Realty411 Realty411Print Online Networkwww.realty411guide.com |
Vol. 3 No. 2 2010
A Resource Guide for Investors
Tips for Long-Distance
LANDLORDING
Turn-Key Rentals Around the NationCash Flow from the Comfort of
HomeMathew Owens, CPA, owner of
OCG PROPERTIESBuys & RehabsRentals in Tennessee from Redondo
Beach
Get the Deals DONELearn Creative Real Estate Techniquesfrom Dave
Lindahl, Dolf de Roos, Bruce Norris, Bill Gatten & more!
Wealth Reports!
FREE
Look Inside
Celebrating the Largest Issue with More Pages &
Opportunities than Ever!
photo by Sam Green
>7 Secrets from the Master! Dave Lindahl shares his latest
tips for Investing Success 9 No Drama in Dayton Triple Net Houses
Helps Investors Profit without Issues 11 California Living with
Tennessee Cash Flow Mathew Owens, CPA, owner of OCG Properties,
explains why he loves to invest out of state 14 Beware of the
Investment Vampires by RBS Homes 16 Dolf & Carter: A Mastermind
with Arizona Investors 19 Enjoy a Tropical Paradise with Phenomenal
Returns Charity Walk and Gala 37 Join the Ultimate Bus Tour with
MemphisInvest.com 39 Creative Financing Options with MMG Capital,
LLC 40 Philbin Capital Discovers Deals in the Golden State 42 The
Key to Success by Club Founder Sam Sadat
photo: Sam Green
In search of their latest gem in Nicaragua, Maverick Investor
Group traveled the world 22 Investor Nation Shares their Blue-Chip
Real Estate Strategy 2 5 G i n g e r M a c i a s T h r e e FREE
Ways to find a Great Wholesale Deal 27 Creative Real Estate
Techniques with Educator Bill Gatten 28 Matt Maloufs 10 Weeks to
Massive, Passive Cash Flow 30 A Visit with Sensei at his 12 Rounds
Club 35 Bruce Norris discusses the I Survived Real Estate 2010
45 Buy Bigger and Better Deals by Kathy Fettke 46 Alternative
Economics Club Debuts in California 51 Stop the Gambling! Mike Woo,
a Rich Dad, Poor Dad protg, advises clients 52 Is Your Mortgage
Underwater? Perhaps a Short Pay Refinance is the Answer 55 Pay Off
Your Rental House in Five Years with the Short Term Retirement
Program
57 Whos On Your Team? Insights by 360 Investments
A Powerhouse Lineup of Top Industry Experts Presents the
Insiders Edge on The State of REO 2010
Platinum Partners
The Norris Groups award-winning event returns September 17, 2010
to the Nixon Library in Yorba Linda, California. Were assembling an
incredible line up of accomplished industry specialists to discuss
the state of the REO market, on-going industry regulations, and the
opportunities emerging for real estate professionals. New
guidelines a ect every sector of our industry. In a climate ripe
for both miscalculation and pro table advances, how are our
colleagues and partners navigating an industry in continued
transition? Our Whos Who Round Table Includes:
Bruce Norris President The Norris Group
Joseph Magdziarz Vice President Appraisal Institute
Tommy Williams 2008 President National Auctioneers
Association
Christopher Thornberg Principal Beacon Economics
Sean OToole President Foreclosure Radar
Sarah Letts Director, Credit Loss Mgmt Fannie Mae
Daniel Phelan Mortgage Bankers Association
Peter Wayman Sr. REO Director Freddie Mac
MVT PRODUCTIONS
Last year, I Survived Real Estate 2009 focused on the dramatic
shifts in regulation facing our industry. This year, our panel
separates fact from ction as we delve into the health and
sustainability of the current real estate market and the
opportunities that lie ahead for hungry real estate professionals.
To nd out how you can participate as an individual or potential
sponsor, see the back of this yer or visit ISurvived2010. com for
more information. Seating to this formal dinner event is limited,
so go to the website or call our o ce today. Thanks you to all our
Platinum and Gold Sponsors and friends for making this unique event
a possibility.
www.ISurvived2010.com or 951-780-5856
Gold SponsorsBenton Group Delmae Properties Elite Auctions
Entrust Inland Empire Investors Forum Keystone CPA Las Brisas
Escrow Leivas Financial Services North San Diego Real Estate
Investors Association (NSDREI) Personal Real Estate Investor
Magazine Mike Cantu Realty 411 Magazine Rick & LeeAnne Rossiter
Starz Photography Tony Alvarez theREOmentor.com Westin South Coast
Plaza
SPONSORSHIP OPPORTUNITIESWe cant do this without your help!
Businesses or individuals who are interested in participating have
two options: 1. SPONSOR the I Survived Real Estate Komen Breast
Cancer Walking Team in exchange for a seat (or table) at the event
2. JOIN the I Survived Real Estate Komen Walking Team and raise
money in your network for the walk in Newport Beach September 26th.
Every $200 gets you one seat to the event (while seats remain). All
donations are made directly to our Susan G. Komen Breast Cancer
Walk Team so 100% of the proceeds go to the Orange County A liate
of Susan G. Komen for the Cure. This formal dinner event includes
visitation to the Nixon Museum, appetizers, 3 course meal, and the
live event. Additional bene ts are listed below for those that
become platinum and gold sponsors (Please note all funds must be in
place July 10th for gold and platinum sponsors to take advantage of
initial radio spots).
Winner of seven communication, outreach, and fundraising
awards.
SingleCost Tables (Seats) Received AdvertisingLogo on Event
Website SEO-Optimized Pro le Logo on Flyers Digital Signage at
Event Preferred Seating Event Program Ad Radio Show Mention (Intro
- 15 total*) Radio Show Mention (Outtro - 15 total*) Event Video
(Intro - Single Page) Event Video (Outtro) Press Release Mention
Event Bag Marketing Oppotunity
Gold$2,000 1 (10)
Platinum$5,000+ 2 (20)featured
$200 (1) Seat
Name only featured featured 1/3 page 1/2 page
Call Diana Barlet at 951-780-5856 or visit ISurvived2010.com for
more information and preferred seating.Note: All donations must be
made through the I Survived Real Estate 2010 walk team to be
eligible for advertising. July 10th is the deadline for all money
to be in place to ensure radio spots include the selected sponsor.
There may be more than 15 radio shows that are aired for the run of
event.
Dont You have better things to do than deal with tenants and
toilets?Yes, we know you do.This is why the Herrera Sindell Group
developed a turn-key program, which provides investors HIGH
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Management In Place, No Need to WorryAs featured in Realty411
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Is this opportunity right for you?Visit our ofce and see why so
many investors are enjoying unbeatable returns and safety, all
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www.herrerasindell.com
Toll Free (877) 949-2772Disclaimer: This is not a public
offering nor is it a REIT or hedge fund. This is not an offer or
invitation to sell or a solicitation of any offer to purchase
securities in the United States or any other jurisdiction. Any
securities may only be offered or sold, directly or indirectly, in
the state or states in which they have been registered or may be
offered under an appropriate exemption.
