Ca$hFlow EXPRESS
Passive Income for Today & Tomorrow
Vol. 2, No. 4, 2015
PRICELESS
Living the American Dream Anthony Patrick and His Team Profit in So Cal’s Inland Empire
S
By Lori Peebles, staff writer
tep into the world of Anthony Patrick, the CEO of New Harvest Ventures, LLC. He’s a real estate investor who loves sharing his wealth-building secrets with everyone he meets. Patrick believes education is an important path towards fulfilling the American Dream; and he’s doing his part to help improve people’s lives by offering his knowledge to all who seek it. Recently, we stepped into Anthony Patrick’s latest wealth-building three-day seminar. Our team exited the program and bus tour inspired and eager to implement the techniques we learned. It is evident from his easy-manner and frankness that Anthony Patrick truly enjoys what he does. He says he loves to motivate people and give them the knowledge to start their own path towards success. After attending his bootcamp, his students are enthusiastic about also getting into the business of scooping up neglected houses, which nobody seems to want, fixing them up, and then selling them for a huge profit. What a great way to clean up neighborhoods and build wealth at the same time! It’s truly the American Dream for Patrick, his wife, Mindy, and their team of business partners. Over the years, Anthony Patrick from Rancho Cucamonga, Calif., and his partner, Richard Endrosolin from Ventura, Calif., have mastered the art of flipping houses. It certainly wasn’t easy at first and they both made costly mistakes along the way, but now they are reaping the financial rewards of staying in the game. Patrick admits real estate gets him excited. He says the entire transaction process is enjoyable. “This business is truly my passion. I feel blessed that I can do it and that real estate is my life’s work.” Because Patrick went through the
countless trials and errors of learning the business, he says he has a lot of empathy for his students. “I’ve been through everything and anything you can imagine when it comes to flipping a home,” he explains. He knows about the rewards and the pitfalls too. During his three-day bootcamp, Anthony takes investors from around the country on a tour of his local area, to see the deals he has done, and those that he is actively rehabbing. He works with them side by side, explaining his methods and reasons for doing things the way he does. “There’s a logic to every step in flipping houses,” Patrick says. Continued on pg. 14
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CONTENTS
pg. 21 pg. 12 Colony American Finance wants to Jumpstart Your SFR Portfolio.
Alia Ott and her partner, Terri Garner, are bullish about investing in self storage. Read about Alia’s journey in this fascinating niche.
pg. 18
1
The American Dream Is Realized
4
Publisher’s Letter - Due Diligence
6
From Rehabbing Homes to Hotels
10 It’s Time to Self Direct Your Future
pg. 6
12 Colony American Finance Wants to Jumpstart Your SFR Portfolio 15 Lending Money with Land Trusts 18 Sensei’s Secrets to Tripling Profits 20 The Dangers of Turn-Key Rentals 21 Cashflow without Tenants or Toilets 22 Can’t Find Leads? Go with Probate!
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Or call: 805.693.1497 CashFlow Express • Page 3
Photographs above: Step inside Stacee Nelson’s hotel rehab in Texas.
PRIVATE MONEY LOANS
Beach, Seattle, Atlanta and even New York City just this year alone! It’s a dream come true, and we plan on hosting many more expos and mixers around the nation, including upcoming events in Florida, Missouri, Ohio, and Texas. Our largest expo has attracted up to 300 people and our smaller events EXPRESS regularly unite an exclusive group of veteran real estate leaders. We plan on expanding our events even further. My goals are lofty: I envision some day EXPRESS hosting international real estate conferences — this is precisely how much I enjoy and believe in the power of networking. Passive Income for Today & Tomorrow FREE Contents - 2014 It is a pleasure and privilege to meet the readers of our numerous publicaLearn How to Create Stock Investors Manifest a tions. We produce our quarterly glossy Realty411 magazine, with Real Estate Passive Income for Today & Tomorrow 12 & 18 AttractMindset PrivateFREE Lenders 1 FirstKey MarketLending WealthOffers TodayOptions “Cashflow” CONTENTS FALL 2015 Wealth as an alternate cover. We have separate distribution and websites for Manifest a Learn How to Create Stock Investors 13 Investing in Texas Land 4 Publisher’s Welcome Note each. The 100-page glossy us is available hanks for joining for a at no charge at selected grocery stores, Market Wealth Today “Cashflow” Mindset FOUNDER & EDITOR PRESIDENT 15 The Investment Lab is Open new edition of Cashflow 5 The Millionaire Maker Returns and will soon be available in bookstores across the country. Linda Pliagas Nikolaos K. Pliagas Express. I developed thisMonthly, a digital and interactive issue speNext, we have our REI Wealth 16 Incorporate a Business 6 Management Tips by Pam Texas info@realty411guide.com PRODUCTION newspaper a couple yearsenjoyment. after cifically designed for of online It was created for the Apple NewsEDITORIAL STAFF Advice Lori Peebles 21 & 23 CashFlow Resources 7 Out-of-State Investment the onset of our glossy magazine, stand by Noland Araracap, a San Diego-based technology enthusiast. Next, of Tim Houghten Augusto Meneses Realty411, and our alternate cov24 Scenes from Our Expos 9 Rehab with Andrew Cordle course, is our newspaper CashFlow Express, which is directly distributed at Stephanie Mojica PUBLISHED BY er Real Estate Wealth, because of ourlove live for expos and mixers, and at selected real estate events that we support 26 HowRealty411 to AvoidMagazine Capital Gains LoriZinc Peebles 10 Q-n-A with Financial my newspapers. and sponsor the country. COPY EDITOR EVENTS & EXPOS The plainaround newsprint paper was For the rest of the year, in addition to expanding our calendar of live extrack to wealth, which can often Morgan Schaal Colby Sorrenson what lured me into pursuing a times to utter disaster. pos, weinwill continue toI’ve expand our media and lead marketing company with spePHOTOGRAPHER WEBSITE degree journalism. always PUBLISHED BY FOUNDER Recently, I ran into an our ac- first Realty411 cial print supplements and new We just completed loved the way newspapers lookonline websites. John Pliagas DeCindis Maria Victoria Linda ADVERTISING pliagas@msn.com quaintance at an event; she a and feel so thought it would be Private Money 411 Special Supplement and are starting the second! It is is our 805.693.1497 EDITORIAL STAFF GROW YOUR BUSINESS WITH US! very active investor in Southern creative one as a spe- resource of information for investors. In EVENTS & EXPOS mission to to develop be an all-encompassing Hannah Ash FOR ADVERTISING INFORMATION: Teri Burke California. that any she Lori Peebles cial gift for our guests who attend closing, I’d like to add that if we can assist you in anyShe way,disclosed or if you have Suzanne Lilly Stephanie Mojica had a bad experience at one of the our expos around the country. 805.693.1497 Lawrence Ruano feedback on our publications or events, please let me know. Your suggestions COPY EDITOR local real estate investor clubs, one That’s really how it all develWe provide FREE Copies for your Meetup WEBSITE Group or REIA Lori Peebles and comments are always welcomed. Maria Victoria which is no longer in operation. PHOTOGRAPHER oped; and we’ve been producing TO REACH US, CALL: John DeCindis If you take away anything from Cashflow Express for a number PRODUCTION 310.499.9545 Personal Finance News from the Publishers of Realty411 Magazine - www.Realty411Guide.com this publication, please take my of years now. It’s wonderful to Lori Peebles We provide complimentary copies Augusto Meneses Contact us: 310.499.9545 or info@realty411guide.com for your CashFlow group or REIA advice: Spend time researching see ideas and aspirations turn CashFlow Express is published in Santa Barbara County by Realty411. © Copyright 2015. All Rights Personal Finance News from the Publishers of Realty411 Magazine - www.Realty411Guide.com Reserved. Express Reproduction without permission is strictly prohibited. The opinions expressed by writers and CashFlow is published in Santa Barbara County by Realty411. © Copyright 2013. All Rights peopleRegular and companies before you into reality. I feel veryBe fortunate Social and Receive Updates from Me on: Reserved. without is strictly prohibited. opinions by real writers and columnistsReproduction are not endorsed bypermission the publishers and/or editorialThe staff. Beforeexpressed investing in estate, jump into a business relationship. to be able to provide valuable Facebook, Twitter, LinkedIn, Pinterest, Google+ columnists are not endorsed theorpublishers staff. Before investing in real advisor, estate, stocks, bonds, mutual funds, by gold, securities,and/or seek editorial the advisement of a trusted financial stocks, mutual funds, gold, or securities, seek the advisement of abusiness trusted and financial advisor, attorneybonds, or tax consultant. Investing in any asset and market sector is risky may result in information to others who are Be sure to ask for references attorney or capital. tax consultant. Investing in any asset and market sectorUSA is risky business and AMERICA may result in the loss of Please invest responsibly. PRINTED IN THE ~ GOD BLESS DISCLOSURE AND INFORMATION READERS interested in learning about real FOR and actuallyAND call EXPO them.GUESTS Check onthe loss of capital. Please invest responsibly. PRINTED IN THE USA ~ GOD BLESS AMERICA The publications, expos promoted and/ Connect to our virtual network ~ Search for us here: estate. I’m very events, involved in and the mixersline to seebyifRealty411guide.com there are any negative or their owners, employees agents and affiliates (collectively “411”) are for informaproduction of each issue, includreports. And, if your investment tional and entertainment purposes ONLY. The information and presentations provided ing the design. It’s a wonderful is quite I would even therein do not constitute an offer or solicitation to buy substantial, or sell securities or real estate. Please beoutlet aware that RISKY. 411 is not responsible for creative for real me.estate investing is VERY recommend doing a professional any of the being information and/or data presented, do not reflect background check and as well. While at theprovided forefront of statistical the opinions, advice or research of 411. You personally are 100% responsible for your the has been Youforcannot be toowith careful with dueinvestment diligence, forindustry all investment information and all decisions respect to a any positive experience, for the hard-earned may potential investment or transaction. 411your strongly recommendsmoney. that you It seek the advicepart, of your attorney, financial adviser before investing. most mytrusted position has broker, also CPA and/or have taken decades to accumulate led me to experience stress and that nest egg, don’t get excited DISCLOSURE AND INFORMATION - ATTENTION ALL: CashFlow Express • Page 4 anxiety. Particularly, when I hear and rush into something withThe publications, events, expos and mixers produced and promoted by about negative experiences that out having all the facts! I always Realty411guide.com, reWEALTHmag.com and/or their owners, emoccur in our industry. recommend seeing an investment ployees, agents and affiliates (collectively “411”) are for informational first-hand. I’ve invested in some I cannot stress how important and entertainment purposes ONLY. The information and presentations properties out of state and have it is for all investors to take the provided herein do not constitute an offer or solicitation to buy or sell seen each one prior to making a securities or real estate. Please be aware that real estate investing is time to do the most thorough VERY RISKY. 411 is not responsible for any of the information provided purchase - sometimes I visit twice! due diligence they possibly can and/or statistical data presented, and 411 does not represent that any BEFORE investing with anyone, Also make sure to invest in information or opinions expressed and data provided reflect the opinwhether you meet them at a real what you understand. I like to keep ions, advice and research of the publishers, editors, columnists, venestate club, a national expo like it simple with buy-and-hold rentdors, speakers, sponsors, guests who are in attendance at the events, ours, or the many other places als, the caveat is to purchase them and do not reflect the opinions, advice or research of 411. By attending these people may be lurking. Be in emerging markets. Some people 411 events you acknowledge that the investment strategies mentioned skeptical and do your homework. like to invest in tax liens, notes may not be suitable for you, that any real estate investment is inheror even assisted living facilities. The allure for quick profit in ently risky, that all investments are subject to risks, which could result Whichever path you choose, make this industry unfortunately atin the entire loss of your investment, and that 411 is not responsible sure you fully comprehend your tracts people who may not have for any losses or outcome of any investment made by you from or after investment choice. the best interest at heart for oth411 events, or as a result of contacts made at these events as well as after reading 411 publications. You personally are 100% responsible for ers. We have to put our profesIt’s important to remember that your due diligence, for all investment information and for all decisions sion in perspective: The entry to the higher the financial rewards, with respect to any potential investment or transaction. 411 does not the real estate industry is easy generally, the greater the risk will endorse, and has not performed due diligence on any of the columcompared to other high-income be. Be cautious, ask questions nists, advertisers, vendors, speakers, sponsors, companies and guests fields, which require advanced and, as always, if we can help you who appear at our events or in our publications. The information predegrees that can take years to please don’t hesitate to contact our sented at any 411 event related to any potential real estate investment complete. office: 805.639.1497. Thank you, I is general in nature and does not constitute legal, tax or investment adhope to see you in person soon! Again, the industry seems to vice. 411 strongly recommends that you seek the advice of your trusted have the illusion of being a fast attorney, broker, CPA and/or financial adviser before taking action as
