REI Voice Magazine Sept - Nov 2012 by San Jose Real Estate Investors Association

www.reivoice.com

Sept. - Nov. 2012

Real Estate Investment REAL WEALTH THROUGH REAL ESTATE

REFERENCE GUIDE • STRATEGY • DEAL MAKERS • ADVICE Dec. - Jan. 2012 REI VOICE

INVEST WITH CONFIDENCE ACHIEVE IMMEDIATE CASH FLOW D

iscover the lowest risk, highest quality residential investment properties in the country. Using sophisticated methodology, the best investment properties are carefully selected and rehabbed beautifully to secure the best tenants. With superior property management and instant cash flow, your investment pays worry-free dividends from day one. We Hide Nothing. Complete specs on each property are published on our website.

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All Properties Direct from the Source. We own clear title. Wilson Investment Properties is owned by an investor with $100M and 1,800 units of experience in the DFW area.

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TOM WILSON, President

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TomKWilson@earthlink.net TomWilsonProperties.com

ER NN WI f t h e a l o ion d r t N a Awarint A P I R E B est t ion f o ru b l i c a P

SOUND OPINION—WISE DECISIONS: VOICE OF THE PROFITABLE REAL ESTATE INVESTOR

TABLE OF CONTENTS An a lysi s

Advice

Cross the Bridge to Funding 5 Simple Rules for Cash Flow Success

6 In Intimate Detail: Expo Silicon Valley Take an inside peek at why Silicon Valley is one of the country’s three hotspots for real estate investors. Understand what attracted our sponsors to this market and why our presenters were happy to move and mingle in the “tech-specialist place on earth.”

8 How Real Estate Performs in Times of Inflation and Deflation With the world economy in flux, some experts predict massive inflation others predict deflation is on the horizon. Learn why Lori Greymont, investor and CEO, predicts that real estate investments win in either scenario.

10 Not Created Equal: Analyzing the 100K Turnkey Investor and turnkey provider Tom Wilson is frustrated when he sees investors taken in by “pseudo-turnkeys”—resellers that do not offer investments that measure up to the four-point definition of a true turnkey product. He shares the questions to ask and how not to get taken in.

There’s a lot to understand when it comes to determining cash flow; however, Jeb Henley, investor and investment broker, breaks the subject down into five simple rules to follow. You may want to clip this article and pin it to your wall.

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18 Five-Year Plan: Your Gateway to the Future Jason Hartman, investor educator, helps new real estate investors off to a great start…starting with an understanding of how your investment goals should drive the kind of investments you engage in. Mr. Hartman has helped thousands of investors find clarity and direction. It’s your turn.

22 Protect Your Investments with an FLP The Family Limited Partnership, also known as FLP, is one option for protecting your assets. Attorney Nancy Chillag explains this often underused tool in terms anyone can understand.

Features

One lending sector has appeared to do well despite the market turmoil. For brokers still seeking a new niche to get through the tough market, understanding how private bridge lenders work may be what you’re looking for—and lending expert Stephan Kachani of Lone Oak Fund is the person with the expertise to clarify bridge lending.

20 How Investor Personality Type Influences Your Deals Companies have been using personality testing for years to determine the right position for their employees. Why not use those same tools to understand what kind of investor you are? Kathy Fettke, CEO of Real Wealth Network, challenges you to understand yourself to increase your success.

24 Tools that Rule Social Media expert and freebie guru Aaron Norris shares the four must have, free on-line tools for any small to mid-sized organization: Drop Box, Google Analytics, Trello, and Mailchimp. (REI Voice uses three of the four, guess which one we just downloaded thanks to Mr. Norris!)

14 How the Collapse of Studebaker Got You an IRA Real estate attorney and self-directed IRA specialist, Jeffrey Hare, exposes the surprising bipartisan history that led to the IRA and that gave you the opportunity to direct your retirement funds into real estate for the last forty-years!

to Thrive 30 Words By: Tuigim, Ger 15 CALENDAR 29 I nv estor R es ou rces

Sept. - Nov. 2012 REI VOICE

P UB LIS HER’ S NOTE

WELCOME

We are proud to publish the 1st Annual Real Estate Investment Expo edition of REI Voice Magazine. This is the issue you want to hold onto for reference and for its kernels of knowledge, some of which are timeless.

Geraldine Barry Publisher, President of SJREI Association

I believe success leaves clues. This issue features professionals who have experience, known both success and failure (failure is part of any journey), and ultimately prevailed. You don’t have to blaze a new trail - learn from those who have gone before you: slow and steady progress will win the day. Remember success does not happen overnight. Our mission is to assist you on this real estate investing journey with sound opinion which helps you to make wise profitable investment decisions. In terms of practical, helpful advice - this issue will not disappoint. Real estate investing is a business - a systematic, logical, non-emotional approach is what works. No get rich quick schemes here - run for the hills if someone suggests that this is easy. It’s not a game, it’s a business, but it does work if you work it. With the most incredible buying opportunity on the horizon, this is a great time to participate. Strategy is important — your strategy might be to purchase one cash-flow property per year for the next five years to supplement or augment your retirement. After a few years of funneling rent to pay off your loans, you’ll own the properties outright and have a steady stream of income for life. Now

that is a simple straight forward plan! Or you may prefer to buy, rehab and resell. Or perhaps you’d rather invest in income producing notes backed by real estate. Investing in real estate is not rocket science, but developing a strategy, and then proper implementation and execution are essential for you to reach your financial goals. What made our parent organization, SJREI Association, a national award winning organization? Integrity first, followed closely by relationships and education. This is a model for individual investors as well. Maintain your integrity. Build your relationships. Stay educated. Real Estate Investment Expo Silicon Valley 2012 is full of opportunity for forging relationships and deepening understanding. For some it is the beginning of a journey, for others, a continuation. Wherever you stand on this continuum, you do not stand alone. We are here to support and applaud you on this exciting journey. Step aboard!

REI Voice™ Magazine A publication of SJREI Association™ Publisher Geraldine Barry | 408-264-3198 Geraldine@SJREI.org Editor-in-Chief Susan Hare | 408-391-8068 Susan@REIVoice.com Advertising Sales Sara Treanor | 408-264-3198 Sara@REIVoice.com Art Director Kevin Bell kbell@Western-Web.net Director, Administration Sara Treanor | 408-264-3198 Sara@REIVoice.com Printer Western Web Western-Web.net

SJREI Association is a member of NREIA®

REI Voice™ is a publication of SJREI Association™ www.SJREI.org Reproduction or use of any editorial or graphic is prohibited. To request reprints or reprint rights, contact Info@REIVoice.com. REI Voice Magazine c/o SJREI Association 4309 Sayoko Circle San Jose, CA 95136 www.REIVoice.com SJREI Association and REI Voice Magazine make no representations or warranties regarding the content, accuracy, or validity of the advertisements or of the articles contained herein. All persons should exercise due diligence and consult with legal and tax professionals before making any investment decisions.

4 REI VOICE Sept. - Nov. 2012

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Sept. - Nov. 2012 REI VOICE

AN ALYSIS

In Intimate Detail: SILICON VALLEY EXPO by Geraldine Barry

6 REI VOICE Sept. - Nov. 2012

S P EAK ERS

hy is Silicon Valley one of the country’s hotspots for real estate investors? Money. Yes, the answer is as simple as available capital. According to Bloomberg Businessweek, eight of the 50 richest, growing zip codes in the U.S. are in the bay area, and 6 of those zip codes are in Silicon Valley— the highest density of anywhere in the country. Did you know that the Silicon Valley and the San Francisco Bay Area is #2 on the millionaire location list? Or that each successful startup adds thousands of individuals to the 225,000+ millionaires who already reside in the area? According to Lamarr Baxter, Director of Business Development for Accuplan Benefits Services, Silicon Valley and the greater San Francisco Bay area is awash in IRA funds. “In this area of the country alone, over $75 billion is held in IRA accounts. While the majority of dollars are tied to stocks and

mutual funds, a growing number of people are taking control of their own investment strategies and choosing to direct those retirement funds into real estate investments.” We asked some of the speakers and sponsors of Real Estate Investment Expo Silicon Valley what attracted them to this market aside from investment capital, and why they are happy to move and mingle in the “tech-specialist place on earth.”