Realty411Real Estate
published for Investors by Investors
WealthFOUNDER & EDITOR Linda Pliagas [email protected]
EDITORIAL STAFF Lori Peebles Matt Malouf Carla Fischer Ginger
Macias COPY EDITOR Lorie L. West PHOTOGRAPHERS Sam Green John
DeCindis COLUMNISTS Dave Lindahl Charles Salisbury ADVERTISING
Kelly Global Marketing [email protected] 310.439.1145 EVENTS &
EXPOS Lawrence Ruano ruanoinvestments@gmail 805.791.5457 PRODUCTION
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&
A
by Dave Lindahl
s a successful real estate investor and top-selling author, Im
on the road a lot presenting workshops across the county. I often
start with a bit of personal history because when youre a
multimillionaire like I am, people assume you were either born rich
or had a wealthy mentor show you the inside track to making money.
Thats not my story. Not by a long shot. Fifteen years ago, I was
running my own small landscaping business in New England. I was a
guy with a pickup truck and lawn mower. If you havent experienced a
New England winter, let me simply say it
$5,000$10,000 or More Extra Monthly Cash Flow?means I was
literally frozen out of work for a good part of the year. I spent
winters doing odd jobs to scrape by. A friend asked if I wanted to
repair a property that needed some TLC so it could be resold fast.
The owner was looking for a quick fix and flip, and thus I was
indoctrinated in the business of flipping properties before it
became a national pastime and the subject of cable TV shows. But
what attracted me to real estate was not the quick turn. It was the
steady cash flow. The idea of checks from renters filling my
mailbox month after month, regardless of the weather, really
appealed to me. I wanted other people to pay my mortgages, creating
huge equity in my buildings. I wanted to sit back and watch my
buildings appreciate, making me wealthier and wealthier. I wanted
to live off the positive cash flow that I received each month, so I
wouldnt have to go to a job every day. No more daily grind. No more
living paycheck to paycheck. Best of all, I liked that millionaire
was the likely outcome if I did it right. Back then there was
nobody teaching how to buy rental properties. The gurus focused on
single family houses, just as they do today. So I had a big
learning curve.Realty411Guide.com
Who Else Wants Up toWhat You Need to Succeed First and foremost,
to succeed as a real estate investor you must be motivated. This
business isnt for the undecided. You have to want it bad enough to
take action. Because where theres a strong will, theres wealth. I
was 100% determined to own real estate. I didnt let the fact that I
had a less than $800 in the bank stop me from buying my first
property, a three-unit building in my hometown. Sure, I was nervous
doing that first deal. I had no direct experience. No track record.
No personal wealth to use for collateral. But I didnt let any of
that stop me. This is why I tell beginners everywhere that they can
own real estate right now. I dont care if youre broke like I was.
If youre motivated to succeed, real estate and all the personal
wealth it can generate can be yours once you know how to find
properties and structure the deal.How I Found My First Building I
bought books and tapes on real estate, even though I didnt find
much on apartments. I went to local investment clubs, networked
with experienced investors, and started bird-dogging for them
(findingContinued on pg. 60
Realty411 and Real Estate Wealth magazines are published in Los
Angeles by Manifest Media Partners (mailing address: 4221 Neosho
Ave., Los Angeles, CA 90066). Publishers are not responsible for
unsolicited manuscripts, photographs and/or other materials.
Copyright 2010. All Rights Reserved. Reproduction without
permission is strictly prohibited. The opinions expressed by
writers are not endorsed by the publishers and/or editorial staff.
Before investing in real estate, seek the advisement of a trusted
nancial adviser, attorney or tax consultant. Please invest
responsibly.PRINTED IN THE USA. GOD BLESS AMERICA
INFO/FAX: 310.499.9545 Realty411Guide.com | reWEALTHmag.com Main
email: [email protected]
Our Mission is to Educate & Inspire
Connect to our network @
PAGE 7 2010
reWEALTHmag.com
invest without dramaDo you have reservations about becoming a
landlord? Triple Net Houses created a program to help investors
prot from rental properties without ever having to deal with
tenants!n 1903 The Wright Brothers made history in Dayton, Ohio,
with their first power airplane flight. One hundred four years
later, Peter Julian, CEO of Triple Net Houses, reflects on their
short three-year revolutionary history that began in 2007 as a
premiere provider of real estate management. Weve reinvented the
way people invest in residential rental real estate, Julian says
proudly. He then adds: Its kinda
I
by Carla Fischer
(www.triplenethouses. com) takes all the unknowns off the table.
By purchasing a Triple Net rental, investors will know exactly what
their cash flow is going to be for the next ten years. Julian
explains: When Peter Julian we lease the house its a triple net
lease, which means we pay taxes, insurance and maintenance.
Basically we pay all the operating expenses, so theres nothing our
clients have to pay. We man-
there. When we rehab a property we pretty much do everything so
we know its going to be a maintenance-free property. When we
finish, its almost like a new house. The companys record is
impressive. In the year 2009, we collected 97.4 percent of our
scheduled rent, Julian proudly states. It even amazes me! In
Dayton, market rents range from $595 to $950. The company rents
with a one year lease agreement. A typical scenario
If an investor buys a Triple Net House, they know exactly what
their cash ow is going to be for the next 10 years. They never have
to deal with tenants and never have to deal with or pay for
maintenance.overcast. Were going to get some rain later on, which
doesnt mean a thing for our investors who are from all over the
country. The weather rarely has anything to do with our business,
unlike the Wright Brothers. Julian shifts to business quickly
explaining how he created a NNN (triple net) investing model, which
is traditionally only found in commercial real estate transactions.
