix area alone last year, and it’s on pace to double in 2012. Whiterock Capital, Inc. was born from the passion that only real estate investing can inspire. Yet, the owners are grounded enough to accelerate company growth by taking advantage of the many benefits that today’s diverse market opportunities present. Benefits include an ample supply of deeply discounted properties, historically low interest rates, and a growing demand for starter homes and cashflowing rental properties. Richard Edrosolan, founder and CEO, met Anthony Patrick several years ago at a real estate investment seminar. While discussing their mutual interests and philosophies on real estate, they realized that they had much more in common than just investment strategies. Soon thereafter, a successful business model was developed and a vital new company born. Based upon the diverse and well-seasoned experience that each of these men brought to the company, financial success was attained at the earliest stage of this relationship. Although Edrosolan has wide experience within California and states in the South and Southeast, Whiterock chose to focus initially in Southern California, specifically in the tremendous opportunities the Inland Empire has to Realty411Guide.com

offer. Patrick leads the company efforts in the Inland Empire. Established in Southern California, Edrosolan, who has a life-long affinity for Arizona, and in particular the Phoenix area, has also identified and developed significant business opportunities and expertise in the Phoenix market. In constantly changing market places, Whiterock Capital has the experience and capacity to perform on multiple diverse projects simultaneously. Working wholesale deals, executing multiple “fix & flip” projects, preparing “rent ready” properties for long-term hold strategies and managing property are everyday activities to satisfy the needs of their many investors and joint venture partners. Many of Whiterock’s initial projects were rehabilitation projects. Drawing upon years of Patrick’s experience as a property manager and home inspector, the company continues to focus on ways of reducing and eliminating expenses, while improving the quality and salability of the refurbished home. Consistently, the bottom line of each and every project is enhanced, securing the delight and satisfaction of their respective venture partners. Edrosolan, who has exceptional expertise in various ways of raising capital, has been able to maintain a stable source of ready funding for the company’s increasing workload. Edrosolan provides PAGE 31 • 2012

Anthony Patrick and Richard Edrosolan

extensive experience in raising capital, arranging project funding, and creating “win-win” financing for real estate investments. His efforts have enabled Whiterock to maintain a stable source of ready funding for the company’s increasing list of projects. Whiterock Capital, Inc. provides individuals and organizations interested Continued on pg. 45

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leaders

White Rock Capital Creates Wealth for Investors

One Company, Twice the CashďŹ&#x201A;ow

by Isaac Newkirk III

remier Equity Group has been one of the most successful providers of cashflow investment properties in the Southeast. The company has offices in Jackson, Mississippi, and Birmingham, Alabama. They are a full-service operation, providing turn-key investment properties, and other real estate services, for investors all over the world. Birmingham and Jackson are stable markets and are not subject to the â&#x20AC;&#x153;peaks & valleysâ&#x20AC;? present in more speculative areas. Premier Equity Group acquires properties from multiple sources, including: asset managers, banks, foreclosure sources, short sales and general listings. Because they get the best deals, they are able to pass on the savings to their clients. Both Jackson and Birmingham have also been rated by various publications as Top 10 Cashflow Markets. The property taxes in Alabama and Mississippi are the two lowest in the na-

tion, ranking 49th and 50th, respectively. Investors have migrated to the South due to low price points, strong rental markets and low property taxes. Both markets have huge upside potential as big developers are coming in, there are six different major automobile manufacturing plants and modern medical facilities, which serve to stabilize the rental markets. Their mindset is to take the investors â&#x20AC;&#x153;concernsâ&#x20AC;? out of the equation, and offer a â&#x20AC;&#x153;hassle-freeâ&#x20AC;? investment process. Thatâ&#x20AC;&#x2122;s easier said than done, as you know. They offer a unique product to investors, one that simplifies buying a house, implementing a top-quality rehab, leasing it out, and placing it with their in-house property management team. This process ultimately leads to steady positive cash-flow. In the smaller niche markets, you can

achieve greater cash flow for a fraction of the cost of the investment. In high property value areas, to earn a positive cashflow may require a property purchase of several hundred thousand dollars. In comparison, these two markets provide investors with affordable cashflow opportunities. For example, a newly renovated 3 bedroom, 2 bath investment property in Birmingham with a purchase price of $60,000, and a monthly rent of $850, minus a property management fee of $77, minus $40 insurance, minus $80 taxes, nets a monthly cash on cash return of $653, which is an annual return of 13%. Premier believes that one of the keys to the success of their company is their inhouse property management team. Also, transparency is very important. Owners have access to a web portal, get online statements and can receive direct deposit of rents. For these important services they charge only 9%.

Continued on pg. 45

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

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V shows make flipping houses look easy, and bootcamps make it seem extremely profitable every time. But in reality, new investors often get burned on their first few deals. Everyone wants to make a quick buck, and in theory, flipping could be a way to do that. But please heed this warning: Flipping is not for everyone! Here are some tips to help you decide if it’s for you. The Real Costs of Flipping Property There are many hidden costs that new investors fail to calculate on the outset: • The cost of funds borrowed to purchase and/or renovate the property • The cost to sell, including agent fees and closing costs — estimate 10% • Holding costs, including on-going property taxes, interest charges, and insurance • Cost overruns — always allow a 10% cushion for the unexpected • Sales price variations — allow 10% less than what you’re expecting • Estimated profit — 10% at a minimum (and if this is all you’re expecting, there are much lower risk investments out there!) • Short-term capital gains taxes — potentially 35% of your profit. Always talk to your CPA before making any investment. As you can see, after you calculate all repair costs, you’ll still need to be able to acquire the property for less than 60% of current market value. Is it possible? Yes. Is it easy? No. Buy & Sell VS Buy & Hold At Real Wealth Network, we advocate buy & hold investing for the following reasons:

• Flipping requires hands-on involvement and most working people don’t have the time. • Successful flipping requires that you only invest where you physically live. A buy & hold investor can invest anywhere, have many investments working at the same time, and still make money doing other things. • A cash flow rental property can yield over 10% return after all expenses, without the risk of rehabbing and trying to sell at the right time. • Rental income is much more favorably taxed, and capital gains can be avoided upon sale if a replacement property is purchased according to IRS 1031 Exchange Rules. • Growth over time, for both rental income and capital growth, works the same as compound interest; it’s one of the most powerful tools in an investor’s arsenal. Thirty years ago, one would

have had to put down $13,000 to buy real estate. Today that property would be completely paid off, and would have more than tripled in value. What’s more: you’d be earning at least $13,000 rental income per year! The same power of multiplied growth is available today simply because prices are so low. Real estate bought today could very well be worth more than three times its value 20 to 30 years from now. There is no other investment that delivers cash flow and capital growth like long-term real estate investments do. Flipping is a job. Buying and holding property is an investment. Kathy Fettke is the founder and CEO of Real Wealth Network “The Real Estate Investors Resource.” Members have access to free education, resources, and referrals to turn-key rental properties around the United States. Real Wealth Network has over 8,000 members, so the shear power of numbers allows the group to acquire properties at huge discounts. Membership is free. Kathy is also host of The Real Wealth Show on KABC Los Angeles and on iTunes and is a regularly interviewed guest expert on ABC, CNBC, CBS Market Watch and NPR.

strategy

Is Flipping Property Good for Your Wealth?

by Kathy Fettke, CEO of the Real Wealth Network

LOCATION: San Antonio, TX COMPANY: Prosperity Homes and Investments CONTACT: Clay Schlinke ph: 210.771.0861 web: ProsperitySA.com

Market Spotlight: San Antonio, TX

he Texas economy and real estate market remains on fire with investors from around the world flocking to top Texan cities to add rentals to their portfolio for appreciation, cashflow and added stability. San Antonio offers one of the fastest growing job markets in the country with a projected 10-year job growth of 12.2%, according to Economy.com. The city also offers lower business and lifestyle costs than comparable areas and a well educated productive workforce. To learn more about San Antonio, we interviewed Clay Schlinke, a master developer, investor and CEO/owner of Prosperity Homes and Investments (ProsperitySA. com), an online resource for the San Antonio real estate market. Question: What kind of opportunities are you seeing in San Antonio? Answer: San Antonio has remained stable during the past several years and has continued to add jobs and people to our city. Multiple companies have been moving to San Antonio over the past few years and now with the discovery of the Eagle Ford Shale oil and gas reserve, it is helping with the continued growth. Q: What is the best part of being an investor and buying in San Antonio? A: Due to our economy and great rental market, it is easy to cashflow in our city. With the cashflow and with the stability of our economy, there will be future appreciation of your properties, which all add up to a great investment. Q: How is the rental market? A: The rental market is at an all-time high right now. The occupancy rate is 92%.

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Q: I understand the military bases provide a great tenant pool and also economic stability. A: Yes, all of our projects are in close proximity â&#x20AC;&#x201D; within a 15 minute drive to all of the major bases in San Antonio.

Q: Do you prefer multifamily rentals as an investor? A: I prefer our product because we offer several advantages to our investors, which means higher rents and higher occupancy levels. First our units are set up as townhomes with a garage and backyard. Second, we have 3 bedrooms with 2.5 baths with great amenities that include granite counter tops, concrete stained floors, crown molding and built-in niches. Lastly, we also include a park and pool in our neighborhoods. As a tenant you can get everything at one of Clay Schlinke and his family our developments that an apartment can offer, but you also get a garage and yard with no neighbors above or below you.

Q. What makes Prosperity Homes and Investments unique in the marketplace? A: We are the only new home builder that specializes in building townhomes, duplexes and fourplexes. We develop our own subdivisions in locations that have high rental demand and are in strong areas for future appreciation. We are able to give the investor instant cashflow and even equity when they purchase. We have also been successful in setting up our developments so the investor can purchase a fourplex building, but later sell them individually as townhomes if they choose to really maximize their return. We also provide a full two to 10 year warranty to the investor to protect their investment.

PAGE 34 â&#x20AC;˘ 2012

Q: How long have you personally invested in real estate? A: I have been investing since graduating college in 1994. I own both single family and multifamily properties. Q: What do you foresee for the San Antonio market for 2012? A: Based on the last few years, San Antonio has as bright of future as any city in the United States. Our government is very pro business and you can see that when you arrive here. In 2012, and beyond, we will see continued growth and success in San Antonio.

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Phoenix Starts Recovery

by Wendy Pineda

hoenix is a great place to invest in real estate. On February 9, 2012, CNBC.com released a slideshow on the “Top 10 Turnaround Towns” in the nation. The slideshow placed Phoenix at number two. Two years ago, Ray Bansal, president of USA Property Investing, a company that specializes in turn-key property investments, had already predicted that the Phoenix metropolitan area would be one of the most promising areas in which to invest. This has been proven to be true partially due to the historically low prices coupled with the state’s commitment on supporting economic growth in key industries. In a recent article published by the Wall Street Journal on March 13 of this year, Thomas Lawler, an independent economist declared that “Phoenix has hit a bottom.” The article also stated that the low prices in Phoenix paired with the upswing in the economy has led to an increased demand in housing, and not just from first-time home buyers. Big and small investors are snapping up the bargains. In fact, one quarter of all properties sold last month was to an out-of-state buyer. Although it may seem like the window of opportunity is almost gone,

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with the right team, investors can still purchase investment properties that will bring them immediate cash flow and long term appreciation. However, investing in an unknown market can be a huge concern for many investors. Ray

Bansal understands this, and with his 20 plus years of general construction and real estate experience, Bansal has developed a turn-key investment system designed to eliminate concerns and doubts for real estate investors. Through this process investors can choose from fully rehabbed cashflowing properties, some already rented, in great family-oriented neighborhoods. The turn-key system allows for USA Property Investing to handle the whole transaction from beginning to end. This includes fully rehabbing the property, scheduling appraisals and inspections, all the way through to tenant placement PAGE 36 • 2012

and assigning a property management team. Bansal also knows that for some investors hands-on research is the only way to develop a real comfort level when investing. That is exactly why Bansal started a Phoenix Investment Property Tour, so investors can meet with him, learn how the company works, the many benefits, and view the market first hand. By attending the Phoenix Investment Property Tour, investors can view the workmanship of the rehabbed properties, as well as evaluate the various neighborhoods and view some of the commercial developments currently enhancing the Phoenix economy. Along with the research and analysis provided by USA Property Investing, investors can now make a truly informed choice. The team at USA Property Investing is fully invested in their clients’ success and can tailor the investments to suit the individual investor’s personal needs. Don’t have all the cash needed for a purchase? No problem, USA Property Investing has the resources to help you achieve your goals. Many financing options exist, so contact Ray Bansal at (888) 616-3706 to learn more. Learn about their next tour, at: PhoenixInvestsmentPropertyTour.com