“Success education, smart money and swanky people.” — Jason Hartman, Founder and CEO, Platinum Properties Investor Network

“There’s no better place to bring brilliant business minds and truly successful real estate professionals together!” — Kevin Kaczmarek, Founder/CEO, Capital Blueprints

“It’s the intelligence, the ‘can do’ spirit and the relationships that make Silicon Valley great.”

“Silicon Valley is the definition of synergy. It is where professionals, ideas, and money make things happen.”

—Lori Greymont, Founder and CEO, Summit Assets Group

—Tom Wilson, Owner, Wilson Investment Properties

“Silicon Valley folks work so hard. Time to let their money work hard for them.”

“The highest concentration of motivated self-starters is found here.” —Jeffrey Hare, Real Estate Attorney

—Kathy Fettke, CEO, Real Wealth Network

Thank you to our sponsors and presenters for making the Expo a sensational event!

Sept. - Nov. 2012 REI VOICE

A N ALYSIS

HOW REAL ESTATE PERFORMS IN TIMES OF INFLATION AND DEFLATION Lori Greymont is CEO of Summit Assets Group. She offers educational presentations around the U.S., trains and mentors people new to purchasing distressed assets and coaches on creative financing techniques. Her company sells single Turnkey Cash Flow Investment properties, Fix and Flip properties, and Bulk lists.

By Lori Greymont If you’re following the news and the actions of not only the U.S. government but most of the major governments in the world, then it is very reasonable, maybe even a foregone conclusion, that we are headed for massive inflation in the not too distant future. If things get even more out of control we could even experience hyperinflation. On the other hand, a case can be made that we’re heading for massive deflation, just like in the Great Depression. It is out of the scope of this article to go into details on the factors leading to these two scenarios. However, if you are a real estate investor, or are considering investing in real estate, then it is important to understand how real estate investments perform during inflation or deflation. What happens in periods of high inflation? The purchasing power of the dollar declines. As a result, creditors are getting paid back in dollars that are worth less then when they were lent out and as a result raise interest rates rise. Creditors like interest rates to be a few percentage points above inflation. Let’s use some numbers as examples. If inflation hits 12%, then interest rates could easily go up to 15-20% so that creditors can make money. But at 15% the cost of a mortgage skyrockets and most people can’t afford to buy a home. This happened in the 70’s and many other times in history. As fewer people qualify for mortgages, rental demand increases and rents go up. Rental property owners, especially those with fixed interest rate mortgages, receive higher rental income while their biggest expense stays fixed. Thus their cash flow increases. One important note: In times of high inflation, properties with shorter rental periods generally perform better, making residential rental property with 6-12 month leases a good bet. Commercial rental properties such as office complexes and shopping centers, which often have 5-10 year leases can actually see cash flow go down as expenses such as utilities, insurance, and maintenance increase while rents are flat.

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How is appreciation affected by periods of inflation? During times of high inflation, the cost of the raw materials needed for new construction increases and directly affects overall property prices. As the costs of materials, labor, and building fees rise, prices of existing properties are positively impacted. But what if we’re headed for another Great Depression? We certainly hope that is not the case but let’s take a look at how real estate performs in deflationary times. If residential real estate performs well in inflationary times then you might expect that it would not perform well as an investment in times of deflation but as we’ll see that is not the case. In times of deflation, there isn’t much money available to buy anything. This lack of money creates a lack of demand and the lack of demand forces prices down and that includes real estate prices. However, real estate has just gone through a major deflationary period while other commodities such as gold, silver, and oil have had major

upswings. Currently, real estate has less room to fall and poses less risk than other commodities. But here’s the kicker, cash-flow real estate has a huge advantage over other assets during deflation: the cash-flow! Even if the value of a rental property drops during a period of deflation, the rent checks still give you a return on investment each month. Other investments do not. Plus it’s easy to find renters during deflation because banks don’t have the money to lend for mortgages. People can’t buy homes, so they have to rent. If you expect a period of deflation, your real estate investment will perform best with longer lease periods so increase your lease durations as much as possible. In summary, residential rental properties do very well in times of inflation and they have advantages over other investments in times of deflation as well. Contact Lori Greymont at 888-298-0652 Lori@SummitAssetsGroup.com

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Sept. - Nov. 2012 REI VOICE

AN ALYSIS

NOT CREAT ANALYZING THE By Tom Wilson

Tom Wilson is a thirty five year real estate veteran who has executed over $100M and 1,800 units of real estate investments. After thirty years of managing some of Silicon Valley’s pioneering technology companies, Mr. Wilson put his business and management experience toward fulltime investing. One of his companies, Wilson Investment Properties, offers high quality, highcash flow, fully rehabbed and leased properties to other investors.

Let me tell you about two great real estate deals for the busy professional. Both are single family homes that have been renovated and are offered as turnkey rental investments. Investor Special #1 is priced at $100,000 and rents for $1,200—a 1.2 rent ratio. Investor Special #2 is priced at $100,000 and rents for $1,050—a 1.05 rent ratio. Which property do you choose? One really is a better deal than the other and I’ll let you know why later. However, if instead of choosing, you thought, “I can’t make a decision based on such limited information,” then you’re in the top 50% of real estate investors. In a moment, I’ll help you get to the top of the class by understanding the crucial data required to properly analyze a turnkey deal. Your test will be to use this information going forward to make investment decisions based on information gathered, not on the slickest presentation or the personalities involved. First, why turnkey investments are not created equal. To the top tier turnkey property providers, turnkey means that all the elements of the investment are in place so that all the investor has to do is “turn the key” on their bank vault and watch the money flow in. Clearly there is more to it than that, but not all that much more. By our (and I mean the top providers) definition, a turnkey investment property has ALL of the following attributes: 1. The provider is in possession of the deed, 2. The property has been carefully selected and renovated with renters in mind, 3. The property has been leased, 4. A property management company is actively engaged in managing the property. After the investor purchases the property, the property manager simply redirects the rent checks to the investor. Some providers call their offerings turnkey, but are missing some or all of the four essential elements. If the company selling you the property does not possess the deed, it is not a turnkey. If the seller has yet to complete renovations, the property is not turnkey. If the property does not have rent paying tenants, the property is not turnkey.

10 REI VOICE Sept. - Nov. 2012

If the seller offers to “look after” the property until you find a property manager, the property is not turnkey. Now that you understand the four essential elements that define a turnkey property, how do you evaluate the myriad opportunities available to you and get to the top of the class? By analyzing how each deal rates in four major categories: Location, Property Condition, Provider, and Property Management. Location Metro economy. Is this a one -economy,

or one-company dominant town? A broad based economy makes for a more stable rental market. Submarket economy. The city may be doing well, but don’t buy in a depressed neighborhood. Population growth. State, metro, and submarket. This is ultimately what drives the future rents and house values. You want your future income and values to appreciate. Demographics. Income, crime, turnover rates, education, age. Neighborhood. What is nearby: busy roads, noise, multifams, utility towers, flood zone? Vacancies. Number and trend. Foreclosures. Number and trend. SFH Price. History and trends. Government policies. Business friendly, landlord friendly, zoning, master plans. Property Condition Age. Generally older houses

require more maintenance. Structural condition. Is the foundation stable? Number of usable years left for the roof? Quality of the renovation.