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Ca $ hFlow Ca$hFlow
Welcome to Cashflow Express
No. 1 / Vol. 1 2012
No. 1 / Vol. 1 2012
T
estate investing, trading stocks, building a strong MLM business, etc. You will not succeed. It’s like trying to grow corn in a field of sand. The seeds will not germinate and you’ll end up with next to nothcan remember my first time playing to harvest in the fall. stocks, building ing Robert Kiyosaki’s Cashflow estate investing, trading By Doug Carver How, you ask, does this to the board game about eight years a strong MLM business, etc.relate You will not Organizer Pasadena and Burbank Cashflow game? agoMeetup and how it succeed. It’s like trying to grow corn in Cashflow Groups Well,will after started a chain a field of sand. The seeds notplaying germigame of events continues nate and you’ll end upthe with nextatobunch nothcanthat remember my first time playof times, I learned to this day. What Kiyosaki’s stuck ing to harvest in the fall. ing Robert Cashflow thethis“how of with meboard most was not about the eight years How, you ask, does relateto” to the game getting out of the “how to” playing Cashflow game? agoof and howtheit rat race, butplaying I still game but the people that Well, after started a chain was not able to Iofmet at thethat event. These the game a bunch events continues take what II learned were like What the normal of times, learned to thisnotday. stuck from the game people mywas lifenotthat the “how to”and of with meinmost the Doug Carver (left) and Chris Hanson disapply would I was crazy gettingit to outmyofrealthe “how tell to” me of playing the play the Cashflow game to group members. life financial for trying my own rat race, but Isitustill game but to thestart people that ation. However, real estate business or was not able toI I met at the event. These realized that the time I take was spending with that freedom what I learned werefinancial not like the normalwas impossible my new Cashflow friends changing without well-paying job. The fromwas the game and people ainsteady my life that theChris wayHanson I thought money andrealmy people I met learn-(left) and Doug Carver dis- about apply it to my would tell me were I was excited crazy about play the Cashflow game to groupfuture. members.I no longer viewed the financial ing and expanding life financial situfor trying to start mytheir own knowledge on stock market as a giantation. riggedHowever, system forI how achieve financialorfreedom. They real toestate business losing money. I began to see the tremenwere active investors in real estate and realized that the time I was spending with that financial freedom was impossible dous opportunities the sinking real esthe stockamarket. were small my new Cashflow in friends was changing without steady They well-paying job. busiThe tate market even asabout many money people and I knew ness owners passionabout and vision the way I thought my people I metwith werea excited learnwere losing moneyI on that had gone for more financial success on in financial future. no deals longer viewed the ing creating and expanding their knowledge bad. for rigged the firstsystem time optheir lives. Overall, they freedom. had a mindset stock Overall, market asI saw a giant for how to achieve financial They portunities all around create wealth for prosperity that I likeintoreal callestate a “Cashlosing money. I beganme to to see the tremenwere active investors and even the newspapers talked constantly flow” mindset. dous as opportunities in the sinking real esthe stock market. They were small busiof themarket “Greateven Recession.” A lot of people complain that Kiyosaki tate as many people I knew ness owners with a passion and vision Today as money a resultonofdeals my that ongoing indoes not provide specific success details on were losing had gone for creating morethefinancial in volvement playing how should implement stratbad. Overall, I sawand for organizing the first timelocal optheir people lives. Overall, they had ahis mindset Cashflow in Southern California, egies to createthat financial freedom in his portunitiesevents all around me to create wealth for prosperity I like to call a “CashIeven haveas athethriving real talked estate constantly investing books and programs. Truth is he never newspapers flow” mindset. business. It was after speaking with one spells a step-by-step to” for of the “Great Recession.” A lotout of people complain“how that Kiyosaki of Today my Cashflow friends whoongoing was a real building freedom. as a result of my indoes not long-term provide thefinancial specific details on estate investor that Iand wasorganizing encouraged to What he does teach is far more imporvolvement playing local how people should implement his stratstart wholesaling properties. It tant, that is financial how to create a “CashCashflow events distressed in Southern California, egiesand to create freedom in his turned out to be a great decision. More flow” mindset. Kiyosaki describes it in I have a thriving real estate investing books and programs. Truth is he never recently, I’ve begun to learn how to suchis book Quadrant business. It was after speaking with one spells out Cashflow a step-by-step “how moving to” for cessfully trade in friends the stock market your mindset from thefinancial E (employee) and of my Cashflow who was using a real building long-term freedom. options. As a self-proclaimed real estate SWhat (self-employed) side Cashflow estate investor that I was encouraged to he does teach is of far his more impor“zealot”, I never would haveproperties. dreamed ofIt quadrant theisBhow (business owner) and start wholesaling distressed tant, and to that to create a “Cashinvesting intothe equity markets. HowevIflow” (investor) side of the quadrant. In layturned out be a great decision. More mindset. Kiyosaki describes it in er, after playing Cashflow 202 with my man’s terms, it’s the mental shift from recently, I’ve begun to learn how to suchis book Cashflow Quadrant moving Cashflow friendin,who is an active someone who from seeksthe financial securityand at cessfully trade the stock markettrader, using your mindset E (employee) and learning his trading real system, all costs to someoneside whoof canhisconfidently options. As aabout self-proclaimed estateI S (self-employed) Cashflow was able Itonever see would the opportunity before and knowledgeably take measured risks. “zealot”, have dreamed of quadrant to the B (business owner) and me. I nowinfully expect markets. that investing in This is a simplistic definition but aInvery investing the equity HowevI (investor) side of the quadrant. laythe will be a huge part my fuimportant one to the er, markets after playing Cashflow 202ofwith my man’s terms, it’sunderstand. the mentalWithout shift from ture financial success in addition to my correct mindset, it really doesn’t matter Cashflow friend ,who is an active trader, someone who seeks financial security at how much learn who the “how to” of real and learning about his trading system, all costs to you someone can confidently Continued on pg. 2I was able to see the opportunity before and knowledgeably take measured risks. me. I now fully expect that investing in This is a simplistic definition but a very the markets will be a huge part of my fuimportant one to understand. Without the ture financial success in addition to my correct mindset, it really doesn’t matter how much you learn the “how to” of real By Doug Carver Organizer Pasadena and Burbank Cashflow Meetup Groups
I I
By Tyrone Jackson TheWealthyInvestor.net
companies and products with which you are familiar. If you’ve ever opened a can of Coca Cola on a hot summer day and felt refreshed and invigorated, why not own the and stock? It’s a product you companies products with which know a story you understand. you arewith familiar. When I say “a ever story opened you understand,” If you’ve a can of ICoca meanCola to on saya that you understand hot summer day and the Coca Cola felt refreshed andhow invigorated, why makes not own the stock?Corporation It’s a product you money, or to exknow with a story you understand. press it in Wall When I say “a story you understand,” Street terms, you I mean to say that you understand understand how how the Coca Cola the companymakes earns Corporation revenue. Thetomore money, or exbottles of press and it incans Wall Coke Street that terms,Coca you Cola sells around understand how the world each day, the company earns the larger The the comrevenue. more pany’s Over bottlesprofit. and cans of the past ten years Coke Cokestock that(symbol Coca KO) has risen from around per Cola sells$40 around share to a high of $71 — $1000 inthe world each day, vested in Coca Cola thestock largerten the years comago would be worth $4,100 pany’s profit.today; Over $10,000 invested Coca Cola stock the past ten years in Coke stock (symbol would be worth $41,000 today.$40 per KO) has risen from around If you more $100 per share to aspend high of $71than — $1000 inyear eating fast Cola food,stock why ten not years own vested in Coca the the past ten today; years ago stock? would Over be worth $4,100 McDonalds stock (symbol MCD) has $10,000 invested in Coca Cola stock risen a low $41,000 of $15 per share to a wouldfrom be worth today. high $95spend per share. If of you more than $100 per
Yes! Yes! From the Publishers of Realty411 Magazine You can be rich from owning real By Tyrone Jackson estate and trading stocks. TheWealthyInvestor.net We’ve all heard the story of the little old lady who livedYou modestly can be and worked as a school teachrich from er for 40 years. She never owning real earned more than $35,000 estate and trading stocks. per year, owned modest We’ve all aheard thehome, story of the and her who life with littleshared old lady livedtwo modestly cats. Once she herteachrelaand worked as adied, school tives discovered a $150,000 er for 40 years. She never life insurance policy and $1.5 earned more than $35,000 per million in stocks that she left year, owned a modest home, to elementary school’s andthe shared her life with two scholarship cats. Once fund. she died, her relaThe national media loves tives discovered a $150,000 to these stories. seems lifeairinsurance policy It and $1.5 there old she ladies millionarein several stocks that left who fit elementary this seemly school’s unique to the profile year fund. after year. How could scholarship thatThe be? national media loves in stocks is not the to Investing air these stories. It seems world’s challenging task. In there aremost several old ladies fact, core,seemly it’s veryunique simple. The who atfititsthis truth is that the stock market profile year after year. Howcreates could millionaires every year. Investing in that be? stocks, with wealth in mind, easier Investing in stocks is isnot the than you think. world’s most challenging task. In fact, at its core, it’s very simple. The Know truthInvest is thatIn theWhat stockYou market creates millionaires every year. Investing in Wanna be wealth a good in stock market instocks, with mind, is easier vestor? it simple and start with than youKeep think.