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“What We Can BE,

We Must BE”

have put them on the plus 1, but they chose to step back to safety and landed on negative 1, the difference of two points and not just one, as commonly believed. Here’s what’s worse. Every time you make such decisions, the gap between what you could have done and what you actually did grows Sam Sadat wider. Dr. Maslow affirms that all our regrets, anxiety, frustrations, unhappiness, anger, depression, etc. lies in that gap which separates growth from comfort or realizing one’s full potential from settling for less (selling oneself short.) People take all kinds of drugs for various mental and emotional conditions when all they have to do is to pick growth over comfort and security. Speaking of which, do you really believe there’s such a thing as security in life? If you think about it, it becomes clear that “security” is a myth. After all, we have very little control over events and what will happen next. Some schools of thoughts recommend the notion that if you want “security” it’s best to seek insecurity! By that, they mean to simply allow things to take their natural course. That does not mean you sit back and do nothing. Rather, you do the best you can but not get attached to the results. Only in this way you would be able to experience a life of joy and fulfillment. Back to our discussion of why the vast majority of people choose comfort over growth almost every time they make a decision in life. Is there any hope of reversing this vicious cycle? And the answer is………….. Yes! It’s possible and you won’t need several lifetimes to get it done! You surely can reverse this process but it requires effort initially. But in the long run your life will be a lot more effortless! PAGE 37 • 2012

Just so we are clear about growth versus comfort, I’ll give a few examples of how people choose safety over growth: 1. You got angry at your son and decided to break off communication a while back. An opportunity arises to sit down and talk things over, but you take the easy way out by going into your comfort zone and watch the ball game. 2. You need to get up early and take care of something important. Instead, you look at the clock and go back to sleep! 3. You find a good property to invest in but at the last minute you’re gripped by fear and chicken out! Recognition is the half way to transformation. So, first examine your own life and look at moments when you could’ve and should’ve gone for growth but you chose safety. Then realize that the gap where all this negative energy resides is dragging you down. Since there’s not much we can do about the past, we need to take action in the present to affect future. For those of us who insist to live in the past, the famous poet, Omar Khayyam has this to say: “the moving finger writes and having writ moves on. Nor all thy piety nor wit can lure it back to cancel half a line, nor all thy tears wash out one word of it.” Once you come to terms with your past and realize you can still do something about your future in the present time, then resolve to never again step back into safety when you can choose growth instead. As you begin to make decisions that are more growth based and less on safety, you will see that the gap is getting narrower and narrower. Soon you'll gain control of your life and move in the direction of self-actualization, which is, according to Maslow, where you can realize your full potential and maintain a happy and fulfilled state of being. To your success and life of abundance,

Sam Sadat

www.samsREclub.com sam@samsadat.com

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motivation

“W

hat we can be, we must be,” is one of Dr. Maslow’s famous quotes. Abraham Maslow is the father of humanistic psychology. He is renowned for his Hierarchy of Needs and Self Actualization theories. Most of his writings are about human motivation and personality. Today, his teachings are successfully applied in fields of business, marketing and communication among others. Maslow was born in New York 1908 and died in 1970. "If you deliberately plan on being less than what you are capable of being then I warn you, you will be very unhappy for the rest of your life.” — Abraham Maslow Dr. Maslow believes human beings have an instinct (need or impulse) that drives them to be the best they can be. On the other hand, he says that the story of the human race is the story of men and women selling themselves short. So what gives? Let me give you an example. Imagine drawing a straight line that goes to infinity on both sides, from one end to another. Now think of yourself standing in the middle of this line, which we call point zero. One side of the line starts with plus 1, plus 2, plus 3 and so on to plus infinity. On the other side of the line, you have negative 1, negative 2, negative 3 and so on to the negative infinity. Dr. Maslow states that at any given moment, when you are faced with making a decision, you have a choice to move forward in the direction of growth (plus side of the line) or step back into the direction of safety (comfort), which is on the negative side of the line. So that if you are at point zero and faced with a challenge that requires a decision on your part. What will you choose? What do most people do when confronted with problems of life? They usually step back into safety or the negative territory. The first such decision results in going back to negative 1. And so they justify by saying, “it’s nothing, I just went back one step, I can always make up for it later.” But here’s the catch that most people miss. It really cost them two steps and not one! They could have made a decision to move forward into growth, which would

Going Global to Meet Demand Small Real Estate Company Finds Success Taking its Business Model to an International Audience

winters with little to no snowfall; •A high rate of foreclosures, allowing properties to purchased and resold inexpensively, providing an optimum product to an end buyer; •A dollar-based economy;

By Robert Feol

few short years ago, business partners Bert Miller and Hans Guenther had a business that was primarily focused on delivering retail level homes to end users in Memphis, Tennessee. Their partnership, which has spanned over 20 years, was thriving, as they realized their mission to take on foreclosed, non-performing real estate, revitalize it, and provide desirable housing to their buyers real estate investors do while reinvigorating the when their entire target tax base. sales group evaporates Then, the credit crisis before their eyes? While hit and the two partners any investors would tuck found themselves betail and run, or become ing forced to redevelop Hans Guenther and Bert Miller complacent in trying to their business model. simply find a new way to The so-called credit crisis has challenged today’s modern real address the problem of U.S. mortgages beestate investor in a variety of ways, but coming few and far between, the pair opted for investors like Miller and Guenther, the to ‘take the red pill’ and go a bit further fallout was a significant one — the major- down the rabbit hole, asking a hard-hitting ity of their purchasers were unable to buy and probing question — if our target market has disappeared, who then IS our target homes, period. “It was like the hammer falling,” says market? The answer was found, interestingly Bert Miller. “We woke up one day, and so many of our pending purchases were enough, outside of Memphis, Tennessee. Miller and Guenther had focused so inbeing challenged or falling apart due to new appraisal restrictions, HVCC rules, tensely on their domestic market in their etc... Changes in credit were hamstringing resident city that they had forgotten the families who wanted to purchase their pri- whole world was, literally, just waiting for mary residences. We began to realize that them to show up. They started to reassess the value of their our only answer to the problem rested not in waiting and hoping things got better, product, and looked at it in its most conbut in radically revolutionizing our busi- summate and simple form. Memphis, Tenness model. There was simply no other nessee real estate offered: •Incredible cashflow per square foot; way to continue our business in its current •Low purchase points per square foot; incarnation.” •A stunningly high per capita rent al rate (almost 50% of the population Enter the Matrix of Memphis is comprised of renters Miller and Guenther had come to a crossseeking rental homes); roads, not just metaphorically, but literally •A Southern climate, which had mild speaking. What do two ‘rehab to retail’ Realty411Guide.com