Was rotten wood painted over or replaced? Will the carpet wear out in a year or last through a

TED EQUAL: $100K TURNKEY tenant or two? Are appliances sturdy enough for the rental market and attractive enough to appeal to quality renters? Was every aspect of the renovation geared to attract an excellent tenant and to minimize the likelihood of having any significant maintenance for several years? Extent of rehab. Just interior cosmetics, or were the appliances upgraded, landscape improved? Tenant friendly. Good floor plan, usable back yard, 3 or 4 bedrooms, at least 2 baths, 2 car garage? Conformance to neighborhood. Is it the largest house on the street and therefore not likely to appreciate as much. Does the architecture fit into the neighborhood and appeal to tenants and future buyers? Provider Reputation. References, internet,

Better Business Bureau. Direct Source. Is the person you are dealing with just an agent or referral service? Are you dealing directly with the company that owns, rehabs, and manages the products? Experience. Years of experience and stability? Number of units sold? Realistic Performance Claims. Do they project

too-good-to-be-true cash flow and ROI? Is the rent estimated or actual? Transparency. Does the provider give all of the facts up front and on the website about the property: age, photos, public records, actual current expenses, house specs? Value. How is the provider justifying their price? Are they giving you sales comparables up front? Are they dancing around the subject of appraisal and market value? Are they trying to sell the property

for cash so as to avoid an uncertain appraisal? Ask them how many of their investors get loans and how often they fail an appraisal. A reputable provider will seldom fail appraisal. True Turnkey. Is the unit really leased? Do they want you to take over a contract for a raw property and cover all of the unknown expenses for conversion to a rental? It typically cost 15-30% of the raw product purchase price to get a property to positive cash flow. Beware of the seller who says that with a little carpet and paint it will be rented in 3 weeks. Investment Credibility. Do the provider’s principals own properties in the same area that they are recommending for you to purchase? Ownership. Do they own and have clear title to the properties or do they just have a contract with the seller because they cannot get loans to purchase the properties themselves? Team. Do they have all of the professionals needed to make the transaction easy? Does each member of the team work mostly with investors, not owner occupants? This is important. Warranty. Do they provide any warranty? Property Management Experience. Years for principle and staff? Licensed

agents? Fees. 10% is typical for up to 4 properties with full service. Half of one month’s rent is typical for new leases. Provider Endorsement. Does the recommended property manager manage the provider’s own personal portfolio? Number of units managed. Are they too small to have back up coverage or too large and have a lot of overhead? Staff. Is it sufficient to cover the needs? Product compatibility. Is what they manage mostly the same as what they will be managing for you (houses, not apartments or commercial)? Management in your area. Do they have other rentals in the same area that you are considering purchasing or do they not know that area well and have to make a special trip to check up on your property?

Yes, there’s a lot that goes into analyzing a turnkey

property, but it is YOUR money. Ask questions until you are satisfied, and by all means, visit the property before you buy. Back to the two investor specials at the beginning of this article, which are real case studies. (Names have been changed to protect the duped!) Investor Special #1 priced at $100,000 and rents for $1,200, purchased by “Sam.” During the loan process the appraisal for the property came in short and Sam shells out another $5K to close the deal. After closing, Sam finds out that the rent was a “market estimate” and after waiting for 3 months and dropping the price twice, he finally gets the property rented for $1,000/mo. Within 6 months Sam is notified that the 50yr old house has exterior trim that needs replacing because the seller painted over rotten wood, the hot water heater needs replacing (and there is no warranty), and the HVAC needs repair. His bill is greater than the net income that was predicted for the first year. The city he purchased in has only one industry, and within a year, the one new UK manufacturing plant that was scheduled to come to town and employ 2,000 people gets postponed indefinitely because of economic uncertainty in Europe. Adding salt to the wound, Sam’s tenant fails to renew his lease. Sam experiences another 3 month vacancy and he has to drop the rent to $900 because of the now weaker rental market. Sam is very sorry he didn’t do his homework. Investor Special #2 is purchased by “Mary” for $100,000 and rents for $1,050. The house is only 10 years old, comes with a premium home warranty, is already leased and the appraisal came in at value. The employment in the state is the highest in the country, the city has 25 Fortune 500 companies with diverse economies, the population is growing, rents and values are appreciating. Mary’s first tenant leased for three years. When it did turn over, the property required minimal make-ready. It was leased again at $1,125 before the current tenant moved out. The cash flow exceeds Mary’s expectations. Mary earns an A+ because she purchased in a top, low-risk, metro and from a reputable provider. Contact Tom Wilson at 408-867-1867 tomkwilson@earthlink.net

Sept. - Nov. 2012 REI VOICE

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Trust deeds allow me to make consistent returns without the volatility of the stock market. I like knowing that the cash is coming in every month and that my investment is secured by the property. Desert Hot Springs, CA Appraised Value: $67,000 Loan Amount: $40,000 Loan to Value: 59.7% To Investor: $300 mo. Rent: $1,050 2 bed, 2 bath, 1,120 s.f.

Rancho Cucamonga, CA Appraised Value: $295,000 Loan Amount: $177,000 Loan to Value: 60% To Investor: $1327.50 mo. Rent: $1,875 4 bed, 2 bath, 1,641 s.f.

Bloomington, CA Appraised Value: $115,000 Loan Amount: $69,000 Loan to Value: 60% To Investor: $517.50 mo. Rent: $1,400 2 bed, 1 bath, 640 s.f.

Compton, CA Appraised Value: $232,000 Loan Amount: $140,000 Loan to Value: 60.43% To Investor: $1,050 mo. Rent: $2,000 3 bed, 1 bath, 1,027 s.f.

Taft, CA Appraised Value: $85,000 Loan Amount: $52,000 Loan to Value: 61.18% To Investor: $390 mo. Rent: $1,050 3 bed, 1 bath, 1,661 s.f.

Lancaster, CA Appraised Value: $87,000 Loan Amount: $52,000 Loan to Value: 59.77% To Investor: $390 mo. Rent: $1,200 3 bed, 2 bath, 1,340 s.f.

earn 9% with trust deeds Tired of wild fluctuations in the stock market? Want checks instead of bills? Think trust deed investing. Let’s face it, not everyone has the time or expertise necessary to be a full-time real estate investor. But trust deeds, secured by cash-flowing California real estate, offers a stress free and passive way to incorporate real estate into your portfolio without the hassle of managing properties yourself. The Norris Group offers: • 9% return

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A DVICE

SIMPLE RULES FOR CASH FLOW By Jeb Henley

A client asked, “I am in escrow on a house in Phoenix at $180,000. Is that a good deal?” Jeb Henley is a Real Estate Broker and investor with over 35 years’ experience with both residential and commercial properties. Mr. Henley has been investing, selling and exchanging real estate since 1975 in both California and across the United States. As a Broker, Mr. Henley works with strategic partners and affiliates to locate solid real estate values for his investor clients.

I said “It depends. What is the rent?” “$1,400 is the rent.” I suggested that a better deal was a $180,000 Phoenix property with a $2,600 rent roll. Being an engineer the client did the math and realized I was right. If you live in California, an $180,000 house in a great neighborhood sounds like a good deal, and just might be if you’re planning on living in it. However, if you’re buying investment property, the quality of the investment depends upon one very important metric: cash flow. After rehab, lease-up fees, property taxes, property management fees, etc., how much money will that property bring in each month? Forget the phrase Cash is King. Cash Flow is King, right now. Look for properties where income exceeds expenses by at least 30% —that is a good deal. Real estate prices will appreciate eventually, but without steady income it is harder to hold onto your investment properties. Here are Five Rules for buying in this new cash-flow-centric market across the U.S. 1. Buy in cities with expanding population and strong economics. Phoenix, Houston, Dallas, Reno are adding population and jobs. More jobs create more tenants.