LindaPliagas
Published by Realty411 Magazine Invest In What You Know
Wanna be a good stock market investor? Keep it simple and start with
year eating fast food, why not own Continued on pg. 12 the stock? Over the past ten years McDonalds stock (symbol MCD) has risen from a low of $15 per share to a high of $95 per share.
Continued on pg. 12
Continued on pg. 2
LindaPliagas
an investor. To contact us, please call (805) 693-1497.
Real estate, and all investing, is risky and may result in the entire loss of your principal investment. Please invest responsibly.
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CashFlow Express • Page 4
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REHAB
From Rehabbing Homes to Renovating a Hotel T Interview By Linda Pliagas
hroughout the years, I have met many phenomenal people at our live events throughout the country. One of the perks about this business is that after a while you begin to know some on a personal level and begin to follow their progress as an investor. When I met Stacee Nelson years ago, she was busy rehabbing a single family residence in Santa Barbara. The project was a major rehab and the property was stripped down to the bare bones. Nelson is not one to shy away from complicated deals, she takes on projects with certainty and confidence. It’s been interesting to follow Nelson through her progression from rehabbing single-family homes to her risk-taking efforts in purchasing water-front properties, REO tapes, and now even a hotel.
LINDA: How long have you been investing in real estate? STACEE: I purchased my first condo when I was 22 and then didn’t invest in anything for a long time. When I was living in Germany I started going to real estate auctions at the courthouse. My friend was buying properties to renovate and hold. I tagged along. In 2011, living in Santa Barbara, I began my formal education in real estate investing and purchased my first flip house in 2012. LINDA: I even saw one of your projects in Santa Barbara a couple of years ago. What attracted you to the hotel niche? STACEE: The idea of renovating an empty building into a small boutique hotel was initially the idea of my business partner. At the time we were looking for alternative passive income opportunities
as well as ways to create a positive impact on communities. An opportunity presented itself in the form of an empty 15,000 square foot building directly on the town square in Gonzales, Texas. The town was keen to redevelop their downtown, which made for a win-win opportunity.
CashFlow Express • Page 6
Continued on pg. 8
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From Rehabbing Homes to Renovating a Hotel, pg. 6
LINDA: Was it easier to take on the challenge and expense of a hotel rehab after doing many single-family home deals? STACEE: Initially we thought it would be a comparable project, just larger in scope. What we learned was that renovating an empty building into a hotel with individual plumbing, HVAC, cable, etc. was far more complicated and costly than anticipated. Certainly having a background in single-family home renovations was crucial in the planning and budgeting, but we were surprised by the sheer volume of issues that arose during the construction phase. The next one will go much more smoothly as a result of the number of lessons we learned. LINDA: Tell us about the hotel. Where and how did you find it? STACEE: My business partner has a long-time family friend living and investing in the town. He made the initial introductions to the town’s economic development council who were very interested in supporting business growth in the area. Their support was a critical factor in the decision to purchase in Gonzales, Texas. We toured numerous vacant buildings in the area until we found one large enough and with a perfect location directly on the town square. LINDA: How long did the rehab take? Did the entire property have to be worked on or only a section? STACEE: The rehab took over a year to complete. There were a number of delays in the project especially when our initial contractor was removed from the project. One of our important
lessons from this project, was to have a project manager on-site during the construction phase. The volume of issues was simply magnified by one hundred versus a single family renovation. Our hands-on project manager made the difference in our ultimate success and project completion. To provide an idea of the complexity of a project like this: the smoke and fire alarm systems had to be coordinated with the installation of electricity and plumbing (water sprinklers), the HVAC system required coordination in timing with the electrician, drywall installer (ceiling vents) and the roofer (where the systems are housed), the water coming into the building had to be separated between the hotel and the restaurant located on the ground floor, and the elevator turned into a complicated project all by itself. LINDA: What was the biggest lesson you’ve learned from this transaction? STACEE: Rather than give one, I’m going to provide a few lessons we learned from this project: For large projects, invest in a project manager who is on-site and regularly reporting on progress. Have the contractor regularly send pictures and review before progress payments are made. It’s a necessity to have a detailed project plan and budget agreed on, in writing, by the contractor. We thought we had sufficient detail in our initial project summary based on our housing rehab experience. What we learned is you can’t be to detailed oriented in the budget and planning phase. The more detailed the budget and
CashFlow Express • Page 8
contractor commitments are, the better. Include a split between labor and materials so it is very clear for both sides, especially when you choose materials. Have the contractor sign the agreements. Budget sufficiently for contingencies. The larger and more complex the project is, the greater the likelihood for additional unplanned expenses. Have an agreed process for change orders that includes approving changes and costs before the work is completed. LINDA: How is the hotel performing now? What are your goals with the property? STACEE: The hotel looks fantastic. The reviews of the guests who have stayed there are overwhelmingly positive. While we positioned the boutique hotel to provide executive-style accommodations for the local oil industry, the majority of our guests thus far are visiting Gonzales, Texas, for the regional rodeo events, the hot rod show, the summer concert series, and many historical events. Gonzales, Texas is known as the place where the first shot of the Texas Revolution was fired. LINDA: Wow, that really sounds exciting! Now, In addition to hotels and single-family homes, your company also invests in Marina and resort properties around the world, is that correct? STACEE: Yes. We looked at a variety of different passive income and commercial real estate opportunities and decided that marina and resort properties were ideal: It is a relatively untapped Continued on pg. 28
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It’s Time to Self Direct Your Future But even those who are aware of the potential financial power of selfdirected IRAs often do not fully comprehend the IRS guidelines of “prohibited transactions,” according to Hall. “You’re not allowed to have any personal benefit from your IRA prior to retirement,” Hall says. A common misconception among investors is that they can use the self-directed IRA funds to purchase real estate or other property from themselves or close relatives such as a spouse, a child, a grandchild, a parent, a grandparent and any spouses of such relatives. These transactions are not permitted under self-directed IRAs, according to Hall. However, an investor could purchase property from a more distant relative such as a sibling, a cousin, a niece, or an uncle. “Make sure you know what you’re doing,” Hall says. “We’re here to help people so they understand the twists and turns as much as possible. I’ve educated tens of thousands of people about the use of self-directed IRAs and uDirect IRA Services is set up to serve and
By Tim Houghten, staff writer
elf-directed individual retirement accounts or IRAs are rapidly growing in popularity, but experts warn that it is important to only get into such an investment with proper education and professional guidance. Kaaren Hall, owner of uDirect IRA Services in Orange County, California, says even after more than two decades in the financial industry and six years of running her company, she too must continually stay on top of her investment education, particularly regarding Internal Revenue Service guidelines for retirement accounts. Self-directed IRAs allow people to invest their retirement funds into a variety of options outside of the traditional stock market, including real estate, land, and private notes. “Financial literacy is not taught in schools, but our future depends on understanding it,” Hall says. “Only about 4 percent of U.S. investors have a self-directed IRA. Why?” Because most investors and many advisors simply aren’t aware of it.
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Financial literacy is not taught in schools, but our future depends on understanding it,” Hall says. “Only about 4 percent of U.S. investors have a self-directed IRA. Why?
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educate self-directed IRA investors.” The term self-directed in itself misleads some people because it is the IRA doing the investing, Hall adds. “So that’s confusing because they get into trouble by maybe signing a purchase contract (in their own name),” she says. “Your IRA can’t buy an asset that you own.” Consequently, people should wait until they actually open an account with a qualified custodian before funding it and making transactions, Hall says. Generally, a custodian rather than the actual investor should sign purchase contracts relevant to selfdirected IRAs. While representatives of companies such as uDirect IRA do not give actual investment advice due to potential legal liability, they can help people follow ever-changing IRS guidelines. Hall, a former mortgage broker whose work history includes Bank of American and Indymac Bank, has educated tens of thousands of investors into deciding whether self-directed IRAs are right for them. She and her associates have directly worked with thousands of clients. To learn more about self-directed IRAs, call 866-447-6598 or visit: www.uDirectIRA.com
We understand the details and challenges involved with property development and can work with you through the phases of development to help you build your company. ■ ■
Flexible 6 – 24 months No prepayment penalties
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Interest reserve or pay-current available Rates starting at 9%
CashFlow Express • Page 10
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We fund loans from $500,000 up to $5 million Primarily in the southwestern states
REALTY411
EVENTS
SEATTLE, WA - Network in the Northwest LOS ANGELES - CA$HFLOW Expo West Coast With Real Estate Association of the Puget Sound Network with investors from around the nation! August 15th - 9 am in Bellevue, Washington September 19th - 9 am, Complimentary Book
LAS VEGAS, NV - 2nd Viva Las Vegas Expo NAPA VALLEY, CA - CRUSH It Expo 2015 Event hosted with Real Estate Insider’s Club Hosted by BAWB, Bay Area Wealth Builders October 3rd - 8 am, It’s Harvest Time in Napa October 24th - 9 am, Play & Learn in Vegas
NEW YORK CITY, NY - CA$HFLOW Expo East Hosted with REIA NYC - Meet Us in Manhattan November 7th - 9 am, Focus on Finance
DALLAS, TX - Giving Thanks / Giving Back Lone Star State Expo with Dennis Henson, AREA November 21st - 9 am to 5 pm, Charity Expo!