PAGE 38 • 2012

Miller and Guenther, who already held 300 rental homes between them, had no problem filing in the logistical blanks, which remained to be identified for them to produce what is, today, a brilliant success story in the making. They already had a licensed realty brokerage, which was managing their portfolio successfully. Why not offer that service to investors in the scope of a truly ‘turnkey’ system that provided investors who wanted to purchase full-service properties in Memphis great investment homes that were online and performing Going the Distance What really sets Miller and Guenther apart is their clientele — almost 100% of their end-user sales are to international investors. Miller and Guenther have traveled extensively, spending a significant time in Singapore in 2011 working with their clients, and they are scheduled to travel to New Zealand and the United Kingdom in the early months of 2012 as keynote speakers, discussing their turnkey real estate system to foreign investors. The early prognosis for 2012 anticipates Miller and Guenther selling about 150 homes to foreign buyers this year, not counting their domestic output and retail, and the end-user sales they still engage in. Establishing a truly turnkey system wasn’t the difficult part of reinventing the business model — the difficult part, according to Hans Guenther, was convincing investors that there wasn’t some kind of hidden “angle.” He adds: “We had so many investors after meeting us and hearing us at seminars ask us bluntly: ‘What’s the catch? What are you guys hiding? This seems to good to be Continued on pg. 45

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The Best Opportunities …don’t last forever

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BiggerPockets Real Estate Investing Summit & Expo 2012

Denver, CO March 23 - 24

The No-Nonsense, No Upsell Real Estate Investment Conference

Join Us At The BiggerPockets Summit! Ύ &ŽĐƵƐĞĚ ŽŶ ƌĞĚŝďŝůŝƚǇ Ύ EŽͲhƉƐĞůůŝŶŐ Ύ ǆƉĞƌƚ WƌŽĨĞƐƐŝŽŶĂůƐ ĂƐ ^ƉĞĂŬĞƌƐ Ύ BiggerPockets is at it again. The company that changed the way real estate investors network, learn, and do business via its website, is announcing it inaugural live conference and trade show. dŚĞ ŝŐŐĞƌWŽĐŬĞƚƐ ZĞĂů ƐƚĂƚĞ /ŶǀĞƐƟŶŐ ^Ƶŵŵŝƚ ǁŝůů ƚĂŬĞ ƉůĂĐĞ Ăƚ ƚŚĞ ŽůŽƌĂĚŽ ŽŶǀĞŶƟŽŶ ĞŶƚĞƌ ŽŶ DĂƌĐŚ ϮϯͲϮϰ͕ ϮϬϭϮ͘ ͞/Ĩ ǇŽƵ͛ƌĞ ƚŚŝŶŬŝŶŐ ĂďŽƵƚ ŐĞƫŶŐ ƐƚĂƌƚĞĚ ĂƐ ĂŶ ŝŶǀĞƐƚŽƌ ŝŶ ƌĞĂů ĞƐƚĂƚĞ͕ ŝĨ ǇŽƵ͛ƌĞ an accidental landlord, if you’re an experienced pro, or if you’re a service professional in the real estate investment industry, our BiggerPockets Summit will ƉƌŽǀŝĚĞ ǇŽƵ ǁŝƚŚ ŽƉƉŽƌƚƵŶŝƟĞƐ ƚŽ ůĞĂƌŶ͕ ƚŽ ĞǆƉůŽƌĞ ŶĞǁ ĐŽŶĐĞŶƚƌĂƟŽŶƐ͕ ƚŽ ŵĞĞƚ ǇŽƵƌ ƉĞĞƌƐ ĂŶĚ ƉŽƚĞŶƟĂů ƉĂƌƚŶĞƌƐ͕ ĂŶĚ ƚŽ ďĞ ŝŶƐƉŝƌĞĚ͘ tĞ͛ǀĞ ŵĂĚĞ ƚŚĞ ĞǀĞŶƚ ĂīŽƌĚĂďůĞ ĂŶĚ ůŽĐĂƚĞĚ ŝƚ Ăƚ Ă ĐĞŶƚƌĂů ŚƵď Ͷ ĞŶǀĞƌ Ͷ ƚŽ ŵĂŬĞ ŝƚ ĂĐĐĞƐsible for as many people as possible from around the country.”

Don’t Get Shut Out -- Space IS Limited -- Buy Early and Save!

dŽƉŝĐƐ ƚŽ ďĞ ĚŝƐĐƵƐƐĞĚ ŝŶĐůƵĚĞ͗ How to invest in real estate while ǁŽƌŬŝŶŐ Ă ĨƵůůͲƟŵĞ ũŽď ƵŝůĚŝŶŐ ^ǇƐƚĞŵƐ ĨŽƌ ǇŽƵƌ ZĞĂů ƐƚĂƚĞ ƵƐŝŶĞƐƐ /ŶǀĞƐƟŶŐ ǁŝƚŚ Ă WƵƌƉŽƐĞĨƵů WůĂŶ ĨŽƌ ZĞƟƌĞŵĞŶƚ ,Žǁ ƚŽ ^ǇƐƚĞŵĂƟĐĂůůǇ &ůŝƉ ĂŶĚ ZĞŚĂď ,ŽƵƐĞƐ /ŶǀĞƐƟŶŐ ŝŶ ZĞĂů ƐƚĂƚĞ >ŽŶŐ ŝƐƚĂŶĐĞ /ŶĐƌĞĂƐŝŶŐ zŽƵƌ WƌŽĮƚƐ ǁŝƚŚ 'ƌĞĞŶ /ŶǀĞƐƟŶŐ hƐŝŶŐ ƚŚĞ ĞƐƚ &ŝŶĂŶĐŝŶŐ KƉƟŽŶƐ ǀĂŝůĂďůĞ ĨŽƌ zŽƵƌ /ŶǀĞƐƚŵĞŶƚƐ dƌĂŶƐŝƟŽŶŝŶŐ ƚŽ DƵůƟͲ&ĂŵŝůǇ Investments &ŝŶĚŝŶŐ ĂŶĚ ŶĂůǇǌŝŶŐ ĞĂůƐ And much more! Sponsors:

BiggerPockets ŚĂƐ ďĞĞŶ ƌĞĐŽŐŶŝǌĞĚ͕ ƵƐĞĚ ĂŶĚ ĐƌŝƟĐĂůůǇ ĂĐĐůĂŝŵĞĚ ďǇ ŵĂŶǇ ŽĨ ƚŚĞ ŶĂƟŽŶ͛Ɛ ůĞĂĚŝŶŐ ŶĞǁƐ ŽƌŐĂŶŝǌĂƟŽŶƐ ĂŶĚ ǁĞďƐŝƚĞƐ͕ ŝŶĐůƵĚŝŶŐ͗ dŚĞ EĞǁ zŽƌŬ dŝŵĞƐ͕ >ŽƐ ŶŐĞůĞƐ dŝŵĞƐ͕ ĞŶǀĞƌ WŽƐƚ͕ KƌůĂŶĚŽ ^ĞŶƟŶĞů͕ ŚŝĐĂŐŽ dƌŝďƵŶĞ͕ h^ EĞǁƐ Θ tŽƌůĚ ZĞƉŽƌƚ͕ >ŽŶŐ /ƐůĂŶĚ EĞǁƐĚĂǇ͕ ^ EĞǁƐ ZĂĚŝŽ͕ EĞǁƐ ZĂĚŝŽ͕ ^ ϰ ĞŶǀĞƌ ds͕ ĂŶĚ ŵĂŶǇ ŽƚŚĞƌƐ͘

ZĞŐŝƐƚĞƌ ĨŽƌ ƚŚĞ ^Ƶŵŵŝƚ dŽĚĂǇ͊

http://www.biggerpockets.com/conference

an you really earn $8,000 profit per month trading stocks online? Yes you can. There’s a reason the really rich own and trade stocks AND buy real estate. The stock market has always been a place to earn fast, sexy money for those that have a financial education. So what’s the problem? Most Americans never seek to be financially educated themselves,

a company whose annual and quarterly earnings are rising. Historically, increased earnings creates pressure on the stock price to increase. Stocks that trade above $100 per share have increasing earnings. In the We a l t h y Investor program we refer to t h e s e companies as “good dates.” As an investor, you’re hoping that the company continues to have success and earning in-

A trader takes a different approach to stocks. A trader is in the game of taking small quick profits. Let’s take a look at a company like eBay (ticker symbol EBAY). eBay is currently trading around $37 dollars per share. Maureen, a smart, intelligent and attractive real estate investor and entrepreneur, understands that to create real wealth she needs to be diversified. That means owning stocks and real estate. She likes investing in Dow components like MacDonalds, AT&T and IBM for the long term and using a small portion of her investment capital for trading others. One of her favorite stocks to trade is eBAY. On Monday shortly after the

therefore they are locked out of the greatest game in the world… investing and trading stocks. For way too long the stock market has been an exclusive playground for the upper class. Today stock research and the ability to trade is just a click away. There are two major ways to earn money in the financial markets. They are investing, (purchasing shares and letting them increase in value over the long term), and trading (buying and selling shares very quickly). The real estate equivalent to stock trading is buying a house, fixing it up, and then selling it for a profit as soon as possible. As a stock investor, your intention is to purchase shares of

creases over a long period of time, let’s say two to five years. When XYZ’s stock price increases from $100 to $110 and you own the shares, your investment has increased in value ten percent. That means your $10,000 is now $11,000. In the above scenario you only have a paper profit. An actual profit results from selling your shares. Once a stock price has increased, you have several interesting choices, you can: 1. Sell XYZ stock for a proﬁt, and enjoy your ten percent return. 2. Purchase more shares and ride the wave of success. 3. Find another company to invest in using the same criteria that led you to XYZ.

stock market opens, Maureen logs into her online brokerage account and purchases 1,000 shares of eBay at $37. That’s a total investment of $37,000. She’s willing to sell the shares the second they reach $38 dollars and capture a quick profit. Maureen is not day trading. Day trading requires that you sit at a computer while the stocks are trading and buy and sells stocks when they increase five to ten cents above your purchase price. Most people who attempt day trading lose money. Instead, Maureen prefers to volatility trade because the free software in her brokerage account will trigger a sell of her eBay shares while she’s out in the world enjoying her life.

by Tyrone Jackson

Wednesday, two days after Maureen purchased her eBAY shares, the stock’s price reaches $38 shortly after the market opens at 9:30 a.m. eastern time. The soft-

Isn’t it time you added stock market trading to your list of revenue streams?

Realty411Guide.com

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ware inside of Maureen’s account automatically triggers a sell while she is at the gym. When she returns home, Maureen gets an email and discovers she has just earned a $1,000 profit from the sale of eBay shares. How did that happen? Let’s review. Monday Maureen purchased 1,000 shares of eBay at $37. Her total investment was $37,000. When the share price reached $38 her 1,000 shares were sold. Maureen’s initial investment of $37, 000 was returned to her account plus a one dollar per share profit. One dollar multiplied by one thousand shares equals $1,000. If Maureen can buy and Continued on pg. 46 reWEALTHmag.com

diversification

Trading Stocks VS Investing in Stocks

Spring has Sprung, pg. 9

RealBay.com, pg. 11

price, square footage, cap rate, asset specifics, etc. The platform lists the assets for auction, and people are able to deal directly with each other. “I’m allowing the buyer and seller to talk with each other direct and connect without any regulation – This greatly increases the chances of getting a deal done – The other sites won’t do this because they afraid of being cut out of the loop and not getting their fee after the transaction.” according to Piscano. This helps with the buyer and sellers coming to an executed transaction faster. The website attracts global buyers and each buyer and seller is different and the personal relationship of direct contact is Buy, Hold & Rent, pg. 26