2. Buy properties with employed tenants preferably in management. The higher trained your tenants, the less management problems you will have as an owner. 3. Buy in front of trends. The U.S. natural gas industry will expand for ten more years and is based in Houston, Texas. Mexico and the U.S. are now sharing manufacturing and distribution, Phoenix will grow more than Denver because of this manufacturing trend. 4. Have your funding strategy in place before you go shopping. All cash offers are chosen ahead of offers with financing. If you need financing, it is essential to have a lending relationship established before you start looking for properties. Lending is much more complex than a year ago. Underwriting is more difficult and time consuming than you will expect. Your lender is an essential team member. 5. Single family homes and multi-family properties all share the same attribute—they provide housing. America needs more rental housing. Be more concerned with cash flow than the property type. Contact Jeb Henley at 831-419-4200 jebhenley@gmail.com

Sept. - Nov. 2012 REI VOICE

FE ATURE

How the Collapse of Studebaker Got You an IRA By Jeffrey Hare

Jeffrey B. Hare, Attorney at Law, provides outcome-oriented legal services to real estate investors, commercial and residential property owners, and real estate developers. As a real estate attorney with over 25 years experience in ral estate and business transactions, Mr. Hare provides his clients with a practical, cost-effective approach to solving complex legal issues, including due diligence, contract review, negotiations and selfdirected IRAs.

hat did the closure of a Studebaker plant in 1963 have to do with your right to invest your IRA in real estate? More than you might think! The history of pension plans through the first half of the 20th Century was plain ugly. Many businesses failed, pension plans went bankrupt, and thousands of employees ended up with nothing to show for years of hard work. Today, you have the opportunity to set up your own pension plan – an IRA – and invest it in either traditional or alternative investments, thanks in part to what one author characterized as “The Most Glorious Story of Failure in the Business” – the collapse of a Studebaker plant in South Bend, Indiana, in December, 1963. To appreciate the significance of this event, and how it resulted in the enactment of the Employee Retirement Income Security Act (ERISA) with bipartisan Congressional Support, it is helpful to look at the early part of the 20th Century. The first pension plan was offered by American Express Co. in 1875, and by 1925 there were around 150 private plans. However, by the time of the Great Depression in 1930, most of these plans were either insolvent or bankrupt. Social Security was introduced in 1935, but was designed to provide only a basic level of retirement support; the rest was to be provided by private pension plans. Union negotiators often faced a dilemma: allocate available monies to fund pension plans for employees eligible for retirement, or to pay higher wages to younger workers to keep them on the job. In the end, most of the pension plans were underfunded, and only a small percentage of employees found themselves eligible for a pension after many years of labor. Like many other businesses in the 50’s, Studebaker-Packer had been suffering. The United Auto Workers union was well aware that the pension benefits were in jeopardy.

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The liability of the corporation for pension benefits was over $15 million – a large amount for a relatively small company – and there simply was not enough money. In December, 1963, Studebaker announced that it was closing its plant in South Bend, and laid off approximately 5,000 employees. Knowing that Studebaker would default, the UAW moved quickly to negotiate a settlement. Retirees and retirement-eligible employees over 60 years of age received 100% of their pension benefits, but employees less than 60 years old received only about 15% of their vested pension benefits. Another 2,900 non-vested employees received nothing at all. The collapse of Studebaker and the ensuing failure to provide retirement benefits to thou-

sands of employees became the poster child for pension reform. The UAW seized the moment to promote legislative measures. Over the next ten years, Presidential Committees were formed, various bills were introduced, and studies were conducted. A study conducted in 1971 disclosed that only 5% of employees over a 20-year period actually received pension benefits. To no one’s surprise, Congressional progress was stalled by political infighting between business interests seeking tax advantages and labor interests seeking greater protection of pension benefits. Ultimately, public outrage over Studebaker’s collapse and failure to provide adequate benefits prevailed, and led to calls for a joint labor and tax bill with broad, bipartisan support. The result was the passage of the Employee Retirement Income Security Act of 1974, ERISA, signed into law by President Ford on Labor Day, 1974. Thanks to ERISA and regulations enacted since then, even self-employed individuals can set up a retirement plan, and invest it in real estate, businesses, private placements, and notes, as well as traditional investments such as stocks, bonds and mutual funds. Individuals who have accumulated funds in a qualified retirement plan such as a 401k or similar program can roll their funds over into a self-directed IRA and continue to build wealth and control their retirement plans themselves. Next time you see an old Studebaker, don’t laugh – wave! As with any type of investing, it is important that you do your due diligence to minimize risk and avoid fraudulent schemes. Consult with a legal or tax professional, and make sure you understand the risks involved. Investing your pension funds with a self-directed IRA may not be compatible with your investment objectives. But for those who plan ahead, it can be a very rewarding and productive way to put your retirement funds to work – for you! Contact Jeffrey Hare at 408-279-3555 or Jeff@JeffreyHare.com

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South Bay Meeting at The Domain Hotel in Sunnyvale – Preview Expo Silicon Valley

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Mid-Peninsula Meeting at Crowne Plaza in Foster City - Takeaways: What we learned: Review Expo Silicon Valley

JumpStart Program at The Domain Hotel in Sunnyvale

East Bay Meeting at the Hyatt Place in Dublin - Robert Campbell, California Market Timing Expert: Shares his view on the market

South Bay Meeting at The Domain Hotel in Sunnyvale - Robert Campbell, California Market Timing Expert: Shares his view on the market

Mid-Peninsula Meeting at Crowne Plaza in Foster City

East Bay Meeting at Hyatt Place in Dublin: “Deals Gone Wrong” Panel. Sharing lessons learned from real-life deals gone sideways!

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Dec. 1 - Invitation only SJREI holiday event For More Information or to Register for Any of these Events, Visit: www.SJREI.org

Sept. - Nov. 2012 REI VOICE

FE ATURE

CROSS THE BRIDGE TO Understanding how bridge lenders work can open new doors of opportunity to brokers and their clients By Stephan Kachani From 1999 through 2007, commercial mortgage brokers were seemingly at the top of their game. Many brokers made an impressive amount of money — more than they ever had before. When the bottom fell out of the market in 2007, the banks were no longer lending. Many brokers were out of a job and had no money. By the beginning of 2010, some had lost everything. One lending sector has appeared to do well despite the market turmoil — private bridge lending. Many mortgage brokers and bankers who work with private bridge lenders continue to close loans successfully for their clients. For brokers still seeking a new niche to get through the tough market, understanding how private bridge lenders work may be what you’re looking for. When it comes to bridge lending, some brokers may be skeptical; many equate bridge lending with hard money, which historically has a less-thanfavorable reputation, high interest rates and inflexible terms. Bridge lending isn’t necessarily hard

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money, however. In today’s market, it is easier to find private bridge lenders with reasonable interest rates, albeit generally higher than a 30-year fixed mortgage. Higher rates are to be expected because these are short-term loans that are meant to bridge a financial gap for borrowers. In a sense, many of today’s private bridge lenders are between institutional lenders and hard money. By understanding what private bridge lenders seek from a deal in terms of property types and locations, as well as, documentation, brokers can determine if this type of funding is right for their clients. What private bridge lenders want

In the current market, private bridge lenders typically are looking for

commercial and residential properties in “A” — or prime — locations, such as coastal or high end areas. This is because if a borrower gets into trouble or if the lender has to foreclose, the property’s value more likely will be stable because of its location. Some major property types that private bridge lenders seek include the following: • Multifamily • Real estate owned (REO) properties • Residential • Commercial • Industrial • Retail • Restaurants and hospitality It is important to keep in mind that most private bridge lenders have a niche. Some might focus on the hospitality industry, while others might specialize in industrial properties or gas stations. This is why bridge lenders often are complementary to, more than competitive with, each other and other lending institutions. In addition, they typically seek deals that have a low loan-

to-value ratio (LTV) and that have strong borrowers or sponsors, as well as tenants. Value-added properties also are attractive to private bridge lenders. These properties’ values tend to appreciate after improvements or rehab. In addition, they often will finance REOs, short sales, refinances and distressed assets. Essentially, private bridge lenders want to help borrowers, developers, banks, private funds and other real estate owners reposition their debts to current market value. They may provide lines of credit for REO flippers, as well as “horizontal apartments” — aka houses leased for a long-term hold and underwritten as apartment buildings. Private bridge lenders also may provide capital to broken condo projects and unfinished construction, which helps free up capital in the secondary markets for the unwinding of commercial mortgage-backed securities (CMBS) loans. In today’s market, private bridge lenders often have too much capital and not enough quality loans. This is because they, like traditional lenders, have tight-