Ive been a real estate broker for a little over 30 years. Ive
worked with investors my entire career. When I talk to them, most
like all the good things about real estate, like the cash flow, the
tax write-offs, building-up equity, and potential appreciation. But
when potential investors get to talking about managing, theyve all
heard the horror stories about tenants, maintenance and all those
kinds of things. So Julian and his team came up with a unique
solution. Its basic and simple, even though it tackles a
complicated concept. The Triple Net Houses
programRealty411Guide.com
age the property so theres no management. Investors will never
have to deal with a tenant and never have to deal with or pay for
maintenance, Julian explains. The company offers a 10-year NNN
(triple net) lease. If investors want to terminate early, all they
have to do is provide a 60-day written notice. There is no penalty
and the investor still owns the property. Its a turn-key
investment. It pays a high yield and were able to buy houses at low
cost and rehab them economically. We then pass that deal on to an
investor, as a totally turn-key investment. Their total involvement
after the investment is to collect a payment from us each month,
which is electronically deposited into their checking account. Its
a perfect storm. When asked how Triple Net Houses can provide
guaranteed returns for investors, regardless of what is going on
with their property, Julian replies: Were very careful in selecting
properties in neighborhoods where we know the rents are going to
bePAGE 9 2010
is this: A tenant occupies a three bedroom, one bath home, 1,100
square feet, with a one car garage, for $700 a month. Many homes
are brick with full basements, some are ranch houses built in the
late 50s. Dayton is home to the largest single site employer in the
state of Ohio: Wright Patterson Air Force Base with 26,000
employees. The city also has two universities: Wright State
University with an enrollment of about 18,000, including a medical
school. Next is the University of Dayton, which enrolls over 10,000
students and also offers a law school program. As far as the
financials, a Triple Net investor can realize up to 17% return on
each house. If the investor pays cash then they will receive 9.1%.
Julian explains further: For example, if they have a $60,000 house
the investor will be receiving $5,460 a year, which is 9.1% of the
purchase price.Continued on pg. 47reWEALTHmag.com
California Investors Specializing in the Memphis Market!
L
Tennessee Rentalsby Ginger Macias | photography by Sam
GreenGinger: What did you do before you became a full-time real
estate investor? What is your background? Mathew: Lets see, I grew
up in the tiny town of Los Angeles and graduated from the
University of California, Santa Barbara, with a degree in economics
and an emphasis in accounting. Afterwards, I was able to achieve
one of the accomplishments I am most proud of, passing all four
parts of the CPA exam in one sitting, a feat only 10% of candidates
have been able to do. After passing the exam, I worked as a CPA,
auditor and business adviser, helping my corporate and individual
clients increase their bottom line, helping them find fraud risk
factors inside their business systems and auditing their accounting
records. I guess that is why I am so good at doing due diligence on
real estate transactions now. The accounting and due diligence
skills are a perfect match for a real estate investor, I just had
to adjust my personality to be more outgoing and personable, which
most CPAs are not known to be. Being in the real estate industry as
a full-time investor, I am finding it is rare to find a CPA who
understands the tax and legal implications of investing and the
real estate investment side in detail. Ginger: So tell us, how did
you get your start in real estate? Mathew: I started investing
about five years before I decided to take some real estate
education courses and quit my corporate job cold turkey. I found
that the skill sets I gained from working at CPA firms were hugely
valuable, and I still hold the partners of those firms with the
upmost respect for what they taught me, the ethics they instilled
in me and the guidance they gave me. However, the skills that I
have developed running my own company are unparalleled to anything
I would have ever expected. While working for myself, I started
flipping and holding properties >PAGE 11 2010reWEALTHmag.com
California Life
ast year, while working as a panelist at a local real estate
investment club in Los Angeles, I had the pleasure of meeting
Mathew Owens, a certified public accountant and owner of OCG
Properties. I was so impressed by his experience and work ethic
that I invited him to partner with me on syndicating real estate
projects. Having worked closely with him for almost six months now,
I can say that hes the real deal and youll be in for a treat if you
get the chance to work with him. Mathew has many strengths that
make him a great partner: integrity, organizational skills, and
real estate and investment proficiency. Plus, hes very likable. I
have met a lot of people in this business, and I expect great
things from him in the coming years. I recently sat down with him
to ask about his real estate investing strategies and the current
projects hes working on out in Tennessee. Mathew has purchased,
renovated, and sold or held more than 100 investment properties in
the last three years alone. Below is a partial transcript of the
interview I had with him. Ginger: Mathew, in your own words, what
exactly does OCG Properties do? Mathew: In a nutshell, we help
people invest in real estate. At OCG, we sit down and go over our
clients financial situation and resources to help them find the
best ways to invest and meet their individual goals. With good
in-house management in place, you can hold for long-term growth and
really get a great return on your money. On top of that, the price
points are low enough that you can buy with cash and not even have
to deal with financing. Talk about low risk! We help our clients
achieve great returns on their money while doing all of the due
diligence on every investment. We bring a ton of real estate
experience to the table and help our investors every step of the
way.
Realty411Guide.com
in Memphis. I got through my initial learning curve and kept
striving for more deals with a magnificent obsession for real
estate that only few can really understand. It was tough, but after
getting through the struggles, you find yourself breaking through
and finally achieving success. Working that much taught me multiple
things. But one thing stuck more than anything else: Passive income
is the goal! Ginger: You live in Southern California and invest in
Memphis, Tennessee. Why do you invest so far away from where you
live? Mathew: That is right, I live in sunny Redondo Beach and
invest in Memphis. Most of the investors I meet ask me this exact
question, and the simple answer is: I invest with logic and
statistics, not based on what my emotions are telling me. Look at
the economics in the Memphis market. It has one of the highest
price-torent ratios in the nation! It did not take a huge dip like
a lot of markets, it had an average annual appreciation of 4% per
year over the past 20 years. Its a very stable market. The
population is also expected to increase and you can pick up
property that not only cash flows but gives you appreciation
potential in the next 10 years, which is
that the current reported unemployment to go out and develop a
team in every marrate is 12.8%, there is a $19.9 billion dollar
ket, which is exactly what we did out in gap in the California
budget, the California Memphis. We have in-house management
mortgage delinquency is up almost 100% and a team on the ground
there that helps year on year, 90% of us get all of the the Alt-A
and Option Mathew Owens, his brother and little sister. information
we ARM loans coming need to be sucdue are underwater in cessful.
California, 1/3 of Option ARM loans are Ginger: What delinquent
already, the team members California tax rate rose should one have
from 9.3% in 2008 to when investing 9.55% in 2009, and it out of
state? will rise again to cover Mathew: There the gap in the
budget. are a number of On top of all that, team members people who
are underyou need in order water in their homes to be a successand
not in financial ful real estate hardship are starting investor. At
the to walk away because top of the list it does not make finanfor
any buy-andcial sense to hold them hold investor is a and hope they
go up great, and I mean $200,000! G R E AT, p r o p e r t y m a n a
g e r. Ginger: Im an outProperty manof-state investor too but other
investors agement is the number one reason an inmay be skeptical
about owning property vestment property will fail to produce posiso
far away. tive cash flow, assuming you did your numbers correctly
and did not buy in a ghetto. In addition, an investor needs
lenders, REALTORS, inspectors, appraisers, attorneys, CPAs, IT
consultants, marketing agents and the whole nine yards to really
develop a good system. Each team member is crucial to your success,
and that is why investing in real estate can be so difficult at
times. Your team can make or break you, and you need to have
reliable team members that communicate well with you to be
successful. Ginger: What separates your company, OCG Properties,
from the rest? Mathew: At OCG we have in-house property management,
which is the key to our and your investment success. We also take
an ethical and conservative approach to investing and do all of the
right due diligence on every investment. We really care for our
clients and care about their goals and what their interests are. We
have a guaranteed tenant and renovation on every property, and put
the properreWEALTHmag.com
A sample OCG Property.