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Colony American Finance Wants to Jumpstart Your SFR Portfolio By Jennifer Goralski, Vice President
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o you think that you might have missed the boat to invest in singlefamily rental homes? The answer is a resounding NO! We all remember 2005-2007, when it seemed that investors couldn’t make a mistake in the residential fix and flip market. Investors with little experience were able to outbid the competition, slap some minor paint and carpet improvements, and then sell their properties for incredible returns. But then the bubble burst, and many investors were left with homes that couldn’t be sold or in some cases, even given away. They had two choices: Give up the properties through foreclosure or become a landlord.
RENTAL DEMAND OUTPACES EXPECTATIONS Statistics show that nearly 35% of Americans now rent instead of own. Drill further into the statistics and you’ll find that 35% of renters choose singlefamily homes and 19% choose duplexes, triplexes or fourplexes. With these two categories encompassing 54% of all rental choices, it makes perfect sense that investors are looking to 1-4 unit properties instead of owning larger multifamily apartment-style buildings. 1-4 unit properties have a lower price point, the ownership risk is spread out among multiple structures, and the overall expense ratio is lower. Renters in single family housing tend to pay their own utilities, maintain the landscaping themselves and have access to municipal water/ sewer/garbage at a much lower rate than through private service. Rental demand is projected to change significantly over the next ten years, primarily driven by the changing nature of the household. Baby boomers are moving in with their children or into senior housing, and millennials are favoring renting over owning because of its flexibility and lower commitment level. Being well versed in the changing market is the key to having a profitable portfolio. Also noteworthy is that there are an estimated 14 million rental homes owned
Rental demand is projected to change significantly over the next ten years, primarily driven by the changing nature of the household. by non-institutional investors in the United States – most of which are owned free and clear. Quick math: Using 14 million rental homes at an average value of $100,000 each, that’s potentially $1.4 trillion in new loans that can be originated and re-invested into the market. Colony American Finance has multiple financing options available so you can access your portfolio’s equity and quickly put it to work to buy additional properties, invest in your children’s education, or simply replenish your cash position.
KNOWLEDGE IS POWER The savviest investor will do three things: Research, research and more research. Mortgage brokers and real estate brokers have invaluable information, such as market trends and vacancy rates, as well as access to properties that might not be listed for sale. But it’s significantly more critical for investors to have access to capital: Both liquid cash and innovative financing. No longer is the SFR rental market monopolized by private money loans with steep interest rates and fees or the more traditional Fannie/Freddie product that caps out at 5-10 CashFlow Express • Page 12
properties. Colony American Finance provides non-recourse term loans for stabilized portfolios and fix and flip lines of credit for acquisition funding.
FIX/FLIP LINES OF CREDIT If you want to grow your portfolio or perhaps don’t yet own a rental portfolio, a line of credit is definitely the right choice. Colony American Finance offers two different line of credit options, depending on investor experience and short-term/long-term goals. Our Entrepreneurial Line of Credit is a non-revolving, declining line designed for the investor who does less than 20 fix/flip projects per year and only within the 1-4 unit residential arena. Line amounts start at $500,000 and go upwards of $5,000,000. Borrowers have 12 months to utilize the proceeds and 12 months to pay back each draw. This loan has no prepayment penalties. For the more active investor, our Institutional Line of Credit offers additional flexibility as it allows for both residential 1-4 unit properties and commercial properties up to 20 units. The Institutional Line of Credit is also a revolving line, meaning you can access the funds multiple times. Line amounts start at
RealtyMogul.com Adds Two Top Commercial Real Estate Producers New Hires Speak Volumes in the Company’s Aggressive Expansion of Experienced Talent
$3,000,000 and can go as high as $50,000,000. Borrowers have 12 months to access the proceeds and typically nine months to repay each draw. This is a non-recourse loan and has no prepayment penalties. Also important to note is that you can utilize either the Entrepreneurial or Institutional Line of Credit to build your own personal rental portfolio. Once you have completed the renovations on your fix/flip properties, you can look to refinance your holdings into one of Colony American Finance’s term loans.
NON-RECOURSE TERM LOAN OPTIONS If your SFR rental portfolio has five or more properties, Colony American Finance is your option for attractive financing options. Our loans are underwritten like a commercial loan, which means no more debt-to-income ratios hurting you when qualifying. Rather, your portfolio is underwritten on the assets and the cash flow generated from those assets. Plus, because we lend across the U.S., a single-term loan can be made on portfolios with holdings in multiple states. Our rates are competitive with traditional FNMA loans, are amortized over 30 years and can be fixed for five or ten years. Our loan amounts start at $500,000 and can go up to $100 million – and almost all term loans are available on a non-recourse basis. Important too, is that borrowers can have multiple tranches of loans to facilitate estate planning or property management issues.
REGIONAL STRATEGIES Auction.com recently released data that showed investors are favoring buy-and-hold strategies over fix/flip on a nationwide basis, but that investor intent varies between online/offline investors, regions, and property prices. Midwesterners and Southerners are more likely to buy and hold whereas those in the Northeast are more likely to fix/flip. Investors in the western states are evenly split between fix/flip and buy/ hold strategies. Whatever your investment style, we have the capital for either strategy. It’s an exciting time to be an investor; trends indicate that the rental market will continue to improve over the next decade. Colony American Finance is ready to provide meaningful and cost-effective financing options for your portfolio. -Jennifer Goralski has been a lender since 1993 and has an in-depth knowledge of single family home portfolio lending. She is available to be reached at 310.752.5287 or at Jennifer.goralski@ colonyamericanfinance.com
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ealtyMogul.com, the online marketplace for real estate investing, announced that Michael Sanchez and Charles H. Kim, CFA will join the company’s Commercial Lending Division. RealtyMogul.com recently secured $250 million in capital commitments from institutional investors for bridge and permanent lending in commercial real estate, and Sanchez and Kim will further facilitate the company’s explosive growth and expansion in the commercial real estate debt markets. Sanchez and Kim, who helped launch Colony Mortgage Capital in 2013 and have originated and executed nearly $1 billion of senior and mezzanine loans since its inception, will be responsible for generating substantial new commercial business for RealtyMogul.com. They will lend their considerable experience to provide strategic counsel on the real estate capital markets. “High caliber talent such as Michael and Charles are rare. It’s a testament of RealtyMogul.com’s market position and platform that these two industry leaders would choose to join our team from Colony Capital,” said Jilliene Helman, CEO of RealtyMogul. com. “We are thrilled they are coming aboard our platform, as they will
help us further build RealtyMogul.com into a world-class commercial real estate capital markets player.” Sanchez has over 25 years of commercial Sanchez real estate experience, with an emphasis on structured finance and portfolio management. Sanchez earned a B.S. degree in real Kim estate finance from California State Polytechnic University. Kim brings an equally impressive track record in real estate finance, with more than 15 years of experience in origination, underwriting and execution of financing transactions across various asset types. He holds a B.S. in management science from University of California, San Diego, and has an MBA from USC’s Marshall School of Business. He also holds the Chartered Financial Analyst designation.
Real Estate IRAs Residential, commercial, notes, fix and hold, fix and flip, and more.
NewDirectionIRA.com (877)742-1270 CashFlow Express • Page 13
Anthony Patrick credits his success to his team of experts. They make work not only profitable but also fun. Anthony says he surrounds himself with people he cares about and his team includes his wife, Mindy Booker (red shirt), and his sister, Elvie Gil-Jund (white shirt), and long-time friend Richard Endrosolin (green shirt). His broker, Scott Cheramie (red tie), is also an important part of New Harvest Ventures, LLC, as well as team members Robert McGrauth (ivory shirt) and Joe Lopez (black shirt). Living the American Dream: Anthony Patrick’s Testimonial, pg. 1
Anthony Patrick holds the future in his hand. As an entrepreneur and real estate investor, Anthony Patrick likes to be in control of his future and says real estate has fulfilled his “American Dream”.
Anthony Patrick has rehabbed hundreds of homes in the Inland Empire.
Anthony Patrick was a guest speaker at a MORSynergy event produced by MOR Financial. CashFlow Express • Page 14
Everything is explained and everything is revealed. Anthony often repeats himself just to ensure that everyone understands it. Patrick realizes that many of his students are embarking into unknown territory, and as he states, “doesn’t want you to make the same mistakes that I made when I learned the business.” Every few months, Patrick disembarks with a bus load of eager students from throughout California and around the nation. Investors of all ages are anxious to learn how to rehabilitate distressed properties and make a handsome profit doing so. Patrick’s American Dream was realized through real estate. He began as a handyman, then graduated to a real estate inspector. Today, he has flipped hundreds of houses and has also shared the stage with influential leaders of wealth, such as Donald Trump, Suze Orman and Ron LeGrand. Although he prides himself as being a “self-made man,” Patrick acknowledges that he’s had a lot of help to get where he is today. “My beautiful wife, Mindy, is my right hand. And I have a phenomenal team of brokers, real estate agents, rehabbers, contractors and investors who have been instrumental to my success.” Patrick describes himself as a man of faith: “God has guided my way throughout this journey,” he confides. Before we conclude the interview, we asked Patrick if he had any last-minute suggestions for our readers. He replied: “Don’t wait to invest, start now. Many people don’t believe they have the money to start investing, but did you know that you could use some of your home’s equity or your 401(k) retirement plan from work? You can even use money from your IRA account to get started.” Patrick believes almost anyone can succeed in real estate with the proper mentor, education, motivation, and passion. Sign up for one of Anthony’s weekend seminars. They are held in Rancho Cucamonga, Calif. The team’s mission is to transform the lives of others and improve their quality of life. Call Anthony Patrick at New Harvest Ventures, LLC and ask how you can sign up to learn the art of successful real estate investing. For information, call (909) 694-2221.