FUNDING SUCCESS ened their underwriting guidelines in the past two to three years. In this time, the governmentsponsored enterprises (GSEs) under conservatorship — Fannie Mae and Freddie Mac — and the Federal Housing Administration (FHA) have funded most loans while banks focused on deposits. Many banks, life-insurance companies, private lenders, institutional lenders, hedge funds and new lenders are now much more active in funding loans. The GSEs and the FHA also are still active. The CMBS market, however, has taken a back seat because of the economy and the real estate market. Investors, bridge lenders and other lenders are waiting for the loans that were supposed to come due, REOs that were supposed to be sold, construction loans that were coming due, shadow inventory to clear, and all the toxic assets to come to market — many of which have been extended because regulators are trying to figure out a smooth process to avoid complete chaos. Documentation is Key

Because private bridge lenders are asset-based lenders, typically providing 50 percent to 60 percent

LTVs, they can allow junior financing for people who need leverage with minimal conditions. This allows brokers to close loans within one to two weeks. Furthermore, a bridge lender often can get you a letter of intent within 48 hours, compared to traditional lenders’ typical one to two weeks. Compared to hard-money lenders, bridge lenders typically have stricter documentation requirements. This is because bridge lenders also look at the borrowers and don’t do loans for people with bad credit, whereas hard-money lenders tend to look only at the assets. For example, if a bridge lender sees a 500 FICO score, it likely won’t make the loan. A hard-money lender, on the other hand, is more likely to make that loan. Bridge lenders tend to have a more-institutional look and feel and make prudent loans based on location and not on fees. Bridge lenders have changed the reputation of private lending. This is reflected in their documentation and their fiduciary responsibilities toward mortgage lenders and brokers. The reason bridge lending has become a standard in lending is be-

cause of the capital crisis and what’s going on in the economy today. The bridge-lending platform allows an exit strategy to come from an institutional loan such as from banks, mortgage bankers, life-insurance companies, CMBS lenders and other institutional lenders. Bridge lending helps the secondary market by providing additional liquidity where there may be short supply. This helps clear the market of inventory by providing transactional capital. Banks are providing limited capital, so private funds are helping with REOs and properties they discount to current borrowers. In return, the banks get a happy client, the bridge lender becomes the bank’s best friend, the market is clear, and buyers and sellers have a meeting of the minds. To get back to free-market activity and lending, as well as to help clients fund loans to bridge their financial gaps, commercial mortgage brokers would be wise to take advantage of the opportunities private bridge lenders offer. Contact Staphan Kachani at 310-826-2888 or stephan@loneoakfund.com

Stephan Kachani is Vice President of Sales and Marketing for Lone Oak Fund, LLC, one of the largest and fastest growing private bridge lenders in California, with over 500 members in the fund. Since Mr. Kachani joined the firm in 2003, he become an investor in the fund, an expert in private bridge lending, and has been instrumental in funding over $1.5 Billion in bridge loans.

Sept. - Nov. 2012 REI VOICE

B ASICS

FIVE-YEAR PLAN: Your Gateway to the Future Part One of a Two Part Series By Jason Hartman

Jason Hartman has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. His company, Platinum Properties Investor Network, Inc. helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide.

One of the questions that many young people grow tired of hearing is: What do you plan to be doing in five years? The reason that people ask it so frequently is because when you are young, it is easy to become distracted by dayto-day events, and hard to keep your focus on long-term goals. When school becomes boring and monotonous, it is important to visualize the future that will be realized if we are successful in our education and training. When working through a difficult project, it is useful to think about the long-term prospects for our career. This places the current difficulties in context as a ‘blip’ in the bigger picture. Unfortunately, many of us stop thinking in terms of a five-year plan once we move into a “grown up” career. This leads to becoming bogged down in the daily ritual of work and life. The future feels far away, and our present concerns begin to crowd out our thoughts of future investments or achievements. As we move further down our current path, it becomes increasingly difficult to shift focus to a new paradigm that may offer even greater rewards. It is critically important to consistently create a 5-year goal for your career that articulates the key milestones that you seek to achieve. The type of plan that we create will be highly influenced by where we are in our personal investing career. We like to think of this as the “Entry Point” for your 5-year plan. There are three entry points in particular that carry significantly different priorities. These entry points are the new investor, the growing investor, and the short path to retirement.

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The New Investor

As a new investor, one of the most important things to do is take action. However, there is another very important thing to consider for people who are just beginning their investing career. This factor is that early returns have a tremendous impact on long-term compounded wealth. In this way, capturing a higher rate of return will make a huge difference in your long-term investing career. The Growing Investor

The growing investor finds himself in a slightly different situation from the beginning investor. As you gain momentum in your investing career, it becomes increasingly important to build stability into your portfolio. The importance of stability comes from the fact that it allows you to compound your investments at a steadier pace and avoid the destructive effect of major contractions. The Short Path to Retirement

As investors near retirement, the importance of stability becomes critical in nature. Losses reduce our base of investment capital, and the reduced capital must generate a rate of return that exceeds the total loss in order to break even. We separate the levels of loss and recovery for investors into three designations: the green zone, the yellow zone, and the red zone.

The Green Zone occurs when your investment portfolio incurs a loss in the range of zero to negative 20%. This represents a bad year, but is relatively easy to offset because the percentage that must be gained is not significantly disconnected from the percentage that was lost. The Yellow Zone occurs when your investment portfolio incurs a loss in the negative 30% to negative 60% range. This represents a major hit to your wealth that will require a very long recovery time. Investors nearing retirement cannot well afford to absorb many years in the yellow zone, since it requires very high future returns in order for the losses to be recovered. The Red Zone occurs when your investment portfolio incurs a loss between negative 70% and negative 99%. This is a critical impact to your wealth that is frequently impossible to fully offset. For example, if your portfolio loses 90% of its value, the remaining capital must grow by 900% to simply break even with where it previously was. For investors nearing retirement, it is absolutely critical to avoid any years in the Red Zone. Conclusion

As we have seen, the entry point for your investing career will have a dramatic impact on the type of investments you pursue, and the relative value of returns vs. stability. As you are constructing your five-year plan, begin by taking an honest assessment of your point of entry, and determine to what degree you need to prioritize stability vs. earning higher returns. In the next part of this series, we will discuss constructing your detailed five-year plan, building a holistic portfolio of investments, and discussing the characteristics of different investments that can be used to populate your portfolio Action Item: Take an honest inventory of where you are in your investing career, and evaluate it against the different entry point stages. This assessment will place you in an advantageous position to determine what actions should be taken to position your portfolio for long-term success. Contact Jason Hartman at 714-820-4200 www.JasonHartman.com

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Sept. - Nov. 2012 REI VOICE

FE ATURE

HOW INVESTOR TYPE INFLUENCE By Kathy Fettke Companies have been using personality testing for years to determine the right position for their employees. Why not use those same tools to understand what kind of investor you are? Try this. Answer these two simple questions: Would you consider yourself more formal or more casual? And would you say you tend to take charge of situations or “go-withthe-flow?” Write those two answers down, and then look below for what may describe your investment personality. Formal & Go-with-the-Flow?