not something I can say about California. California is a huge
risk right now for buyand-hold investments. If you take a look at
some of the economic indicators in the California real estate
market, some of the things you will find areRealty411Guide.com
Mathew: They are really missing out! Ginger, we both know that
with technological advances you can invest anywhere in the world
now, and its as if youre investing in your own backyard. The
reality is, everyone has the resourcesPAGE 12 2010
structuring and risk mitigation procedures in place on every
investment. We also set up proper communication procedures for our
management company to keep our investors frequently updated on the
progress of their investment. Ginger: What due diligence is done on
your investments? Mathew: Wow, where do I begin? I will give you
the quick version. To start off, we do a complete neighborhood
analysis on every property along with a market value analysis,
which includes pulling comparable sales and getting an appraisal
done before we close es-
exactly what the majority of men do. If you never quit, you will
succeed no matter what adversity you face. Ginger: What is the
first step someone needs to take to invest with you? Mathew: They
need to call us and schedule a consultation. We look at each
investors resources, financial situation and investment goals to
make sure we help them invest the right way and surpass their
individual investment goals. Once an investor schedules a
consultation with us, we move them from sitting on the sidelines to
developing a passive income stream to retire on as fast and safely
as possible. Mathew: Do not give up, no matter what. Any business,
any new venture or opportunity that you want to achieve, is 90%
mental and 10% skill. If you never give up, you can never lose. Its
best said in the book Ginger: Do you have anything else you would
like to share with our readers? Mathew: Yes, thank you. I would
just like to add that some people will make up every excuse in the
book for why they do not or cannot do something. I am here to
tell
With technological advances you can invest anywhere in the world
now, and its as if youre investing in your own backyard.crow. We
also do a rental analysis, cash flow analysis, profit analysis,
renovation analysis and every kind of analysis a CPA can think of
to protect ourselves and our investors. In addition, we get an
inspection by a qualified inspector and compare it to the
renovation bid. Each renovation bid comes with an item-by-item,
room-by-room breakdown of the renovation costs, including materials
and labor. This is extremely important so you know what your costs
are going to be on future renovations. When leasing a property, it
is important to get a qualified tenant. If you do not, you will be
sorry later when you have to evict them because they cannot afford
the rent. We qualify them similar to a home loan process. We look
at their debt-to-income ratio and credit. We do a background check
and really get a good assessment of their personality, which can
tell you a lot. Ginger: What tips can you give to people who want
to get started investing in real estate?Realty411Guide.com
Think and Grow Rich by Napoleon Hill: Before success comes in
anyones life, one is sure to meet with much temporary defeat, and,
perhaps, some failure. When defeat overtakes someone, the easiest
and most logical thing to do is to QUIT. That is
you that you can do ANYTHING if you focus and take ACTION steps
towards its achievement. Do not let your emotions tell you it
cannot be done, even if you were not initially successful. Even if
it is difficult to see how you are going to accomplish it, dont
give up. There is always a way, but it comes down to taking action.
Most people give up at the mere thought of difficulty, and your
success in real estate, and in life, are going to be based on your
ability to focus and take action. Also, a successful investor has
to be completely dedicated. They must ignore all of the people who
have an opinion but are less- educated about the subject. Ginger:
Thanks, Mathew. I wish you continued success in your investments.
Mathew: Youre welcome, Ginger. For more information, please visit:
www.ocgproperties.com or email: [email protected] | OCG Properties
can also be reached at: (424) 757-4680reWEALTHmag.com
Photograph of Mathew Owens by Sam GreenPAGE 13 2010
Investin YOUReal Estateth A ia ec Sp blish m 1 fro 41 on ty iti
Real l Ed s of er e Pu
Investment Vampires for the Next Decade
Realty411 Realty411 Wealthwww.realty411guide.com | Vol. 3 No. 2
2010
Never Miss an Issue!A Resource Guide for InvestorsVol. 1 No. 1
2010
Tips for Long-Distance
LANDLORDING
Maverick Investor Group
Turn-Key RentalsCash Flow from the Comfort of Home
Around the NationMathew Owens, CPA, owner of
OCG PROPERTIESBuys & RehabsRentals in Tennessee from Redondo
Beach
T
by Richard Barrett
Get the Deals DONELearn Creative Real Estate TechniquesLook
Inside
Wealth Report!
FREE
from Dave Lindahl, Dolf de Roos, Bruce Norris, Bill Gatten and
more!
Celebrating the Largest Issue with More Pages &
Opportunities than Ever!
Serving the Needs of Accredited Investors - INSIDE: Information
to Grow and Maintain Your Wealthphoto by Sam Green
16
Words of Wisdom from Masters of Real Estate
19
Maverick Investor Group Reveals the Next BIG Thing
35
Bruce Norris Prepares for Annual I Survived Real Estate
Charity
2 Magazines, 1 Mission: To GROW Your Wealth
he ten years ahead of us will be extremely difficult for
investors. Yield and growth will be scarce, but much worse will be
the four vampires waiting to suck the life out of almost every
investment you consider. In this article, we will meet each vampire
individually, understand how they drain your investments dry and
learn about some investing garlic that can keep them away. Ination:
the First Investment Vampire. If you remember President Gerald Ford
then you may remember his Whip Inflation Now campaign, created to
fight inflation climbing over 10%. Eventually inflation reached
over 14% annually in 1980, ushering in years of stagflationhigh
inflation combined with high unemployment. In only five years the
value of investments dropped by 50% and the dollar lost almost 75%
of its purchasing power during that decade. This year, with
unemployment and underemployment already approaching 25%, the
nation is poised to see a replay of those difficult years. To
estimate the curve of inflation in this new decade, we need a basic
understanding of the causes of inflation. Noble Prize winning
economist Milton Friedman said it best, Inflation is always and
everywhere a monetary phenomenon. In other words, when the Federal
Reserve prints more money than the economy can absorb, the economy
catches a bad case of inflation in the next 12-24 months. The money
supply exploded in 2009. It doubled in the space of a few months
and then grew another 50% in the next year. Since the economy has
not grown by 150% in the past two years, all this money is waiting
in bank vaults to drive signifiPAGE 14 2010
cant inflation soon. Experts argue that deflation is the bigger
risk. While that may be true, it does not make inflation any less
destructive when it starts nibbling at your investments. Garlic to
Protect Your investments from the Ination Vampire To protect
against the corrosive power of inflation, you need investing
vehicles with three specific features: Asset value that tracks
inflation. Asset income that tracks inflation. Asset that has
considerable leverage. Its no surprise that investment real estate
has all three of these critical features. In general real estate
values track inflation. That is, their value remains constant or
appreciates even as the value of each dollar declines. Likewise,
the income rentfrom investment property tends to track inflation.