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By Randy Hughes, “Mr. Land Trust”
and look at this from the lender’s viewpoint. If I were the lender I would want to have the title checked to make sure the property being borrowed against was in fact in the Land Trust that I was lending to. I would also want to make sure there were no other loans against the property (other than what might have been represented by the borrower). Furthermore, I would demand the filing of a UUC-1 form that would secure my position against the Beneficial Interest (which is personal property NOT real estate). I would also want a statement from
his article will discuss the ins and outs of borrowing money when property is held in a Land Trust AND how to lend money to a Land Trust using the property in the trust for collateral. First, it is important to understand that if you are buying property and financing it through a conventional loan that must be qualified using secondary market guidelines, you will generally NOT be able to close directly into your Land Trust. The only exception to this rule (that I am
1 and repossessed without going to court. This process works really well when selling to long-term tenants that you want to convert to buyers of the property they live in. This article has discussed the methods of borrowing and lending on property that is held in a Land Trust. We learned that using a Land Trust to hold title to investment real estate provides many ways to creatively finance property. We also learned that borrowing money on property held in a Land Trust gives the borrower many more options than conventional lenders provide. Additionally, we learned that
Borrowing and Lending Money with LAND TRUSTS aware of as of this writing) is Bank of America. If you are buying property in Illinois AND using an Illinois Land Trust Agreement, BOA will let you close directly into a Land Trust. This leaves 99% of the rest of us out in the cold. However, BOA (and many other conventional lenders) will only allow you to obtain four secondary market loans and then they cut you off! So, if you are very active in the real estate game you will be forced to obtain your loans via a Portfolio Lender (where the loan is NOT qualified in the secondary market) or Private Lenders. Most Portfolio Lenders WILL let you close directly into your Land Trust (with your Trustee signing the mortgage on the property held in trust as collateral for your loan). Closing directly into a Land Trust is the smartest way to obtain title because your personal name is NEVER in the chain of title. It is much easier to use a Private Lender when borrowing money using a Land Trust. And you can be much more creative using a Land Trust (especially when there are multiple Private Lenders involved) than if you held title in your own name. Case in point. Bob needed $50,000 to fund his next real estate deal, but he did not want to go to a bank to borrow the money. Not only do banks charge high interest rates but they want full collateral no matter how much money you want to borrow. Bob had $100,000 of equity in one of his properties, but only needed $50,000. If Bob borrowed from a bank they would require Bob’s entire equity to be used as collateral for a $50,000 loan (50% Loan-to-Value). Since Bob’s property was held in
a Land Trust he could assign varying percentages of the Beneficial Interest to multiple Private Lenders. For example, he could borrow $10,000 from five different Private Lenders and give them each an Assignment of Beneficial Interest equal to the percentage of ownership in the Trust (equity = $100,000 / 10,000 = 10% ownership per Private Lender). Some of the other advantages of borrowing this way are; no credit check, no public knowledge of the transaction, no reporting to the credit agencies and the remaining equity is still available for additional borrowing, if needed. Let’s turn the tables on this scenario
the Trustee of the Land Trust confirming her knowledge of my loan and security interest given. In Ferraro V. Parker 229 So2d 621 (1969) the court ruled that a collateral assignment of a beneficial interest in a Land Trust would not be treated as a mortgage, nor require foreclosure nor entitle any party to any redemptive rights. However, Illinois case law indicates that, where a trust is created simultaneously with a financing arrangement, it might be deemed a mortgage. The bottom line to all of this legal talk is that if the Trust Agreement is created PRIOR to a financing arrangement, the Beneficial Interest can be secured by a UUC-
CashFlow Express • Page 15
selling property held in Trust to current tenants is more secure and less risky than conventional contract sales.
Randy Hughes aka, Mr. Land Trust™ P.P.S. If you want to jumpstart your Land Trust education, go to my online FREE training right now for more on how to create your own Land Trusts immediately. Here is the link: www.landtrustwebinar.com. If you have a Land Trust question pick up the phone and call me! I actually answer my own phone. 866-696-7347 or email: randy@mrlandtrust.net
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Take Your Life Back! LEARN TO BUILD WEALTH AND FINANCIAL FREEDOM THROUGH REAL ESTATE
IN 3 INTENSIVE DAYS, MENTOR ANTHONY PATRICK WILL TEACH YOU: • How to find great investment properties • How to manage contractors • How to estimate repair and building upgrades • How to never overpay for repairs again • Which upgrades will provide the best return • How to inspect properties with confidence • How to develop a real estate investment team • How to analyze a rehab project to prevent over-spending • How to determine if a property will qualify for FHA financing • How to avoid pitfalls & more...
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“This is a true ‘Hands On and Step-by-Step” experience. There’s not better way to learn than having Anthony Patrick and the power team there to hold your hand.”
Edwin and Anita Mizunaga Rancho Cucamonga
Turnkey rentals are great. They provide automatic passive income and all the perks of direct investment in property. But is that the best you can do in returns and getting ahead?
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eal estate is the investment for intelligent investors today. But where do you find the time and great returns without sacrificing everything else you love doing? The Status Quo & Investment Strategies that Fit There appears to be nothing safer to invest in than real estate today. The returns are pretty attractive too. But when sophisticated investors and busy professionals look at how most others are investing, it can start to appear challenging. If you are a doctor, lawyer, professor, or even successful artist – you don’t want to ditch a great career you are passionate about to start from scratch learning about being a landlord. Now hands-on fixing and flipping houses and managing your own rental properties can be great for those who don’t really love their jobs, or need a new source of income. But it’s a different story if you are already putting in 40 hours a week in something you like. Or
Real Estate Investing: How to Make 3 Times More Returns Than Your Friends if you are already financially independent and don’t want to cramp your free lifestyle. If this is you, your friends might be invested in REITs, real estate company stocks or even turnkey rental property programs. These can be great ways to diversify a portfolio. But stocks and REITs are really too volatile. Turnkey rentals are great. They provide automatic passive income and all the perks of direct investment in property. But is that the best you can do in returns and getting ahead?
You Can’t Afford Not to Demand More The problem is that the vast majority of individuals and couples are way behind on retirement savings and wealth building. The average 401(k) balance is only around $100,000. Recent data from the Federal Reserve shows that retirement savings and investment balances drop to almost half by the time individuals are in retirement. That means retirees are burning through half of their retirement funds within a year or two of exiting the workforce. Data 360 reports the average life expectancy in the United States is now just shy of 80 years old, and rising. The bottom line is that whether you have
double the average savings or even eight times your salary saved today – it just isn’t going to be enough. Not by a long shot. So how do you get ahead? Continued on pg. 28
We Make the Deal Happen Private Mortgage Fund, LLC provides one to three year bridge and interim financing for non-owner occupied residential and commercial properties in California. Contact us to learn how we can help you make close more transactions. PRIVATE MORTGAGE FUND, LLC • 23586 CALABASAS RD. SUITE 100 • CALABASAS, CA 91302 • (818) 702-2551 Contact Elliott Kimmel: ekimmel@pmfundllc.com ext 7 or Gordon Van Dueck: Gordon@pmfundllc.com ext 9 CashFlow Express • Page 18
Have you ever done business with this guy? Yeah, he’s the lender who promises low rates and terms, but never closes your deal. He’s also the guy who asks for upfront money just to "look" at a deal, but doesn't return a phone call. You know, the guy who promises everything, but never delivers. Avoid having to deal with “this guy” by establishing relationships with reputable lenders, industry service providers and experienced brokers. A solid network is key to finding success in our industry. You have to know who to call—and for which deal. Make these powerful connections by joining us at Pitbull’s 38th National Hard Money Conference and maybe, just maybe you will never have to do business with “this guy” again.
Pitbull’s 38th National
Hard Money Conference
Tuesday Oct 13, 2015 Caesars Atlantic City New Jersey See why industry experts say this is the No. 1 hard money conference in the country!
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A one day event delivering powerful information on:
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Learn how to avoid the most common mistakes made by brokers and investors.
Meet and network with both the established and new players in the market.
Ask questions of our panel of experts. Find new funding sources.
Continental breakfast in the morning and cocktail reception in the evening.
www.pitbullconference.com Questions? Just give us a call at
858.736.7788
LANDLORD
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More and more sellers are throwing out the term “turn-key rental property” in hopes they can attract out-of-state buyers. But what do they really mean by ‘turn-key’? I heard a fellow podcaster state recently that all you have to do to provide turn-key property is buy a home, get it rented, put it under management and voila! You can flip “turn-key” property at retail pricing to eager out-of-state investors! This is certainly not our definition of turn-key. Unfortunately, turn-key means absolutely nothing anymore. Uneducated buyers assume turn-key means that you don’t have to do a thing. The belief (or false hope) is that someone else
DANGERS By Kathy Fettke, Real Wealth Network
does the buying, renovating, leasing and management of your rental property, and all you have to do is deposit rent checks. Unfortunately, most of these misinformed investors end up writing checks and making few deposits. The problem is that most people trust what other people tell them. They believe the marketing message. For example, have you ever bought Fiji water? The marketing is beautiful and makes you feel like you’re drinking right out of a waterfall on a tropical island. But the Cleveland Water Department ran tests comparing Fiji Water to Cleveland tap water and found arsenic, human feces and other contaminants in the Fiji Water. False advertising is often used to market “turnkey properties.” At Real Wealth Network, we are constantly bombarded with companies who want to come speak at our events. Before they can do so, they must be thoroughly vetted to determine if their version of “turn-key” is the same as ours. I noticed one company was especially savvy at internet marketing. From the looks of their marketing, they
appeared to have a quite an impressive system in place, so I decided to pay a visit. What I found was the owners were very young – in their 20s and had only a couple years experience in real estate. When they showed me their available properties, I thought we were walking through their newly acquired homes just out of foreclosure and in pre-renovation phase. You can imagine my horror when they proudly told me these were their turn-key homes. It appeared that no renovation had been done at all. In fact, there was not even a handle on the very old, rusty oven. I told them their properties did not meet our strict criteria, and they quickly replied, “That’s OK. We’ve already sold these to out-of-state investors. We have a wait list.” I asked if the buyers ever came to see what they were buying. They said, “Never.” These kids were expert internet marketers. They were not turn-key rental operators. I was amazed at how trusting their buyers must have been to unknowingly purchase such garbage.
The 10 Most Common Signs of Dangerous TurnKey Rental Operators Real estate investing is really not hard to get right – IF you use the protective measures available to you like property inspections, appraisals and rent verifications. When it comes to working with a turn-key property company, here are just a few of the things we look for at the outset when vetting teams.
1. Inexperienced Operators If they don’t have a solid track record, they will be practicing and learning with YOUR money. 2. Not Walking the Talk If they don’t own a portfolio of rental property, they won’t really know first-hand what it takes to succeed. 3. Lone Rangers If they don’t have a team to support them, you won’t be supported either – especially if anything happens to them. Continued on pg. 26
NICHE
By Alia Ott, Co-Founder of Investors in Action
One of my mentors always used to say “there are riches in niches” and that couldn’t be more true in the world of real estate investing.