When it comes to investing, or making any decision for that matter, “Formal-Flow-Withs” tend to use a very calculated approach. They are highly intelligent and love research, data, and developing systems. They do not want to make a mistake or take a loss, so they analyze every possible angle before taking action. Let’s refer to them as the proverbial Tortoise. The Tortoise-type can achieve great success by taking calculated baby steps in the direction of their dreams. In real estate, they are best suited for the types of deals that allow time for research. They should pick just one type of investment and learn it thoroughly. For example, commercial or multi-family property can be tied up

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in contract for months, allowing the buyer to research piles of paperwork. Buy & hold strategies are also a fit because the Tortoise can buy one rental property per year, allowing plenty of time to choose the right home. On the other hand, flipping properties could be too stressful because decisions need to be made quickly. Tortoises don’t like being pressured to make quick decisions before they’ve finished their analysis. They will slam on the breaks if they think things are moving too fast and hide out in their shell for safety. If you are in relationship with a Tortoise, be sure to give them lots of data to devour, and plenty of time to digest it. And since opposites attract, most Tortoises will find themselves in relationship with a Mustang. Casual & Take Charge?

You are probably high energy, dynamic, fun-loving and friendly. Yes, you are like the proverbial Hare, but since that story ends poorly for you, let’s be more creative and call you a Mustang. Mustangs are fast and are highly responsive. If they get off-track, they just turn the wheel and readjust. Mustangs aren’t afraid to jump into things. They aren’t worried about making mistakes because they like to laugh, even if its at themselves. These are the entrepreneurs of the world. They feel life has been well-lived if they’ve

tried lots of things, and don’t mind having a few dents to show it. They are highly creative people whose ideas are nearly impossible for others to keep up with. Mustangs don’t like to analyze. It literally hurts their heads, so instead, they go with the gut. Sometimes they win and sometimes they lose, but they don’t care because they’re happy anywhere. What matters most is that they played the game. A Mustang could do very well flipping homes, raising money, or selling pretty much anything. They will be most successful if they are supported by Tortoises who help slow them down. Even fast cars need to have brakes. This can be a wonderful partnership as long as the Mustang is willing to stop at yellow and red lights, and as long as the Tortoise is willing to get off the brakes when it’s green. If you’re investing with a Mustang, you must require that their plans be closely analyzed by a Tortoise. While their intentions may be good, they may jump into things they don’t understand. That may be OK for them but probably not for you. Formal & controlling?

You probably like to be in charge so that things go your way. Let’s call you the S t e a m r o l l e r. A Steamroller is mainly concerned about the bottomline results. Self-motivated and disciplined, the Steamroller will go for the goal, and

R PERSONALITY CES YOUR DEALS won’t let anything get in the way. Steamrollers are powerful enough to set up a firm foundation. That’s why they are often found in positions of power. If you are investing with a Steamroller, they will likely run a tight ship. However, if they are too focused on the goal, they might hurt the people around them without knowing it. Like most things, real estate is a relationship-based business. An outof-control Steamroller can destroy relationships by being too demanding, domineering, or impatient. Good jobs for a Steamroller would be managing contractors, property managers, and real estate agents. If they want more productivity out of their support team, they need to remember that a little kindness goes a long way. If you’re a Steamroller, start your requests with a compliment. Look for the good in others, and you will find it. When you offer compassion and kindness to your list of abilities, you may be surprised that your supporters will become your most loyal Fans. Casual & Go-with-the-Flow?

You are loyal, dedicated and committed. Relationships are all that really matter to you. You love people so much that you can easily become a #1 Fan. Fans value harmony, so they sometimes become too nice just to keep the peace. That can be

a problem for investors who might need to fire a property manager who isn’t doing their job. A Fan might even be willing to buy a property or investment they don’t really want just because they don’t want to offend anyone by saying, “No.” That’s why Fans are usually attracted to Steamrollers who will say “No” for them. This can work out well if the two play “good cop/ bad cop.” Fans are usually highly intuitive because they are so sensitive, so Steamrollers should stop and listen to them. Tips for Fans — Become our own fan! You may find that when you serve yourself first, just like the flight attendants tell you to do with the air masks, you can give more to others. Make a list of your values and be loyal and dedicated to them first and foremost. While we might identify strongly with one of these personality types, we can create more balance in life if we develop all of them. For example, a Mustang can gain tremendously from slowing down and becoming more analytical, like the Tortoise. And a Tortoise can gain from speeding up a bit and taking more risks. Consider developing one or two skills from the personality type opposite of yours, and see what happens!

Kathy Fettke is the CEO of Real Wealth Network. She is an active real estate investor, licensed Realtor, certified coach, and former mortgage broker. She founded Real Wealth Network in 2003 to help investors avoid “the scammers” and get the right price, on the best income properties, in the strongest markets. Ms. Fettke focuses on helping members grow their real estate portfolios through creative finance and planning.

Contact Kathy Fettke at info@realwealthnetwork .com 925 -280 -2830

Sept. - Nov. 2012 REI VOICE

B ASICS

PROTECT YOUR REAL ESTATE WITH AN FLP By Nancy A. Chillag

Nancy Chillag is an attorney, CPA and real estate broker. She helps her clients protect their family, businesses and real estate.

Are you worried about being sued? Well, you certainly should be. It is reported that there are 18 million lawsuits in the United States each year with many lawsuits having multiple defendants. If you own your own business or are in a risky profession (doctor, contractor, developer) it is highly likely that you will be involved in a lawsuit. What can you do about it? You can create what many consider to be the premiere protection entity for real estate, the Family Limited Partnership, also known as an FLP. What is an FLP?

An FLP is one of the most popular estate tax and asset protection planning devices available. Once the FLP is properly formed, you transfer your investment real estate into the FLP in return for both general and limited partnership interests. General Partnership Interest. Generally, you only receive 2% of the total partnership interests in the form of general partnership interests. Even though it is a small percentage of the overall interests, the general partner controls the Partnership. That means that you control 100% of the decision making for the FLP’s activities. Limited Partnership Interests. You receive the remaining 98% of the FLP in the form of limited partnership interests. Limited partners have very limited rights in partnership activities. While the general partners may not treat a limited partner unfairly, a limited partner essentially has no control or rights. You are now the proud owner of your very own FLP and in total control. Now what happens? You give your children some of your limited partnership interests. That means that the partnership has partners other than just you, which is what provides the asset protection.

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Enter the Creditor

Estate Tax Planning

If you are successfully sued, all the creditor receives is what is called a charging order. A charging order is a judgment against the partner which requires that any distribution that would otherwise be made to the debtor partner must instead be paid to the creditor. If there is no distribution, the creditor gets nothing. What’s even better is that the creditor has no power to interfere in partnership matters and cannot control the underlying real estate, provided the FLP is set up correctly. What Does the Creditor Do? Since the charging order provides so little leverage, creditors frequently settle the claim for less than face value of their claim. While you might have to pay something, it is unlikely that you would ever pay the entire debt.

In addition to asset protection, the FLP is used to shift assets out of your estate while still maintaining control of them. You can currently shift income to your children that can be taxed at lower rates and you can avoid estate tax on the assets that are successfully shifted. With estate taxes reaching nearly 50%, an FLP can truly help you preserve your legacy. Summary

A properly designed and operated FLP is a great weapon against a creditor and the IRS. The sooner you create your own FLP, the safer your family is from the creditor’s clutches and the tax man. Contact Nancy Chillag at 650.321.6796 or www.chillag.com

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Find out how you can take advantage of a Real Estate IRA at www.theentrustgroup.com. Sept. - Nov. 2012 REI VOICE

A Powerhouse Lineup of Top Industry Experts Converge for The State of Real Estate 2012 On October 19, 2012, join The Norris Group and our panel of industry experts at the Nixon Library in Yorba Linda, California for another awardwinning evening of ﬁne dining, superb networking, and unparalled conversation. You’ll never see these panelists on stage together again.