And finally, you can leverage your investment asset. But Not Just
Any Real Estate! In truth, most real estate does not deliver these
three critical features. The past few years, have seen crushing
drops in the price of condos in Miami, almost any property in
Detroit, suburban tract homes in Phoenix, plus office towers and
shopping malls across the country. Buying investment property takes
effort, considerable research and a team of experts working to
assist you. With the right guidance and team in place, an investor
will never have to worry about those evil investment vampires.
Richard Barrett is CEO of RBS Homes (www.RBSHomes.com). With
offices based in California and Texas, RBS Homes provide investment
properties with these three critical factors in
place.reWEALTHmag.com
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T
he world of real estate investing is a small one. Investors rub
elbows at similar events, read industry publications and generally
run in the same circles. Carter Froelich, an author, investor and
CEO of The Property Ledger, recalls the time he met bestselling
author and renowned educator Dolf de Roos, Ph.D. The two savvy
Phoenix-based investors became friends after an introduction by
Andrew Waite, publisher of the Arizona-based, Personal Real Estate
Investor magazine. At the time, Froelich was busy developing The
Property Ledger, his online software designed to analyze property
holdings, store documents and forecast future returns. Once ready
to launch, he asked de Roos to test out his creation. That was
three years ago, and de Roos still uses the software to track his
portfolio. Recently, Froelich welcomed de Roos home from his
extended visit to Australia. The famed author of eight books,
including the New York Times Best Seller Real Estate Riches, was
visiting Down Under to raise private money for property investments
in Arizona. It proved to be a wonderful opportunity for one master
investor to interview another. Froelich enthusiastically took on
our assignment and provided an outstanding interview. This indeed
is a rare treat; prepare to learn from two of Arizonas top real
estate investing giants. The EditorCarter: Hello, Dolf. Tell us
about what youve been doing lately and give investors your
perspective on the market. Dolf: Well, Carter, although the media
repeatedly states this is the worst real estate market we have seen
in decades, it is only
DolfreadersCarter & the latest giveInterview by Carter
Froelich, CEO of The Property Ledger
Tips from AZ
Dolf de Roos
Carter Froelich
Dolf: I like being on the cutting edge of what is available. I
have always done well with new technology. When fax machines came
out, it saved us thousands of dollars a year in courier fees. Now,
we dont fax; scanned attachments
... with the information stored in the cloud, you can access
your portfolios details from any computer connected to the Web.the
worst market if you are in the unfortunate position of being forced
to sell. If you are in the fortunate position of being able to buy,
then by definition, this is the best market we have seen in
decades. With that said, there are still many who have trepidation
about entering our current real estate market. This has forced me
to go overseas. There are many countries right now experiencing the
peak we saw a few years ago so they see the relative merits of
bringing their money to the United States and investing here.
Carter: Why did you become interested in The Property
Ledger?Realty411Guide.com
are better quality, in full color and dont require an outdated
phone system to get through to a recipient. When I come across
people in the real estate industry who do not use email, and insist
on using faxes exclusively, I think they must miss out on deals
because of their aversion to new technology. I do not want to fall
into that trap. The Property Ledger is cutting edge,
extraordinarily useful and easy to use. Why would you not use it?
Carter: What benefits are provided by The Property Ledger, which
other products do not provide? Dolf: With the information stored in
thePAGE 16 2010
cloud, you can access your portfolios details from any computer
connected to the Web. Before long, most services will have that
feature, but by then The Property Ledger will have innovated yet
another area. Surfing is so much easier one foot ahead of the wave
than one foot behind. Furthermore, having all the details of a
property, including title documents, HUD1s, leases, management
agreements, and the like, stored in one central repository is
simply a great way to run your property investment business. Once
you have experienced it, it is difficult to revert back. It would
be like going back to using sliderules, or for those readers not
old enough to remember what they are, the curly-paged and faded fax
machine if they even remember that! Carter: Since you travel often,
are the features of Electronic Library useful? Dolf: Absolutely. In
fact, more and more companies are trending towards cloud computing.
Clearly, it is convenient to be able to access all the relevant
data on a property from anywhere and not have to be concerned with
taking up space on your own computer, keeping data in sync, having
the data concerned fall into strange hands in the event of a
computer loss, inreWEALTHmag.com
stalling upgrades, etc. It is all done for the end user. Carter:
Why is it important for investors to monitor the financial
performance of their real estate portfolio? Dolf: Interestingly, it
is important for investors in stocks and commodities to maintain a
vigilant eye on their volatile investments so that they can jump
ship if the ship starts to sink. With real estate being a much more
stable investment, much of the interest in monitoring your
portfolio is just that: interest. However, if you want to know when
you can invest in yet another property, based on cash-reserve
build-up, equity position, available collateral, etc.), then you
want to have the up-to-date information available instantly. The
Property Ledger provides just that when you need it. Carter: How
often should an investor track the financial performance of their
real estate portfolio? Dolf: As often as they feel comfortable. One
of the advantages of real estate investing that I often tout is
that unlike the stock market, where you have to monitor your
investments regularly, with real estate, you can buy a property
and put the title in a bottom drawer, take a six-month cruise, and
not worry if you should sell the property again. However, it is
comforting to be able to put your finger on the pulse of how your
investments are performing. Carter: What is your favorite financial
calculation when analyzing your properties? And why? Here are the
choices: Gross Rent Multiplier Cash-on-Cash Return on Investment
After Tax Cash-on-Cash Return Internal Rate of Return Return on
Equity Dolf: I like to analyze based on cash-oncash return. This
calculation shows you how the cash you are putting up is
performing. It is the prime indicator of how you can truly leverage
your money. What other investment allows you to get a $100,000
asset for only $10,000 or $20,000 in cash? For most investors, you
cant buy $100,000 worth of stock or gold or oil without coming up
with the entire purchase price in full. When you put up all the
money to buy an investment, the return is
simply the income divided by the investment. With real estate,
since you only need to come up with a small portion of the purchase
price in cash, the cash-on-cash return becomes very important and,
dare I say it, interesting. It is an advantage inherent in real
estate investing that is often overlooked by financial advisors.
Carter: What type of investment do you favor right now and why?
Dolf: When it comes to residential property, I prefer the
single-family home. However, for the last two decades, I have
personally focused on commercial real estate. That doesnt mean I
havent invested in other sectors but the benefits of commercial
real estate for the property owner are incredible. Here are just a
few of the benefits: 1. The leases tend to be much longer anything
from three to twenty years. They are generally secured by the
business, with the owners offering a personal guarantee. 2.