business at present, primarily due the increased difficulties of potential clients getting financing. Many Section 8 properties have been located in neighborhoods that have added to the problems in acquiring buyer-financing. BH&R determined that buying in the more upscale neighborhoods significantly increased the prospects of a positive return for investors. The much lower turnover rate in these neighborhoods was greatly aided by the tenant base. It’s the age-old real estate mantra of “location, location, location.” Whalen believes that if you focus your efforts in areas where people want to live, you’ll get a different client and a different tenant base. They’re only buying out in the suburbs these days. BH&R’s investors don’t usually worry about the need to get financing. Almost all deals are sealed with cash; with many clients using savings and retirement funds. BH&R remains aware of the competitive marketplace, but Whalen puts a 20-year plus career on the line. Having only specialized in the Cleveland area, he knows the area like the back of his hand. It’s a people-oriented business and he proudly points to the fact that he’s on a first-name basis with all the people that matter. He recognizes that the over $5 billion in construction taking place in Cleveland will attract investors from the world over. He wants potential investors to know that he’s there to serve their interests. Visit online at: www.BuyHoldRent.com Realty411Guide.com

extremely valuable. Having thousands of connections on sites such as LinkedIn.com personally Piscano knows the value of an online network and wants to allow RealBay’s members to truly capitalize on the exposure the site will allow them to have to potential clients as well. The site will have several variations on the style of listings and auctions users may use. “Own it now” and “Best Offer” selections will be available to people, according to Piscano. Currently, the website is open for the public to create accounts at no cost. It is a traffic-based website and sponsored opportunities will be available soon to specific service providers that would like to be showcased to members when those members need them the most. “In the future, we envision a site where users pay nothing and we truly become a free real estate marketplace and social network, driven by our members activity similar to Facebook,” Piscano explains. The site will allow for networking connections between REALTORS®, investors and different types of real estate service providers in a busy and exciting online marketplace.

3. New Infrastructure Improvements, 4. Easy Affordability, 5. Opportunity for Appreciation, 6. Tightening Vacancy, 7. Sales Inventory is Turning. Based on these seven factors, I then assess the area’s median rent prices. It is important to analyze the median sales price, quality and quantity of the houses in a given area. The areas offer at least a 1.25% or better rent ratio (monthly rent/sales price) get a second look. When it’s time to buy, I look for houses that will cashflow at just under the area’s median rent. Buying the right property is only a small step in investing success. The biggest factor of profitability is keeping your property rented. A lower rent range will expose your properties to the largest group of potential renters in the area and let you select the best tenants. So, going back to the question — “ Is it time to buy real estate and if so, where?” — Yes it is the right time to buy. Where? In a market that will provide you stable, dependable cash flow for the long term.

For additional information, be sure to visit www.RealBay.com

Contact Lori Greymont at 888-298-0652 Lori@SummitAssetsGroup.com

Rapid Property Analyzer (RPA), pg. 22

tematic process to help you evaluate potential property for investment purposes. By using this software the investor evaluates each property the same way using the same criteria. This approach allows the investor to identify his return on investment (ROI) using a standard set of rules for evaluating all properties. As shown in the table and the charts on page 22, multiple properties are displayed side-by-side in numerous illustrations comparing the performance metrics of each. This enables the investor to quickly grasp the relative value of one property over another. As an investor, this is what you need to be focusing on, relative rates of return and values set on the same criteria. RPA allows the investor to tailor the software to his individual market and PAGE 42 • 2012

then evaluate any property he looks at against the same criteria. Hence the consistent, repeatable results all professionals look for to evaluate their work. Just like the serious golfer who buys the best set of clubs he can, savvy investors need decision-based tools that assist them in making fast, comprehensive and accurate assessments of a potential property’s value. Gary Geist is a seasoned real estate investor with over forty years experience. He has owned property in several states in the Midwest and currently has large property holdings in Ohio, Indiana, and Pennsylvania. He is the owner of HomeReplay, LLC, which is based in the Midwest and provides tools and turn-key investment solutions to investors worldwide. For more information about RPA visit online at: www.homereplay.com

reWEALTHmag.com

Ate you a Target for a Lawsuit? pg. 23

ing any payments presuming he could buy another couple years of free rent. This time, we waited for six months (listening to his empty promises and excuses). Bill Gatten When we were finally able to effect foreclosure, as per our agreement, the lis pendens (Notice of Legal Action) hit the newspaper, immediately luring the so-called “Consumer Advocates” out from under their respective rocks by the dozens. The particular “extortionist” that Mr. Williams selected agreed to sue us for “equity stripping” and taking unconscionable advantage of the poor, gainfully employed man who earned approximately $10,000 per month but refused to pay his $3,500 monthly mortgage payment (for two and a half years by this time). At the settlement conference in court the two opportunists (client and attorney) suggested they would settle with us for an even $1 million dollars. When we insisted on a trial, the attorney decided that he’d now settle for an even $40,000. We countered with an offer for him to stick his head in a bucket and requested a jury trial. That turned the tables on Mr. Lawyer, since he was basically broke (as many are), and not getting paid by his client, hoping for a settlement and payday. Since he would have had to front his client’s court costs, he just gave up (i.e., Williams vs. Land Partners of American, Va. Est. January 2007). The basic lesson to be learned here? Because the property in question was held by a third-party, bona fide, properly structured title-holding land trust, all claims of Equity and Unlawful Eviction and Wrongful Foreclosure fell on deaf ears. Without the land trust, everything would have turned out completely differently, and in addition to our $96,000 and $25,000 court costs to date, we would have lost the house and been sued for a couple extra hundred thousand dollars to boot. Regarding real estate ownership in particular, some legal advisors will tell you that you do not need to use a Land Trust. They’ll often suggest that you hold title to your real property in an LLC instead. This is not necessarily bad advice by any means; it’s just not great advice. If you are interested in setting up the BEST structure to protect you and your real estate assets you’ll Realty411Guide.com