I
nvesting is not a “one size fits all” venture - some people love the challenge of turning trashy houses into beautiful homes, while others love to become passive lenders or landlords such that they can account for a more predictable payment stream. We all need to find our own niche that works best for our available time, financial resources and personality types. Once an investor finds that “one thing,” the key is to really stick with it long enough to implement efficient systems and push through the challenges that inevitably occur. Growing up in a household with two stay-at-home parents; one focused on retirement hobbies and the other an active community volunteer, I was inspired to seek a financial path that would allow my time, talent and income to support my philanthropic goals and family-focused lifestyle. It was the combination of my “WHY” mixed with my enthusiastic curiosity of investment properties that began my quest for financial freedom via real estate. I was specifically focused on finding an investment strategy that required minimal time with maximum returns over a long term view, and after 13 years of actively doing what felt like the Goldilocks approach to leveraging different strategies, my Investors in Action business partner Terri and I stumbled into a niche that was “Just Right” - and that was self storage. Prior to meeting Terri in 2009, we had both independently tried our hands at flipping and renting residential properties. Upon closing my first “fixer” in 2002, my friend gave me a financial calculator and bottle of Pepto-Bismol as if to say “buckle up for a crazy ride.” Little did I realize that I would eventually tear half that first house down and become my own general contractor rebuilding it from the ground up. If you casually knew me, you would not likely envision me jack-hammering concrete slabs or tearing up the roof with a Sawzall... but I took every DIY opportunity to get my hands on the power tools and make the best of it. Demolition Days included “Weapons of Mass Destruction” where friends would grab a hard hat and sledgehammer to take a whack at the wall, date nights consisted of a dump run followed by a trip to Home Depot with the trailer. Taco Tuesdays with the crew were a regular affair. It was exhausting yet exhilarating, and provided many memorable learning experiences that I would reflect upon fondly. That said, I quickly realized that my sharp-shooting nail gun skills would not be my fastest path to financial freedom, nor was there anything “passive” about rehabbing. After hanging up the proverbial hard hat, my next “Goldilocks” adventure would consist of becoming a landlord. My first rental experience started out with the rosiest of outlooks, my team took all the right steps that the gurus teach
CashFlow without Tenants or Toilets you to do: LLC - check; market growth and neighborhood evaluation - check; reputable property manager - check. We found a tenant willing to pay us one year in advance. No worries with rent collections or evictions you’d think right!? Little did we know later that this nice young lady was running some sort of establishment “ill suited” for this cute little Tennessee neighborhood. When it came time to renew the lease, she was gone and our manager whom was embarrassed by the property condition buried his head in the sand like an ostrich. Left behind in the house were things that investor nightmares and scary campfire stories are made of. My
point of sharing this is not to scare any readers from owning residential rentals (We’ve owned other rentals with great tenants, managers and solid returns). I just prefer lessening my landlording headaches by renting space to people’s “stuff” vs. where they actually live. By 2010, Terri and I had established our company, Investors in Action, and focused attention towards private lending and notes. “Being the Bank” as we like to call it, has been a very successful strategy for us - especially in the upContinued on pg. 26
FREE PROBATE HOME SYSTEM REPORT: Access @ www.dfprobatesystem.com CashFlow Express • Page 21
TOOLS
When You Can’t Find Real Estate Leads,
By Leon McKenzie US Probate Leads
LOOK TO PROBATE!
T
he real estate industry is changing. With more and more competition in the marketplace, challenges in getting a loan and cautious homeowners staying put, it can be nearly impossible to find property that you might be interested in purchasing for your real estate portfolio. Is there a solution? Is there a way to combat the real estate lead shortage that has permeated virtually the entire industry and has stalled your efforts at investing? What new and experienced real estate investors are seeing in the market is a fundamental change that may last for the foreseeable future. Overall, the nation is experiencing a shortage in the amount of properties that are being put on the market, leading to a lack of leads. This is creating increased pricing on homes that are for sale and issues in trying to build and acquire a real estate portfolio. WHY A SHORTAGE IN REAL ESTATE? The shortage in real estate leads that is occurring in most areas of the United States is due to issues in the lending industry that started several years ago and that continue today. With it becoming more and more difficult to qualify for a mortgage, homeowners are holding onto their homes instead of buying and moving because they have no other option. Homeowners that want to expand their homes are simply adding on or remodeling to avoid the issues with lenders and the hassles in moving. This is leading to a painful shortage in the real estate market. The Philadelphia Inquirer agrees: “Some observers believe they are seeing the emerging signs of a housing shortage. . . Predicting how much housing is needed involves a complex calculus that weighs hard statistics (new-home starts, sales of previously owned homes) against a certain amount of demographic tea-leaf reading (household-formation forecasts). Thus, there isn’t complete consensus on what will be enough.” As mentioned, while the overall interest rate is the lowest it has been in years, there are few people with good enough credit to purchase a home. When someone does decide to sell their home it is usually because they have to move for a job relocation or for another pressing matter, such as medical treatment or because they need to downsize – or they are in the enviable position of having good enough credit that they were
able to secure a pre-approval on a new loan to purchase a bigger home. How does this create a shortage? Since lending is tight, fewer people can afford to put their homes on the market. That means that the availability of homes has decreased. To add to the shortfall, the slow economy has led to a construction slowdown, which means that fewer homes are being built to accommodate new communities and homes that are being torn down. Overall, this has led to a painful real estate shortage for much of the nation. The Sacramento Business Journal reported that, “One analysis of the region’s housing market thinks there’s just not enough for sale. Again. A shortage of inventory is driving everything in the residential market from pricing to rental affordability, according to Zillow. One reason for that is a lingering hangover for the building industry from the housing bust of the last decade, said Svenja Gudell, senior director of research with Zillow. Though the economy began to recover three years ago, housing construction is still lagging, she said. In 2012 and 2013, only 159 new home permits were issued for every 1,000 new residents, according to ZilCashFlow Express • Page 22
low.” The overall lack of new homes available and the persistent challenge in getting a loan is creating issues for investors as they try to navigate few options and high prices. HOUSING SHORTAGE EQUALS INFLATED PRICES Most economists will tell you that the biggest drivers in the market are supply and demand. As you can imagine, decreased supply in the housing market means that pricing has skyrocketed, something that real estate investors simply cannot afford when they are looking for business opportunities. The Sacramento Business Journal reported that, “For both renters and homeowners, Sacramento is now defined by Zillow as one of the 10 least affordable metro areas in the country. Mortgage payments here take up 26 percent of income, compared to 15.3 percent nationally. Though the percentage is lower than Sacramento’s historic mortgage payment percentage of 29.5 percent, Zillow noted buyers at the moment also tend to have lower Continued on pg. 30
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Single-family home rentals are dead! By Gene Guarino, CFP
Now there’s a headline for real estate investors. When I was in my 20s making $100 a month in positive cash flow that was exciting. Now that I’m in my 50s, it doesn’t cut it at all. That doesn’t even pay for dinner or a round of golf.
W
hen you do the math, in order to make $10,000 a month at $100 a month, I would need 100 single-family homes to make that happen. That’s a lot of tenants, toilets and turnover to make the money that I need to live on, to thrive and to be able to bless those around me. Maybe I could do it with 50 homes but the pay day is still way out in the future. I want the cash flow right now. Can you relate to that? I’ve been investing in real estate for over 30 years. Through all of that time I have learned many things but one stands out above the rest: Cashflow Is King. If I do a fix and flip and make $100,000 in profit that is terrific. BUT, then I am unemployed until I find my next project. Finding that next project where I can buy it far enough under the ARV to be able to make a reasonable profit is harder then ever in the current market. The reality is the average profit on a fix and flip is about $9,600 period. Hardly worth the effort. I’d much rather do one deal that makes me $100,000 a year, every year for the rest of my life. That is the opportunity with Residential Assisted Living. People are aging and they will need help. The baby boomers are not even in the homes yet. They are 15 to 20 years away. This is a huge opportunity now, and it will continue to grow for the next 20 years. You will be involved one way or the other. I tell people that ask me how they can do this in their own cities that one way or another they will be involved in Assisted Living. You will either be the owner or the resident lying in the bed. For those that choose to ignore this opportunity, I am perfectly fine with that because I need residents and you are welcome to move into my home when you are ready. One of the areas that has held people from getting involved is a lack of information and understanding on what this is and what it
isn’t. The paper work and the licensing can seem daunting to the person that has never done it before. But when someone holds your hand and walks you through the process, all of the mystery and confusion falls away. There are hoops to jump through no doubt. But once you are on the other side, well, it’s a never-ending pay day. For me that is what this is all about. Think about this. If you did just one Residential Assisted Living project this year that produces $10,000 a month in NET income, would you be able to live the life that you are living today, but without the financial stress? Could you quit your job if you wanted to? Would your spouse be happier that you had steady solid income? If you need more money you can do two homes or just do one nicer home. If this is making sense you can learn more online at: www.ALFtrainingAcademy.com For 30 years I have been looking for a better way to make cash flow for the long-term and I found it with residential assistant living. One deal and you’re done. I teach people how to do this all over the country and they’re always amazed that with one single property they can clear in net cash flow $5,000, $10,000 or even $20,000 per month or more. They are blown away and wish they had done it sooner. There are three opportunities in this niche and I’ll lay them out for you. • Opportunity one. Own the real estate and lease it to long-term, low impact tenants for up to twice the fair market rent • Opportunity two. Operate the residential assisted living care home and make $5,000, $10,000 or more a month in net income. • Opportunity three. Own and operate. Own the real estate and operate the residential assisted-living business. When you own the real estate and own the business that’s when you can CashFlow Express • Page 25
Maximize your profits. That is the holy grail of cashflow and security. By the way, I don’t work “in” the home myself on a daily basis. I may not even visit the homes for weeks at a time. I would say the average time I spend on a weekly basis is less than 10 hours a week. If I wanted to completely turn over the reins I could do it with virtually no time invested on a daily or weekly basis. It’s all about setting up the proper structure and running it like a business. That’s what I do. I own the real estate and operate the business for maximum profit. That’s what I teach my students how to do at the ALF training academy. If you are looking for a career change, this is the ticket. That is why it is the only thing that I do now. One of the questions I get quite often is: Can I do this in a house I already own? The answer is, it depends. Does it have the right characteristics? is it in the right neighborhood? Is it in the right geographical location? Are the demographics right? Those are all easily answered questions when you know what to look for. This is not the field of dreams where if you build it they will come. That is a mistake that some people make when they try to figure this out on their own. I would rather learn from someone else’s mistake than my own. That’s why I show my students how to do it step-by-step, starting with the right location, then it’s the right property. By the time the training is done, they can very quickly analyze whether a property is right for this or not. The Tsunami of opportunity with the baby boomers is simply unstoppable. There are 77,000,000 Baby Boomers. Right now, there are 10,000 people a day turning 65 years old. They don’t move into an assisted living facility. But there are 4,000 people a day turning 85 years old and thousands of them will. The average length of stay is 3 1/2 years. That’s a lot of opportunity for us to take advantage of. The average price for a single person to live in a private room nationwide is $3,500 per month. It’s not paid for by the state or Medicaid or Medicare, in most cases they pay much less than that. Continued on pg. 27
The Dangers of Turn-Key Rental Property, pg. 20
4. Lacking Systems If they aren’t organized with the right software and systems, they will get overwhelmed and be unable to serve you over the long term. 5. They Operate in the ‘Hood I think C-properties can look real good on paper, but reality is a different story. Stay away from properties under $50,000 because they tend to be in high crime, high vandalism areas. 6. Shoddy Renovations If they are not fully renovating the property, they are just making a profit and leaving you with repairs. Demand that all plumbing, roofing, HVAC, boilers, foundations and electrical be upgraded to code – and get inspections to verify. 7. Rental or Vacancy Guarantees There are no guarantees in real estate and a rental guarantee won’t be necessary if you buy right. Most operators who make guarantees have padded the price of the property at the outset. Make sure you really understand market rents. 8. Over-Market Pricing Many turn-key operators sell their properties above market value. Out-of-state investors from high-priced markets are targets because they don’t understand local values and think everything is a deal because it’s so much cheaper. 9. Inexperienced Property Management Many turn-key operators choose to do their own property management. If they do not have at least two years experience with lower than average va-
cancy rates – don’t use them or you will be part of their learning curve! 10. A History of Fraud It is astounding how many scam artists are attracted to the real estate business. It’s worse than used car salesmen! This is an easy fix – get back ground checks. We’ve already done this work. Use our research. At Real Wealth Network, we have vetted dozens of so-called “turn-key” operators and are happy to share our research with our members. Basic membership is free. You can join at online at: www.RealWealthNetwork.com Once you are a member, you can meet with one of our investment counselors to get their feedback on property you are considering buying. We have the information you need to make the right decision. We are also happy to provide you with a list of truly turn-key companies who have rave reviews from our 16,000 members. These companies find properties at wholesale prices in good neighborhoods near jobs. They then renovate the properties to likenew condition. They screen tenants to very strict standards and offer on-going, excellent property management in place. Call 888-RWNETWORK or email kathy@realwealthnetwork.com for a referral.