THE PANEL

Will the national robo-signing settlement, the threat of loan eminent domain, and deep Wall Street pockets be a passing fancy or change real estate forever? Get the inside scoop on how these industry thought leaders are adjusting, forecasting, and navigating this market for success. Visit www.isurvivedrealestate.com to ﬁnd out how to attend with ZERO money out of pocket. Bruce Norris President The Norris Group E.J. Burke President Elect Mortgage Bankers Association Sara Stephens President Appraisal Institute Sean O’Toole President Foreclosure Radar Mark Palim Director of Economics Fannie Mae Eric Janszen Economic & Financial Analyst of iTulip Gary Thomas President Elect National Assoc. of REALTORS Rick Sharga Executive VP Carrington Holding Co., LLC

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www.ISurvivedRealEstate.com 24 REI VOICE Sept. - Nov. 2012

FE ATURE

TOOLS THAT RULE By Aaron Norris One of the things I love about working with nonprofits is it forces me to be creative with resources (or lack thereof). There’s typically a lack of time, treasure AND talent to properly market the extraordinary job these nonprofits do every day. Sound familiar? If you’re a sole proprietor, I bet it does. Right now, I’m working on a project for the City of Riverside called Give BIG Riverside. It will end up being a 24-hour online giving day November 13. It hopes to attract 200+ local nonprofits to join forces and leverage all channels of communication to promote local causes and raise muchneeded funds for local programming. This first-time event is huge for our community and nothing has ever been attempted this big in the nonprofit space. The article today will focus on what the steering committee uses to coordinate marketing and get this project off the ground. As I write this, we’re two weeks away from our big launch party, where some of the biggest stakeholders in our community will be giving their blessing for the event. I hope to give you a few ideas on how to leverage low cost or free technology to work with others inside and outside your organization. Drop Box. Drop Box allows you to create a folder and share its contents. You can also access the files on multiple machines attached to your account. It doesn’t store your files in the cloud. Instead, it synchs files to anyone’s computer that has access to the folder. For instance, I started this article at The Norris Group office and saved it to my Drop Box folder. When I got home, I started my computer and the Word file was synced and ready for me to work on. For Give BIG Riverside, it has allowed a steering committee to create, collaborate, and share the correct documents and presentations. It’s also free up to 20GB. If you invite people and they register for the program, you get bonus storage. I have yet to pay for storage with Drop Box.

Google Docs. I’ve been using Google Docs for years now. Google is upgrading to Google Drive, which very much resembles Drop Box with one major difference: Google has its own free word processing, spreadsheet, presentation, and form tools. It’s not as robust as Microsoft Office, but hey, it’s free! My favorite feature is being able to collaborate with others on the same document at the same time. Right now, the marketing side of our steering committee is using Google Docs to share things like usernames and passwords for our social media and e-marketing accounts. Google offers a number of small business tools and Google Docs is just one. Google Analytics. As a marketer, it’s critical I understand how people are finding my site, why they visit, what devices they consume information on, who refers traffic, and which events and communications drive the most traffic. Google Analytics is a small snippet of code your webmaster installs on your website. It’s free, and it gives you access to all of the aforementioned data. Google Analytics has come a long way over the past two years, and it has absolutely changed how I approach content and the web. For Give BIG Riverside, our effort ends November 13. At that time, I will be able to see which media partners, sponsors, and marketing channels drove the most traffic to our site. That will be most valuable for next year planning. Trello. In a nutshell, Trello is an online project management platform. Trello utilizes boards, lists and cards to organize your tasks and collaborations. For instance, I have a board titled “Give BIG Riverside” under my profile. I click on the board and it opens to a bulletin board of lists including my “Launch Event” list. Here I have different task cards set up with do-to lists, due dates, and I can invite people from outside to collaborate on the entire board or specific cards. It even has a phone app so I can check things off on the go. It’s currently free and I’m very excited to see where this goes over the next few years. For us to-do list enthusiasts, this is big.

Mailchimp. Last, but certainly not least, Mailchimp has been my go-to email marketing tool of choice for about three years. It really isn’t all that different from Constant Contact or other email software, but Mailchimp has done a tremendous job on user interface and ease of use. When I work with nonprofits and small businesses, I’ve found adoption rate has been a little better using Mailchimp. It also works with sites like EventBrite, SalesForce, and shopping carts, which allows further integration. If you’re a small business that still blasts your customers and prospects via an AOL address or your business account by copying everyone in your contacts ... stop it! It’s a great way to ensure you get flagged as spam and never reach any of your intended audience. If you’re emailing more than 30 people at a time for general marketing purposes, it’s time to upgrade to something a little more sophisticated that also keeps you compliant with the CAN-SPAM national standards for the sending of commercial e-mail. Mailchimp does most of the work for you once it’s set up. Even better, it’s free if you have fewer than 2,000 contacts and send less than 12,000 emails per month. Mailchimp also allows you to create sign up forms that integrate with your website. These let people easily opt-in to receive emails from you, or unsubscribe if they want to stop getting your messages (a CAN-SPAM must). Most importantly, the admin page lets you see if people are opening your emails and how you compare to open rates in your industry. That feedback alone is incredibly insightful. Mailchimp also provides online training and is constantly rolling out new features and collaborations. These are a few of my favorite tools that I’m using right now with The Norris Group and other projects to coordinate and collaborate. Have an app or site you can’t live without? I’d love to hear from you.

Aaron Norris is Vice President of the Norris Group where he is responsible for business development and production of TNG’s award winning radio show, events, and educational seminars. Mr. Norris is also principal at Palisoul, Norris, + Conroy, a marketing and strategy team based in Southern California and hosts the marketing and business podcast, The Cocktail Party Statement.

Contact Aaron Norris at @aaronnorris on Twitter

Sept. - Nov. 2012 REI VOICE

Looking For That Elusive Combination Of Price & Service? STOP THE NEGATIVE CASH FLOW ON THAT RENTAL PROPERTY? Settling Debt with Dignity Welcome To Partners Mortgage Partners Mortgage is one of the most respected mortgage companies in the industry today. In business for almost 25 years, and with billions in loan production under our belt, we are recognized as a premier lender. We are able to offer great rates and extremely beneficial terms to our clients. At Partners Mortgage, we attribute our success to a common philosophy & passion shared by our entire team of professionals. We are dedicated to providing the very best experience for our clients - before, during, and after their transaction. To that end, our unique brand of customer care is designed to last a lifetime. As Partners Mortgage continues to grow and thrive in this unique and challenging market place, it is important for you to understand that I will never lose sight of the things that are most important to my clients and business partners: I put you first, I listen to your needs, and I make sure you get the level of service you deserve!

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26 REI VOICE Sept. - Nov. 2012

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28 REI VOICE Sept. - Nov. 2012

Investor Resources Accounting Michael Gray, CPA 408-918-3162 mgray@taxtrimmers.com www.realestateinvestingtax.com Richard Smith, Enrolled Agent 408-446-5551 rsmithtax@aol.com www.richardsmithtax.com

Attorneys Chillag & Associates, P.C. Nancy A. Chillag 650-321-6796 nancy@chillag.com www.chillag.com Jeffrey B. Hare, APC 408-279-3555 jeff@jeffreyhare.com www.jeffreyhare.com

Banking Apartment Bank 877-442-4003 Apartmentcustomer service@apartmentbank.com www.apartmentbank.com

Home Improvement HD Suppy Remodel and Repair Lillian Duong 408- 330-0934 Lillian.Duong@hdsupply.com www.hdsrr.com

Insurance Brighton Financial Group Vernon Williams 408-931-6582 vwilliams@farmersagent.com www.farmersagent. com/vwilliams

IRA Accuplan Benefits Services Lamarr Baxter 916-708-0235 lamarrbaxter@accuplan.net www.accuplan.net The Entrust Group Gary Kowalski 916-509-7271 gkowalski@theentrustgroup.com www.theentrustgroup.com IRA Services Trust Company Michael McNair 650-593-2221 www.iraservices.com