BiggerPockets Hosts a GroundBreaking Summit

he most sophisticatGeraldine Barry, the head ed investors in the of SJREI Association whose real estate industry club was winner of the 2010 are flocking to Denver, Award of Excellence from CO on March 23rd and National REIA; and Tah24th for the first annual ani Aburaneh a self-made BiggerPockets Real estate multi-millionaire real estate Investing Summit 2012. developer and author of Real Joshua Dorkin The event, produced by the Estate Riches. nation’s most popular online real estate “Our goal is creating this unique connetwork, will take place at the Colorado ference is to provide experienced invesConvention Center. tors, and those trying to learn, with a Over 200 years and thousands of no pressure, no nonsense, and no upsell deals worth of real estate investment environment,” says Joshua Dorkin, Bigexperience will be available to those gerPocket.com’s founder and CEO. attending. Scheduled speakers include Tickets for the two day event, which some of the most renowned investors includes access to all conference sesin the industry, including: Bruce Nor- sions, are $250. For more information, ris of the Norris Group, best known for please visit: http://www.biggerpockets. his California Market Timing Report; com/conference.

More Cashﬂow, Less Cash L

ooking for a way to With all the negative mejump into real estate dia coverage, many investors by utilizing leverage? wrongly assume that investor Then talk to the Gosser loans are impossible to get, but Bighaus Team at Guild that assumption is false. Take a Jason & Steve Mortgage. The team is look at some of their numbers: led by Steve Bighaus and Jason Gos- Gosser Bighuas weekly average: ser, who specialize in rental property Total Amount Funded: $330,725 financing. Equity Partners: $130,275 “We have techniques and loans that Cash Flow: $1,931.99 many lenders do not offer, and usual- Gosser Bighuas monthly average: ly don’t even know about it,” Bighaus Total amount funded: $1,124,087 explains, and adds that they work with Equity partners: $468,913 many out-of-state investors. Positive Monthly Cash Flow: $8,983

start with a Land Trust first, then bring in the LLC secondarily as the (or “a”) beneficiary of the land trust. So, what is a Land Trust? Unlike most trusts, the Illinois-type land trust isn’t a trust per se at all. Despite the terminology, the corpus of a “land trust (the entrusted property)” is not vested in a trust: it is inPAGE 43 • 2012

stead vested in an entity that is designated to serve as a trustee for the beneficiaries (not for a trust). Land Trusts are essentially privacy tools for real estate asset protection. In other words, they are structured so as to obfuscate discovery by the public of a property’s ownership control. reWEALTHmag.com

by C. Han of 360 Investments

purposes. We m i n i mize the risk of our loan by only lending to borrowers who are preapproved for the refinance loan.

of default. The executed reverse quit claim deed held in escrow prevents the need to go through lengthy and expensive foreclosure proceedings and allows the lender to take title to the property, which lender can hold, sell, and/or assign note to a different pre-approved refinance borrower. Since we loan up to the borrower's maximum loan to value ratio, typically 70% to 75% minus closing costs, that leaves 25% to 30% equity in these properties to further minimize

We send potential borrowers to our preferred mortgage banker to get pre-approved and the banker runs the borrower's credit, financials and then provides a pre-approval letter with their maximum loan amount and loan-to-value ratio. Based on the borrower’s pre-approval figures, we loan up to the borrowers’ maximum refinance loan to value minus their refinance closing costs. These borrowers are real estate investors purchasing distressed properties using our short-term funding so they can make stronger offers with quick closings that get accepted. These borrowers add value to the properties through proper renovation thereby increasing its value and then refinances which pays off our short term loan based on this new higher value. The risks associated our investment lending program is the borrower’s inability to refinance due to loss of job/income, death and/or real estate market depreciation lowering value, requiring borrower to bring funds to close, which they may not have. We minimize the risk by requiring borrowers to get pre-appraisal report(s) with the approved appraisers on the refinance lender’s list. We secure our position on title by taking first (1st) lien position with Trust Deed/Deed of Trust/ Mortgage (depending on the state). Our closings also require lender’s title policy, property insurance and a reverse quit claim deed executed and held in escrow in case

risk. We hold and escrow the renovation fees with new borrowers and provide a disbursement schedule based on the renovation list they provided to the appraiser to ensure the added value has been made to the property. Since 2008, we have funded over 100 transactions with 0% default rate. We contribute our 0% default rate to our system in which our funds are only accessible to those borrowers pre-approved with our preferred lender, whose experience has proven to close the refinance loan with these borrowers based on their initial preapproval qualification. Now that we have explained our process for minimizing risks through our lending requirements, lets progress to the good stuff, the returns. We offer our investor lending partners 2 points (%) of the loan amount plus 12% interest. We do not pool investor funds together. We match each investing lending partner to the each individual loan. The refinance process can take between 30 to 90 days therefore, an example, if the investing lending partner funded $200,000, investor would receive 2 points (%), $4,000 plus 12% interest only payments of $2,000 per month. If the refinance closed in about 30 days, the total profit would be $4,000 plus $2,000 totaling $6,000 and their $200,000 reimbursed

s of just recently, a six month Certificate of Deposit (CD) interest rate was a whopping 0.45%, a 1 year CD was 0.76%, and a 5 year CD was 1.61%. Checking and savings interest rates are 0.52%. Other banks like Bank of New York Mellon (BNY)

How Hard is Your Money Working?

announced last year that they will start charging savings account holders 0.13% for holding their cash. With the stock market drops, many people are moving their money into a saving or CD just to minimize the loss of capital they experience so frequently in the stock market. Due to many investors lack of resources to other investment vehicles, savings, CDs or mutual funds are their only options besides sticking it under their mattress. With high inflationary times, these measly interest rates are nothing: $1,000,000 with savings rate of 0.52% earns $5,200 a year / $433.33 a month. There are many other investment vehicles that offer much higher returns. Many uneducated investors think any returns higher than traditional savings, CDs or average stock market returns are riskier, and that could very much be the case, but you will learn how hard our investors’ money is working for them while still minimizing risks. There are many titles that coin this type of investment activity such as Hard Money Lending, Private Money Lending, Trust Deed Investments, Notes, Being the bank, Mortgages, Bridge Lending and many other known titles. Our investor lending partners earn on average of 20% to 32% returns on their money. Our lending program is short term, up to 90 days, offered to borrowers purchasing residential (1-4 units) real estate for monthly cash flow investment Realty411Guide.com