About the Author: Kathy Fettke is the CEO and Co-Founder of Real Wealth Network and author of the Amazon best-seller “Retire Rich with Rentals.” She specializes in helping people build multi-million dollar real estate portfolios through creative finance and planning. Kathy is also host of The Real Wealth Show and is a frequent guest on FOX Business News, CNN, CNBC and CBS MarketWatch.
Cashflow without Tenants or Toilets, pg. 21
swing from 2010 to date, where we specialized in gap funding and buying deeply discounted notes. This strategy while still profitable, became far less lucrative as more money began chasing skinnier deals than great deals needing money. The downside of it was also that it was transactional, meaning we’d have to place the money once a deal was paid off. As this trend continued, we started to contemplate putting our attention on long-term cashflow with lower risk, fewer transactions and sought asset types that have greater resistance to market fluctuations. And that is when *IT* happened; an 11th hour request to lend on a self storage deal came in. It was one of those serendipitous deals that was perfectly aligned with our strategy discussions and long-term cashflow plans. Even better, this property allowed us to roll up our sleeves with an experienced partner and learn the business “hands on,” all while earning a steady rate of return on our loan. Self Storage, in our biased opinion, is one of the best investment niches out there. Operating and maintenance costs are relatively low, while the returns are typically higher than other asset classes. With people downsizing, urbanizing and moving - there is an increasing demand for space to put excess personal possessions and the method of dealing with non-paying tenants is very simple. When a tenant stops paying their rent, we have the ability to lock them out of their
“Self storage may not be right for every investor, but it’s the perfect fit for us and it’s definitely without regret that we went through our Goldilocks approach to trying different strategies.” unit until they pay or turn their personal property over to an auctioneer to recoup our losses - a process which has been dramatized by the television show “Storage Wars.” The Investors in Action team focuses on “repositioning” storage properties. In other words, we buy low-priced, lower occupancy properties, often in small to mid-sized metro areas. Our strategy is to stabilize the property by increasing the number of tenants and easing in higher rental rates - then we cashflow them for the long haul. Self Storage investing takes into account both macro and micro economics. Of course, you need to manage your property correctly and buy in a stable market at a price point and CAP Rate that supports your desired returns. It’s very important to survey the competition and population demographics within 5-10 miles of your subject property to ensure that stabilization is possible if you are purchasing an under-performing property. Our unique formula for success is actually rather simple; it’s a blend of good management, online marketing, value add components (such as vehicle parking) and partnerships with national CashFlow Express • Page 26
moving brands (like uHaul) that make us successful in our ability to quickly turn properties around. Self storage may not be right for every investor, but it’s the perfect fit for us and it’s definitely without regret that we went through our Goldilocks approach to trying different strategies. Every aspect of our professional and investment journey has given us a variety of unique tools and skills to put in our investor tool belt - from evaluating deals to raising capital and managing remote properties. We love sharing our enthusiasm for the business and enjoy helping other investors learn from our experience as well. To learn more about what we do, please visit us at www.investorsinaction.com Alia Ott is a best-selling co-author of the book “Initiative” and certified advanced project manager from Stanford University. Alia and her business partner, Terri Garner, are founders of Investors in Action and managers of a private syndication, which invests in self storage properties.
NETWORK
Scenes from Realty411’s Long Island Real Estate Investor Expo in Hauppauge, New York, top left corner to right: Manolis Sfinarolakis from Patch of Land discussed how crowdfunding is changing the real estate landscape; James E. Clark with Clark’s Laws PC warned about common mistakes made when investing; The team from Kitchen Liquidators; Our expo charity of choice was Long Island Cares, The Harry Chapin Food Bank. Our guests donated canned food and many made donations as well; The Long Island Real Estate Investor Expo was sponsored by Carl and Eilene Schiovone, founders of East Coast REIA. Here they are photographed with Linda Pliagas, Realty411 founder; Claude Diamond motivated guests with fantastic tips; Liz Trebotich spoke on behalf of Growth Equity Group. Photography courtesy of Bill Moseley. Join our network to be invited to our national events: http://Realty411Guide.com/network Single-Family Home Rentals Are Dead! pg. 26
I don’t focus on that, I focus on private pay because that’s where the bigger money and opportunity is. You truly have the opportunity to do good as you do well. There’s nothing wrong with making money. I think a lot of us are looking for a way that we can contribute, and to do something for others. This brings both worlds together perfectly. Everybody needs to live someplace and if somebody gets older they need more help. Many kids can’t quit their jobs to care for mom and dad on the daily basis. So they hire in-home care or they may bring them to an assisted living facility. Typically the big-box facilities that have 100 or 200 people are not very home like. There may be one caregiver for every 15 residents. It may be an apartment-like context where it’s 100 yards to get to breakfast. That isn’t what most people really want. They want to live in a home where they are well taken care of and loved. Mom and Dad want to live in a home that feels like a home, where they get home-cooked meals and the caregiver ratio to resident is more like one caregiver for every five residents. That’s what we provide with Residential Assisted Living. I got into this field for two reasons: One, I couldn’t find a place that I wanted for my mom when it was her time. Two, I knew that there were millions of people in my same situation who needed help too. I know the megatrend of the baby boomers was here,
but I didn’t think I wanted to “own” a hospital or nursing home. But using a residential home and turning it into a cashflow machine, doing good and doing well that’s the best of all worlds. If you’d like to learn more about this, feel free to contact me through my website at: www. ALFtrainingacademy.com I have a home-study course as well as a three-day training, if you’d like to learn more. CashFlow Express • Page 27
Gene Guarino is a Certified Financial Planner in the U.S. and in Australia. He has been investing in real estate for over 30 years. Formerly a professional musician and always an entrepreneur, Guarino has owned and operated 16 businesses. Today Guarino does just one thing, Residential Assisted Living. Plus, he teaches people who want to do the same thing from all over the country how to do it too.
Make Three Times More Returns than Your Friends, pg. 18
THE RETURNS OF FLIPPING HOUSES WITH THE EASE OF PASSIVE INCOME Remote Rehabs is re-opening its turnkey fix and flip investment program in Phoenix, Ariz. After being one of the first to kick-start the U.S. housing recovery, Phoenix is now set to lead in the second stage of growth with new jobs and rising property values. Check out what’s happening in Phoenix, Arizona at: www.RemoteRehabs.com The Remote Rehabs™ program offers a 100% hands-free, high-return way, to generate passive income in America’s hottest property markets. This service handles everything from sourcing properties, to acquisition, rehabbing and reselling for you. It’s ideal for those investors who lack time, lack experience, and need to earn more than what they’re currently earning. It brings together all the best of the ease of passive income investing with high returns and faster profits of flipping houses. It’s the aggressive way to generate cash, faster. So how do the returns stack up? Imagine: Instead of investing in buying a single rental property that throws off $15,000 a year in positive cashflow you used Remote Rehabs to flip houses for you. It conservatively takes an average of 90 days to fix and flip a house. So if you bought and sold just four houses per year and made $15,000 each time, you’d be way ahead. You’d be pocketing $60,000 per year. While your friends are just getting $15,000 per year on buy-andhold properties. What would an extra $60,000 per year do for your lifestyle or retirement savings?
THE REAL ESTATE CASH MACHINE This system effectively gives real estate investors an automatic cash machine. Real estate education is good, rentals are good, and hands on rehabbing is rewarding. But if you want to diversify, really kick finances into high gear, get ahead, and don’t want to have to sweat or take the time out, check out Remote Rehabs. Then, once you have this real estate cash machine working for you, you can roll over some of that money to buy-and-hold properties for long-term wealth building, or any other investment you are willing to take a shot at. About Sensei: Founder of Black Belt Investors, Sensei Gilliland has been featured on the cover of Real Estate Wealth Magazine, hosts ‘The West’s Top Ranked Real Estate Investors’ Club’ – 12 ROUNDS, and has engineered several highly popular trademarked real estate investment systems. Sensei is the go-to source for serious investors and entrepreneurs seeking extremely effective, no holds barred training, investment properties and funding. Claim your copy of his powerful Cash and Wealth by visiting: www.BlackBeltInvestors.com.