Mortgage Brokers Joe Cucchiara Mortgage Planner/ Branch Manager 408-342-3755 jcucchiara@partnersmortgage.com Michael Ryan, Mortgage Broker and Banker DRE License # 01090891 NMLS # 295351 408-986-1798 mike@michael-ryan.com

Private Financing Socotra Capital Jeff Simmons 916-617-2047 jeff@socotracapital.com www.socotracapital.com

Property Services Thrasher Termite & Pest Control Inc. Janet Thrasher 408-354-9944 info@thrashertermite.com www.thrashertermite.com

Real Estate Agents CSR Real Estate Service Stuart Baeriswyl DRE License # 01807909 408-373-6766 stuart@csrteam.com www.customerservicereality.com

Real Estate Investments Capital Blueprints Kevin Kaczmarek kevin@capitalblueprints.com www.capitalblueprints.com Equity Transitions Jeb T. Henley DRE License # 00608973 831-419-4200 jebhenley@gmail.com www.equitytransitions.com Jason Hartman Platinum Properties Investor Network 714-820-4200 jason@jasonhartman.com www.jasonhartman.com Listed By Stephan Piscano 530-668 4040 info@listedby.com www.listedby.com

Lone Oak Fund Stephan Kachani 310.826.2888 Stephan@loneoakfund.com www.loneoakfund.com Memphis Invest Chris Clothier 877-773-9998 info@memphisinvest.com www.memphisinvest.com

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Real Estate Structured Sales Kevin Kaaha 408-821- 4131 ressalekk@yahoo.com www.ressale.com RealWealth Network Kathy Fettke 888-RW-NETWORK info@realwealthnetwork.com www.realwealthnetwork.com Summit Assets Group Lori Greymont 888-298-0652 lori@summitassetsgroup.com www.summitassetsgroup.com The Norris Group Bruce Norris DRE # 01219911 951-780-5856 info@thenorrisgroup.com www.thenorrisgroup.com Wilson Investment Properties Tom Wilson 408-867-1867 tomkwilson@earthlink.net www.tomwilsonproperties.com

Short Sales Nick of Time Results Team Natalie Knowlton Matt Cassell 831-402-5107 natalie@calssp.com mattcossell@gmail.com www.nickoftimeresultsteam.com

Training & Education Real Estate 360 Joe Cucchiara KDOW 1220 AM www.re360radio.com

Other Services Wellness 100% Chiropractic Dr. Josh Ben 408-340-5055 www.100percentchiropractic.com Marketing / Internet Susan Hare Marketing Susan Hare 408-391-8068 susan@susanharemarketing.com www.susanharemarketing.com

GENERAL ANNOUNCEMENT Membership interests in DFW 2012-101, LLC, a California Limited Liability Company, are being offered to California investors who would like to take advantage of opportunities to invest in residential incomeproducing properties in the Dallas-Ft. Worth, Texas area. DFW 2012-101, LLC will use investor funds to purchase investment properties without financing, thereby maximizing the potential for return on investment. Investments are available in amounts ranging from $50,000 to $500,000. This opportunity is being offered by California Real Estate Broker Anthony F. Earle (DRE No. 01766998). For more complete information about Anthony F. Earle and DFW 2012101, LLC, please email: DFWLLC@yahoo.com or call: 800.613.4760. Investors must meet the following suitability standards: (a) Have a net worth of $1,000,000, exclusive of the investor’s primary residence, or (b) Have income in excess of $200,000 in each of the two most recent years, or joint income with the investor’s spouse in excess of $300,000 in each of those years, and a reasonable expectation of reaching that same income level in the current year; or (c) Be a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of this investment; or (d) Be an entity in which all of the equity owners are accredited investors. No money of other consideration is being solicited or will be accepted. An indication of interest made by a prospective purchaser involves no obligation or commitment of any kind. No sales will be made or commitment to purchase will be accepted until five business days after delivery of the disclosure statement and subscription information to the prospective purchaser in accordance with the requirements of CAL. CORP. CODE § 25102(n).

Sept. - Nov. 2012 REI VOICE

Tuigim,* Ger A

by Geraldine Barry

ccording to TechCrunch.com, Silicon Valley’s startup ecosystem is currently 3-times bigger than New York City, 4.5-times bigger than London, 12.5-times bigger than Berlin, and 38-times larger than Boulder. Proportionally, the Silicon Valley ecosystem has 22% more companies in the “scale stage” than in NYC and 54% more than in London. In the Efficiency and Scale startup stages, Silicon Valley startups create 11 percent more jobs than NYC startups and 38 percent more jobs than London startups. While that data is impressive, those cold facts alone don’t explain WHY Silicon Valley is the entrepreneurial capital of the world for technology and myriad other businesses, like mine. This is a place where innovation thrives and people can explore the business opportunities like no other place on earth. What I love about Silicon Valley is that success is embraced and failure expected, because every successful journey includes both ups and downs. I have struck up conversations in coffee shops with spectacularly bright business people who share their expertise. We exchange referrals without hesitation, provide unexpected, generous sponsorships for community events, or make a phone call to create a connection that turns out to be the key to something that one of us is working on. I never cease to be energized by the generosity, the sharing of ideas, and the flow of information that is commonplace here...yes, this is a thriving entrepreneurial haven. And it is awash in wealth. What’s the end game for startups? Go public or get purchased (or go

belly-up, though this is never part of the plan). Going public or getting bought out financially rewards the dedication and sacrifices made by entrepreneurial individuals. Which leads to, what are the tech-rich doing with their rewards (other than purchasing multi-million dollar personal residences)? Many plow their resources into a new venture and join the ranks of serial-entrepreneurs like Jim Clark, Elon Musk, Jack Dorsey, Marc Andreessen, and others. Some take an early retirement. The real answer is no one really knows what tech-rich individuals are investing in although there appears to be a stock market bias among people who gained their wealth through the stock market. My anecdotal data, as president of SJREI and a serial entrepreneur myself, indicates that a growing number of tech-rich are diversifying their portfolios to include real estate. (Engineers hate this kind of squishy data—sorry , my friends.) Of our membership, fully two thirds either currently work in technology or have worked in technology. And many of these people are on their way to becoming real estate entrepreneurs. Let me count the ways: hard-money lending, turnkey products, syndicates, notes, commercial development, and—to bring things full circle—developers of software and services for real estate! See why this Irish lass loves Silicon Valley? The energy, the drive, the intelligence and the ingenuity are what make this area exciting. It’s a place full of opportunity that pushes all of us entrepreneurs to new heights. An dtuigeann tú?

Tuigim (pronounced tigg-im) is the traditional Gaelic answer to the question, “An dtuigeann tú?” (Do you understand me?)” Tuigim means “I understand,” “I got it,” “I follow,” “I’m with you…,” and is the answer Geraldine Barry, native of the Emerald Isle, most loves to hear.

Geraldine Barry is founder and president of SJREI Association, the premier educational and networking association for real estate investors in the Bay area. Under Geraldine’s leadership SJREI has grown from a half-dozen investors to a vibrant three chapter organization with over 400 investors attending monthly meetings. SJREI won the Award for Excellence from the National REIA (Real Estate Investors Association) in several categories in 2010. As an avid investor herself, Geraldine has interviewed multiple real estate pros, many of whom have been guests of SJREI. In addition to leading SJREI, Geraldine is a regular guest on the nationally broadcasted NTDTV, publisher of the award winning publication REI Voice Magazine, and producer of the much acclaimed annual Real Estate Investment Expo Silicon Valley. As a serial entrepreneur, Geraldine is also a principal in Miles/Barry Contract Furniture serving corporations in the Silicon Valley. Additionally, she coaches business principals and CEO’s, guiding them in becoming more productive in less time in their leadership positions, helping them identify their core strengths, focusing on those to achieve their vision, and delegating effectively. Geraldine resides in Silicon Valley, and is the proud mother of Colin & Claire, her two children.

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REI VOICE Dec. - Jan. 2012