PAGE 44 • 2012

Continued on pg. 46

reWEALTHmag.com

Premier Equity, pg. 32

Besides turn-key rentals, the Premiere Equity Group offers a number of products, business models, and revenue streams that cater to each type of investor, including: Acquisition Lending: Great products for passive investors, currently offering great returns on short term funding for acquisitions. Cashﬂow Properties: The company’s specialty, setting up quality rental property, quality renovations, in great areas, with their in-house property management division protecting the investments. IRA conversions: Using selfdirected IRAs to take advantage of tax saving opportunities. Pre-rehab purchases and pre-funding: Pre-fund your own deal to insure the lowest possible basis for each transaction. Marketing Program: Paying investors to market for the company and paying up to $1,500 per sale per client. Premier Equity Group is looking to make 2012 profitable for its investors. Premier Equity Group invites you to visit them on the web at www. EquityGroupOnline.com and explore the many investment opportunities available in their Southeastern markets.

HomeUnion Services, pg. 6

WhiteRock Capital Creates Wealth, pg. 31

risk of their first investment. They should not just look at returns on paper — there are a number of factors that may whack those projections. We are doing webinars to educate investors. They can also download our white paper: “Critical Mistakes in Real Estate Investing” from our website www.homeunionservices. com. We also invite investors to “like us” on our Facebook page (www.facebook.com/ homeunion), where we offer several tidbits and research on real estate investments. Q: Do you have any tips for more experienced investors who may have lost money during the recent bubble? A: Experienced investors are like day traders, they know which stock to pick and when to buy and sell. The singlefamily real estate market hasn’t had the same level of published research that other markets enjoy. HomeUnion is changing this and experienced investors can now tap into new markets and analyze data to reduce their risks without having to fly all over the country to do this. For more information, visit: HomeUnionServices.com

Local Company Goes Global, pg. 38

true!’ And the fact of the matter is, our homes are generally returning net yields of 12% to 15% consistently, which in and of itself is quite remarkable. It is a testament to the adaptability and efficacy of the system my partner and I designed.” Miller and Guenther are certainly at the vanguard of the pack of today’s wholesale turnkey providers. But, beyond their innovative business model and international Realty411Guide.com

clientele, the pair are especially well known for their mastery and implementation of private financing. Private Financing Paradigms, Applied As in the United States, foreign investors are all about leveraging their capital deployment and insuring they are maximizing the use of other people’s money, whenever possible. Today’s discrimi-

in participating in the real estate market, either as active or passive investors, a proven experienced team of real estate experts dedicated to assisting investors achieve their goals. WhiteRock Capital’s Testimonials from Clients: “Learning the real estate investment business is difficult, there are many aspects related to the business not brought out in the “Real Estate Investment Seminars,” as most seminars are a market place to sell ideas, and not the details of investing. I have worked with both Anthony and Richard and because of their combined knowledge, I have gained a better understanding of the business. I have more confidence in knowing what to do and how nating international investor, therefore, faces a unique challenge when they find that modern institutional bank financing in the United States is not favorable to the foreign national who wishes to take advantage of a weak American dollar and truly depressed American housing markets, however opportunistic the timing is. Most banks will just say ‘no’ to foreign investors who want to apply for loans from American banks. Miller and Guenther, again, had an alternative answer that was, unbeknownst to them, going to have a dynamic impact on their business and transaction volume — the use and implementation of private lending. By partnering with a local lender who has just implemented a trademarked private lending paradigm created by a local Memphis real estate investor, Miller and Guenther

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to avoid some of the pitfalls. Also, Anthony and Richard are always available to help in different situations.” ~ Edwin Mizunaga “Since May 2009, I’ve invested with Whiterock in about six projects including fix and ﬂips, wholesale deals, and now “buy and hold” cashﬂow homes in the Phoenix area. In every case, Richard and Anthony have gone above and beyond to assure the investment was secure and profitable. My plan is to work with Whiterock to acquire ten additional rental properties in 2012.” ~ Joseph Hobbs To learn how you can benefit from Whiterock’s experience and rock-solid integrity, go to WhiteRockCapitalinc.com or call 877-228-6060. began to offer non-qualifying, non-recourse, private lending for each and every property they offer to investors, regardless of nationality. This establishment of what is essentially ‘asset based lending’ has propelled their business forward. Miller and Guenther’s reinvention of themselves holds critical lessons for us all. The real estate business in the past few years has faced a tumultuous and rocky path, one which has seen many investors fall to the wayside. In an industry vertical where only the strong truly survive, Miller and Guenther’s partnership demonstrates that adaptability and perseverance truly carries robust and great rewards, for those strong enough to cross the finish line. Visit online www.BuyMemphis Foreclsoures.com reWEALTHmag.com

Investing VS Buying, pg. 41

sell her eBAY shares twice per week she will earn $2,000 per week; $2,000 twice per week for four weeks produces $8,000 per month in income. Instead of blindly placing her profit from her real estate sales in a mutual fund, Maureen is earning fast, sexy money trading stocks. Some of the advantage of trading stocks online are no closing costs, no attorney fees, and no credit checks. When you buy and sell the right stocks in a volatile market, the profits are fast, sexy and fun. Again, Maureen is a volatility trader, not a day trader. She earns big profits from changes in a stock price without having to stare at a computer screen all day. How is this all possible? Maureen has a financial education and understands that stock prices rarely remain the same throughout the day. They are constantly changing. The rapid changes in a stocks price is called volatility. Financial freedom is about having and enjoying income from multiple streams. Isn’t it time you added stock market trading to your list of revenue streams?

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How Hard is Your Money Working, pg. 44

through refinance closing, generating a return of 36%. If the refinance took the entire note term of 90 days to close, the total profit would be $4,000 plus three payments of $2,000 totaling 10,000, which calculates to a 20% return. Therefore, our investor lending program makes our investors’ money work harder, generating between 20% to 32% returns. Get educated and learn ways to make your money work hard for you by earning higher returns than the traditional savings and certificate of deposits. Realty411Guide.com

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RealEstateforProfit.com PAGE 46 • 2012

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