Renovating a Hotel, pg. 8
When You Can’t Find Real Estate Leads..., pg. 22
market segment with a few big players and the rest mostly individual marina owners, which means opportunity to add value to struggling owners; it combines real estate with business; it provides regular passive income; and marinas and resorts tend to be a happy place for people, thus our motto: Invest in something fun! LINDA: What’s next for Stacee Nelson and her numerous realty projects? STACEE: Going forward I’m focused on three areas in real estate: Acquiring marina and resort properties; purchasing REOs in bulk nationwide to fix and flip; and contributing to the expansion of the Cashflow Divas, an organization dedicated to helping women achieve their financial freedom goals through passive (and active) income investing and financial literacy.
STACEE DISHES HER SECRETS!
I
nvestor Stacee Nelson admits the process of becoming an entrepreneur has been exhilarating, as well as challenging — yes, even scary at times! We asked Nelson to jot down some tips for our readers. Below are a number of factors, which she says have been critical in her success as a real estate investor. · Have a clear vision of what you want to do and achieve, and then give it your all. Be tenacious in your pursuit, have faith in yourself and your vision, and do not give up! · Have a source of income and/or savings to get you through at least a year of living expenses before you leave your job. In my experience, everything takes longer than expected in real estate. Plan for that. · Surround yourself with the people you want to be like. For me that was successful entrepreneurs, business leaders and investors. · Partner with other investors who have a similar outlook on how you want to do business. I rarely do a deal alone. Sharing the project profits is well worth it to have partners with whom to share ideas, issues, opportunities and to raise capital · Get educated before jumping in. I went to countless seminars and trainings to understand not only various real estate investing strategies, but also marketing, asset protection, running a business and personal development. · Have a mindset of helping others achieve their goals, and understand that helping others first invariably leads to you getting what it is you desire. · Consider that 50% of something is better than 100% of nothing. I work with a lot of private investors. Sometimes the cost of capital is very high for a particular project. If it’s the difference between doing a deal and not, I take the higher cost of capital with graciousness and gratitude and get the deal done. · Work with honor, fairness and gratitude. BE the person people want to do business with. · And perhaps my biggest lesson so far is to simply ask each day ‘What do I want to create today?’, and then be ready and open to receiving it. · Plus, have fun on your journey!
CashFlow Express • Page 28
median incomes.” These historically high prices mean that people who are making less money have to spend more of the income that they do have on a home. REALTOR® Magazine reported on the decreased inventory across the country and the increased prices, saying, “The inventory of existing homes is at its lowest level in seven years, while newly constructed home inventory has hit a 50year low mark. Falling inventory is causing home prices to shoot up higher and faster than most analysts anticipated. The national median price of transacted homes was up 9.5 percent in August. Other price measures, like Case-Shiller and the Federal Housing Finance Agency price index, which look at price changes in sales of the same properties over time, have been rising as well, at double-digit annualized rates in recent months. Of course, not all markets are this robust. Phoenix is looking to notch a 25 percent gain for the year, while Chicago is just emerging from negative territory.” SURVIVING THE SHORTAGE AS A REAL ESTATE INVESTOR THROUGH PROBATES If you are interested in continuing to work in real estate, then you know something has to change. Real estate investors have a limited amount of options when facing a market like this. Some investors have simply moved on to other business opportunities, while others have succumbed to the increased prices, which have hurt their business and their balance sheets. But, there is a segment of real estate investors who have found a profitable way to deal with the challenges of the housing shortage by finding a new source of leads. While many investors are only looking at the traditional segments of the market – single family, residential homes that are for sale by families who want to upgrade that are listed on the traditional MLS-style forums – there are other homes on the market that can be purchased at a significant discount. Properties owned as part of a probate are widely available and can be purchased for well less than comparable homes in the area. In fact, there are an estimated 100,000 probates entering the market each and every month throughout the United States. Probate properties are those homes, apartments, multi-family homes and commercial sites that were previously owned by an individual who has passed. The local court then appoints an Executor to ensure that these homes and other properties are sold to take care of paying medical bills, funeral fees and other obligations. PROBATES PROVIDE MOTIVATED SELLERS Once you start working in probates, you will understand why Executors are motivated to sell their properties quickly and for a substantial – 30 percent to 50 percent off – of current market values. Each Executor is responsible to the court to ensure that the assets of the individual who has passed have been liquidated in order to meet financial obligations and provide an inheritance to the individuals left in the family. Execu- >
When You Can’t Find Real Estate Leads..., pg. 28
tors not only feel the pressure to sell because of the court, but they want to sell because of their own convenience. While some Executors can be a family attorney or an accountant, many times the Executor is a family member who has responsibilities of their own. They may even live out of state, and making repeated trips to show a home or apartment building can be nothing short of challenging. Executors also understand that, in addition to time constraints, the home their family member owned may not be fully updated. All of these conditions provide the opportunity for homes and other properties to be purchased for a fraction of the current market value. FINDING PROBATE LEADS Now that you understand the value of having access to probate properties in this challenging economy, you may be wondering how to get access to them. Many individuals who are starting a probate business decide that going to the local courthouse is the best way to look for opportunities in their area. This can take time, as you need to allow for travel to and from the courthouse, as well as time evaluating filings to see if there are holdings within the probate appropriate for your business. As you can imagine, this can take away valuable time from your growing investment business, your family, and the job you currently hold. There is a better way. By using a professional probate lead service you can have up-to-date information and leads delivered right to your inbox on a weekly basis. With no more trips to the courthouse, no time wasted looking at complex filings that are hard to understand, you will have more time to go out and evaluate properties and opportunities. Unlike traditional leads in the current real estate market, which can be nearly impossible to find and create the environment for high pricing, there are literally thousands of options for probate purchases each and every day. BUILD A VIBRANT REAL ESTATE INVESTMENT BUSINESS WITH PROBATES Having access to leads on a regular basis means that you will be able to find success in probate real estate investing. With time, patience and a carefully thought out business plan, you can be sure that having these leads will make an enormous difference in your ability to purchase homes and other properties, as well as acquire them at a favorable price. Probates are not limited to residential real estate, either. What you will find is that you can expand your investments to include apartment buildings, businesses, vacation homes and even purchase and resell personal property, including antiques, artwork and vehicles. The variety and opportunity with probates is endless because there is always a supply of leads available. THE MOST RELIABLE SOURCE Are you looking for a reliable lead source for all of your probate investment needs? The experts at US Probate Leads offer the highest quality leads available on the market today. Our certified lead specialists visit every courthouse in the United States, constantly evaluating new probate filings and making those available to our investors. In addition to our premium lead service, we also offer services that can keep you informed on the newest trends in the market. Contact our office today to learn more about our lead service, monthly newsletter, e-books, seminars, webinars and even our individualized mentoring program. Contact us today to speak to one of our friendly, knowledgeable customer service representatives.
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LandTrustsMadeSimple.com CashFlow Express • Page 29
Multifamily Gains Investor Interest
Elite Apartment Coaching started with a core mission: To help individuals achieve their financial goals by investing in apartments. By Chris Urso
I
’d like to share one of our client’s stories with you, as I think that many people overlook what resources they have at their disposal.
JOHNSON’S STORY
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Johnson knew he wanted to be involved with real estate. He attended many local real estate investment events, and seminars. He even purchased real estate education books and tapes that advised him to get out there and buy something! He did. He bought a single-family rental in Gloversville, NY, in the Bronx. He had also inherited a two family building in Brooklyn from his father. Mind you, he lives in the Bronx and was self-managing, spending most of his week driving from one property to another; losing money each month on each of these properties. When we sat down with him, he was exhausted! I knew he needed a clear plan that took a careful look at what his resources were and where he wanted to get financially. I told him he was going to have to rip off the band-aid and sell those singlefamily homes and take the loss. They were NOT part of his long-term plan. Johnson was single-minded in sticking to the plan, and some of these steps were tough. I was able to leverage a relationship that I had with a Brooklyn broker who took a look at his Brooklyn property. It turns out that what Johnson thought was a two-family with an illegal apartment, was really a two-lot piece of property. This Bushwick property finally sold at $1 million. This is part of the value that we create for our clients. Through the process of a 1031 exchange, a tax-deferred real estate investment vehicle, and our existing relationships, we were able to find Johnson a 23-unit beautiful true “B” investment property in Buckhead, Georgia. This is a stabilized deal that consistently produces cashflow from
CashFlow Express • Page 30
$8,000 to $10,000 per month. Would that have a positive impact on your life? There is nothing more rewarding for me than making a true difference in our clients’ lives. Johnson is now a new father and now has the time to spend with his son rather than on the road. I share this story with you because I think it is so powerful. Each investors’ story is different - and their resources as well; I will never promise that you can retire on the beach after one deal, and this is a dramatic example… But with careful planning and guidance buying an apartment building can truly alter the path that you’re on and get you where you want to go. We host three-day events throughout the year that show all levels of investors how to leverage apartment buildings to create true wealth. To get VIP info and a FREE gift, visit http://mfiweekend.com/ home. Christopher Urso is an investor, author and private real estate coach. His real estate investment company, URS Capital Partners, currently controls over $55,000,000 worth of apartments throughout the Midwest and Southeast and has raised over $20 million is private money. In 2011, alongside his wife Lisa, Chris created his coaching program Elite Apartment Coaching with a mission to help private real estate investors play a bigger game and create true wealth with the power of apartments. In the last three years his coaching program has helped his clients purchase over $50,000,000 worth of real estate in 10 states. Through his Elite Apartment Coaching Program, Chris says he is able to change the lives of his clients, and guide them to their financial goals. For more information, visit online: www.urscapitalpartners.com or www.eliteapartmentcoaching.com
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Colony American Finance, LLC (and its subsidiaries) makes commercial, business purpose loans to investors of tenant-occupied single-family rental properties. Colony American Finance, LLC does not make residential mortgage loans. Loans are for investment purposes only and not for personal, family, or household use. Loan product availability may be limited in certain states. This is not a commitment to lend. All loans are subject to borrower underwriting and credit approval, in Colony American Finance, LLC’s sole and absolute discretion. Other restrictions apply. * Lending products and services offered in California will be brokered by Jennifer Goralski, California Bureau of Real Estate, Real Estate Broker (CalBRE License Number 01924804). Colony American Finance shall have no liability, contingent or otherwise, to an investor or third parties, or any responsibility whatsoever, for the correctness, quality, accuracy, pricing, reliability, performance or completeness of the data or information provided herein or for any other aspect of the performance of these materials, and nothing contained herein shall be relied upon as a promise or representation whether as to past or future performance. This material may include estimates and projections and involve significant elements of subjective judgment and analysis.