Commercial tenants tend to maintain the property better as the look
and condition of the property is important to their
business.Continued on next page
Dolf & Carter, pg. 17
Tenants often improve and upgrade the space with their own
money. 3. With residential property, the landlord tends to pay the
outgoings such as property taxes, insurance and maintenance. With
commercial real estate, the tenants who are leasing the property,
pay for those expenses. Carter: Were both located in Arizona; lets
discuss the local market. Where is it heading? Dolf: Im optimistic.
There was an article in the paper just three days ago stating
Taylor Morrison Homes will begin construction in July of a
master-planned community in Gilbert. There will be 17 phases
developed over the next 12 years according to the report submitted
to
the Gilbert Planning Commission. This is indicative of the long
term. In the short term, things look pretty grim, again, if you are
forced to sell. There is word on the street that there will not be
a u-turn for years. Things go in cycles. When you get old enough to
have experienced a few cycles, you learn to embrace them rather
than fear them. There will be a turnaround. If you can buy real
estate that cash flows now and have a great chance that long term
the capital value will go up immensely, why would you not acquire
some real estate? Learn more online about The Property Ledger,
visit: www.thepropertyledger.com To reach Dr. Dolf de Roos, visit:
www.dolfderoos.com
FREE e-Book Offer, For a Limited
Time!http://thepropertyledger.com/buy/90-the-real-estate-wake-up-call-e-book-free
Download The Real Estate Wake Up Call Today
Best Investment PropertiesInterview by Linda Pliagas
Maverick Investor Group Scours the Globe for the
W
ith a name like Maverick, one immediately expects the
unexpected. Real estate with a hip and a bit of a rebellious twist.
Maverick Investor Group delivers all that and more. It is a real
estate brokerage that caters to a community of sophisticated real
estate investors and agents, all of whom are committed to using
real estate as a vehicle for designing their lifestyles. The
brokerage is licensed with its primary office in Las Vegas, but the
Maverick principals all live in different states, work from laptops
on rooftop pool decks, and travel the globe in search of premium
buying opportunities for their exclusive clientele. Maverick
negotiates directly with developers and owners for prices and terms
that are not available to the public. The buying power of the
Maverick community enables developers to move more properties in
less time and save money on advertising, marketing and other normal
overhead. This allows them to offer special prices and terms to
buyers in the Maverick community that they could not offer to the
general public. Indeed, the traditional brick-and-mortar
neighborhood brokerage dedicated to farming a five-mile radius,
driving buyers around and sitting at open houses seems like an
archaic business model next to Maverick. Even more avant-garde than
their business model is their corporate vision: To
Mark Solak
Valerie Schrock
Matt Bowles
Next Destination: The Hidden Tropical Paradise
of...Nicaraguaradically improve peoples lives through real estate.
And their radical approach to real estate is working. Even during
2009, in a single 90-day period, the company was able
toRealty411Guide.com
close as many as 34 transactions and pay out nearly a quarter of
a million dollars in buyer referral fees to real estate brokers in
the Maverick Referral Network. Mavericks business model,
includingPAGE 19 2010
the international component, is just a continuation of the
global lifestyle enjoyed by its principals. The company was founded
by Mark Solak, Valerie Schrock and Matthew Bowles real estate
investors >reWEALTHmag.com
and licensed real estate professionals with formal, advanced
degrees. Prior to joining forces, they led cosmopolitan lives,
traveled the world and lived in foreign countries for extended
periods of time. Recently, I caught up with the Maverick power trio
to discuss their latest turn-key buying opportunitythe Seaside
Mariana Spa & Golf Resort on the Pacific coast of
Nicaragua.
worthy people I had ever met, all essential qualities for
business partners. The three of us began pooling our skills,
resources and creative energies to develop a cutting edge business
model that could provide unparalleled advantages to real estate
investors and real estate agents. In 2007, it was ready to be
launched so we all quit our jobs, flew to Las Vegas and, while
overlooking the Strip from a rooftop lounge, raised our glasses
we use. It was crucial for everyone to start with the vision of
their own ideal lifestyle. Matt likes to work from his rooftop pool
deck in LA, Mark likes to spend extended time in Europe each year,
and I like to go skiing in Canada and spend part of the year in
Phoenix with my parents. So we structured our real estate business
to facilitate our dream lifestyles. But, more than that, Maverick
has built an entire community
Seaside Mariana Spa & Golf Resort features the first Jack
Nicklaus Signature Golf Course in Nicaragua.
Q: How did the three of you become business partners? Tell us a
bit about how Maverick Investor Group formed? MB: Well, Valerie and
I met in graduate school in 1999. We both got masters degrees in
International Peace and Conflict Resolution and then worked in
human rights advocacy in Washington, D.C., for several years. We
started investing in real estate on the side, reading books about
it and learning by experience. Soon we had millions of dollars in
real estate holdings in states all over the country. I met Mark in
2005 when he sold me over $2 million worth of investment properties
in Las Vegas. I was blown away by his customer service; it was the
best I had ever seen in any industry. These were two of the most
talented, ambitious, honest and trustRealty411Guide.com
and announced to the world that Maverick Investor Group was
born! Q: The Maverick partners live in different states Matt is in
Los Angeles, Valerie is in Washington D.C., and Mark lives between
Chicago and Las Vegas. That is pretty incredible! How did you
decide to structure your company like that and how does it affect
your business? VS: We were intentional about structuring the
company that way from day one, and the primary reason is freedom of
mobility for the Maverick partners. Its all about lifestyle. We can
live wherever we want and travel whenever we want for as long as we
want, and no business falls through the cracks because of the
systems and processes we have set up and the technologyPAGE 20
2010
of real estate investors and agents who are focused on using
real estate as a vehicle for designing their dream lifestyles. We
show our clients how to do what we do. You will notice that we have
a section on our website that discusses real estate lifestyle
design in great detail, down to the specific technology products we
use. Real estate investing is only a means to an end its always
important to keep your eyes on the larger prize. Money isnt very
useful if you have lost touch with your dreams. How can real estate
enable you to recapture your time, design your dream lifestyle and
make enough money to finance it? Thats the big picture. Q: Maverick
has always encouraged out-of-state investing, why are you
nowreWEALTHmag.com
moving to international real ment in Nicaragua, making estate?
it particularly friendly to forMS: For the same reasons, eign real
estate investors. were just expanding the playFor example, as an
interground. The reason why I national investor who lives would
never limit myself to in the US, I can own freehold buying in my
own city or state property in Nicaragua with is because there might
be a bettitle insurance from a Northter market than the one I live
American-based title comin. The failure to consider inpany, and
when I sell it for ternational real estate markets a profit I will
owe no capital produces the same restriction. gains tax in
Nicaragua. PresI want my money in the best ident Ortega has
personally market in the world no matter endorsed the Seaside
Mariwhere I live, period. Maverick ana resort because it is anis
opening up a private chanticipated that it will result in nel for
real estate investors to an explosion of tourism and access
unlisted properties in be a huge economic boon for premium global
markets, with the country. So the governproperty management options
ment is very supportive of in place and a variety of exit foreign
investors coming in strategies. Buying through to buy real estate.
Maverick has always meant Seaside Mariana Spa & Golf Resort
sits on 2 kilometers of pristine beach front. getting exclusive
prices and Q: What kind of deal terms terms that are not available
to was Maverick able to negoup the coast is Nicaragua. It borders
Costa the public. That has simply expanded to Rica and has the same
weather, the same tiate at Seaside Mariana and how can our the
international arena. beaches, the same sunsets, but a much readers
get in on the action? lower cost of living and, at the moment, VS:
As you know, our prices and terms Q: Why did Maverick choose
Nicaragua? much lower property prices. Seaside Mari- are not
available to the public, so I cannot And why the Seaside Mariana
Spa & Golf ana will be Nicaraguas first luxury resort unveil
any details here. I will tell you that Resort project in
particular? with a five-star international brand hotel this is one
of the most extraordinary deals MB: Over the last two years, the
Maverick and a Jack Nicklaus signature golf course. I have ever
seen and that we have a global partners have traveled throughout
Europe, We are talking about a 923-acre resort on exclusive on the
entire resortthe only the Middle East, the Caribbean and Central 2
kilometers of pristine beach front. Noth- way to buy a property at
Seaside Mariana America to review real estate projects. In ing like
it currently exists in Nicaragua. is through Maverick. our opinion,
Nicaragua is one of the pre- This project will single-handedly take
the For detailed information and private acmiere emerging markets
on the world stage country to the next level as a tourist desti-
cess to our special prices and terms, your today. When you look at
a map of Central nation. When the number one golf course readers
will need to become part of the America starting from the south,
you be- designer in the world chooses to go into a Maverick
community. Real Estate Invesgin with Panama, then Costa Rica both
market for the first time, real estate inves- tors can apply to
join our community of of which have already exploded as tour- tors
should perk up their ears. It is exactly VIP Buyers and get access
to unlisted deals ist destinations over the last 15 years and these
types of seismic events that I look for like Seaside Mariana. Real
Estate Agents have seen corresponding appreciation in when I choose
where and when to invest can apply to join the Maverick Referral
property values and the next country my own money. Network and make
3% every time their clients close on a Maverick Deal. We invite
smart real estate investors and Q: What is the political and
economic climate in savvy real estate agents to contact us today.
We dont care if someone has a lot of exNicaragua right now? MS:
Nicaragua has had perience, we care if they are serious about a
democratic government using real estate to build their wealth and
for the past 20 years and design their lifestyle. has had five
transfers of power during that time. For information, contact
Maverick Investor Recently, the government Group:
www.maverickinvestorgroup.com or has been passing laws to email:
[email protected]. encourage foreign invest-
Realty411Guide.com
PAGE 21 2010
reWEALTHmag.com
Blue-Chip Real Estate Strategyby Ryan Hinricher, co-founder of
InvestorNation.com This article originally appeared on
BiggerPockets.com
Fits Economic Climatewell-versed in Section 8 you can profit
greatly in the lower-end homes. The median-priced home becomes the
blue-chip property. The blue-chip home has lower levels of vacancy
and rents that have been buoyed by average people being displaced
from their primary residence via foreclosure. In the market where
my company is located, average-priced homes are selling for around
$115,000. Obviously with distressed inventory out there, one can
purchase properties at lower prices than this, improve them and
probably have equity that is more tangible than lower-priced homes.
How can one possibly model a $115,000 home the same way as a
$30,000 home? The $30,000 home (in most cases) will have
significantly higher rates of vacancy and maintenance. If you go up
a step to the higher-than-average priced homes, youll notice those
homes might offer stable tenants, usually high-end professionals
who will reliably pay the rents. The cash flows may look lower on
the surface than other types of homes but these blue-chip homes
perform more reliably on maintenance, vacancy, and valuations.
Financing Financing on blue-chip homes tends to be much easier than
most any other price point for a number of reasons. First because
the prices are low enough you dont worry about jumbo loan pricing,
rates, and restrictions. On the lower end not all lenders are
lending on homes priced under $50,000 and at times have a different
rate table. In and around the median price nearly every lender
offers investor loan products. Ive also found the appraisal issues
are fewer because normal sales activity exists at thisContinued on
page 24reWEALTHmag.com
T
he housing recovery is limping along slowly leaving many real
estate investors wondering where to invest their dollars. Some
speculation is even returning to the market with new investors
looking to purchase, renovate, and resale distressed properties for
short term profits. Owning a real estate investment brokerage
allows me to see a variety of transactions, including retail flips
from speculators, investors buying $8,000 homes, renovating and
placing tenants in them, and a higher quality purchase and hold
homes closer to median home prices. The latter is a strategy that I
believe right now is being overlooked by many investors. The
Product There are many markets where you can purchase and hold
homes at the median or even average home price and receive a
positive cash flow with a traditional 20% down strategy. These
homes, are out-performing many lower-priced homes from rental
prices and home values perspective. Median-priced homes in most
markets are three bedrooms, two bathroom homes, which offer good
car storage. Usually this is the type of home most Americans desire
to live in ensuring you always have both an available rental pool
and an available buyer pool. This product offers real estate
investors multiple exit strategies with the ability to sell it
retail versus lower-end properties, which usually need to be sold
to other investors. In addition, median-priced homes are usually in
areas low in crime, close to schools, shopping, houses of worship,
and with easy access to employment. The inverse of this is, of
course, also true. I personally own properties at much lower price
points as well. They took the hardest hit on rents and value. This
is where Ive seen
a lot of investors get in trouble. The lower priced homes
usually have households with limited to no savings or emergency
fund. So when a tenant loses a job, the property owner feels that
impact pretty quickly. Also lowerpriced homes tend to be in older
areas givRyan Hinricher ing the owner a much higher rate of
maintenance. The Numbers This is where investors usually make
mistakes. The surface numbers can be very deceiving in real estate.
When analyzing a real estate transaction many investors arent using
vacancy and maintenance, or applying the same vacancy and
maintenance numbers to homes that vary widely in price, age,
neighborhood, size and city. This can cause a pretty big
disappointment when the cheap property you purchase is affected by
socio-economic issues leading to high tenant turnover, criminal
element, slow-paying tenants and maintenance issues. Ive seen many
people advertise proformas with high cash flow on smaller, older
homes in areas with high crime, poverty, poor schools, and with low
rates of home ownership. One can argue that these can be good
investments structured correctly and by applying the right metrics
to ensure a more accurate projection of cash flows is achieved.
These lower-end properties have become the penny stocks of the real
estate investment business. If you get the perfect tenant who
doesnt feel the pains of the recession, maintains the home
themselves and stays in the property for a long time, you could hit
pay dirt. Similarly if yourePAGE 22 2010
Realty411Guide.com
Blue Chip Real Estate Strategy, pg. 22
price point. When you have a lot of normal sales, valuation
tends to be (somewhat) stabilized. Exit Strategy Having an exit
strategy is an essential part of your real estate plan. Some
investors plan on never selling and while that can make sense to
receive all the benefits of real estate, lives change. If you think
back five years ago and how different things in your life were at
the time, you might agree that having an exit strategy is
important. With these blue-chip investment homes, youll find
mul-
ida, which were impacted very little by the housing boom and
bust. Many of these cities have a good economic future, affordable
tax rates, net population growth, and high enough rents to achieve
positive cash flow at the median home price. In Summary With
distressed properties making up a large percentage of total sales,
then it only makes sense to focus on buying bluechip homes at a
discount today. In doing so, one can realize equity through quality
renovation, placing a tenant and holding. These homes should
provide you relative peace of
Having an exit strategy is an essential part of your real estate
plan.tiple exit strategies. Medianpriced homes have the widest
available buyer pool. Think about that for a minute: Lowerend homes
typically are resold to investors. So imagine buying a home on the
lower-end at 60 cents on the dollar and thinking you have a lot of
equity. In fact if your future end buyer is an investor, do you
think theyll pay 100 cents on the dollar? Time on the market is
also another factor. At the medianhome price, time on the market is
usually shorter than any other price point. So in planning your
long-term strategy it seems to make sense to invest in homes that
could be sold quickly, financed easily, and sold at or near market
value? Where to Find There are many markets you can find these
types of properties in today. Without going into much detail in
this article, there are plenty of cities which lie in states
outside of California, Nevada, Arizona and Flormind when compared
to lower price points due to the lower socio-economic risk
discussed earlier. These types of rentals are a good fit for people
looking to diversify out of equities and accumulate a few
properties. While they may offer stronger fundamentals than most
properties they obviously arent bullet-proof. These are comparable
to owning GE stock (GE registered no U.S. profit last year). While
you can depend upon these homes most of the time, the downside risk
is usually minor price depression during an economic recession.
Lastly, in many markets this type of product and strategy simply
wasnt an option when prices were higher. I doubt that very far into
the future this opportunity will be as widely available again in as
many markets as it is today. Ryan Hinricher is co-founder of
Investor Nation, visit online:
www.InvestorNation.comreWEALTHmag.com
Realty411Guide.com
PAGE 24 2010
3 FREE Ways to Find aGreat Wholesale Deal Today!
I
by Ginger Macias
just had a great call with one of my coaching students on how to
get a deal signed up by the end of today. Times are tough, and
although sending direct mail pieces is a great way to get leads,
sometimes its just not possible to send them out especially if
youre just starting out. So over the years, Ive learned some
cheapskate ways of finding leads. 1. Online RSS: If youve been in
real estate any amount of time, you probably already know that
online sites such as Craigslist, Redfin, Backpage, Oodle, etc., can
have some pretty amazing leads on For Sale By Owner (FSBO)
properties. The only problem is that it takes tons of time to sort
through all those sites to find a decent deal. Rhett Halsey, one of
my good friends and an internet marketing guru for real estate
investors, told me of a free feature offered by most websites: RSS
or Real Simple Syndication. Instead of multiple searches for leads,
the leads come to you in one spot. You can set up a Google Reader
account and have all these leads sent directly to you, the minute
they are posted on one of these sites. Its simply amazing how much
time this saves. We have just implemented this in my office and
within a few days got three properties under contract and sold them
within a few hours. My new assistant was floored at how quickly an
investor can get a deal under contract and sold! To set up your own
RSS feed, go to your favorite FSBO site, Craigslist
(www.Craigslist.com) for example. Do a search using motivated
seller keywords like fixer, investor, etc., one word at a time.
Once the search is complete, you can scroll to the bottom of the
page and click on RSS or the little orange RSS icon. Set it up to
point to your Google Reader, and youre done!
free emails. Its important to work with an agent who knows you
want a smokin deal, and who will make lots of lowball offers on
your behalf without flinching. For most listings, other than REOs,
you can also try and make seller-financing deals. The point is to
get your foot in the door and start negotiating with the seller.
Another lead system you can set up on the MLS is expired listings.
These listings have expired without anyone buying the property.
This can mean youd be dealing with very motivated people! Set up a
win-win situation with your agent where they can present your
offer, and if the sellers dont like it, the agent may be able to
pick up a new listing. 3. Other Wholesalers: One of my absolute
narrow down your search to REOs, probates, fixers or other
criteria. You dont even need access to the MLS, just find an
investorfriendly agent and let them know your criteria. They will
set you up to receive
favorite ways to find deals is to ask other wholesalers what
they currently have under contract and to market that property to
my buyers list. Or, if youre a rehabber or landlord, you can pick
up amazing deals without having to do all the leg work. Where do
you find these wholesalers? If you see a We Buy Houses sign, call
them. Youll likely be dealing with a wholesaler. Also visit your
local REI meetings, Google wholesalers in your area, ask rehabbers
who they recommend, and ... dont forget, ME! Im an active
wholesaler in Southern California who loves working with other
investors. (Shameless plug? Of course.) If you get a deal done and
need to sell your property really quickly, let me know. Well, now
there is no excuse for you not to find a deal today! Good luck and
send me a brief email letting me know if you found this helpful. To
contact Ginger Macias or learn about her speaking engagements and
wholesale deals, visit: www.OCWholesalers.com
2. Multiple Listing Service: Your local MLS (Multiple Listing
Service) offers a great way to find leads for free. You
canRealty411Guide.com
PAGE 25 2010
reWEALTHmag.com
ets face it the country, the economy and the real estate market
is just terrible. There are no more good deals. Lets all get out of
the business. People are not building, buying or selling homes any
more. There are so many overencumbered and foreclosed-upon cheap
properties available for pennies on the dollar that nobody wants
them anymore. After all, who can make a living in this ridiculous
business these days? Oh yeah? And Michael Jackson faked his death,
Elvis eats at Burger King, and the world ends in three years! Not
that theyre needed anymore, but here are a couple solutions to
these horrible problems facing real estate investors in this
disastrous economy: 1. Stay in bed with a tinfoil hat on your head.
2. Go live with your parents and let them feed you until you win
the lottery. 3. Go back to school on the government, and get a law
degree so you can force people to pay you to stop suing them. OR...
4. You can capitalize on singularly the greatest money-making
opportunity ever! And you dont even need a dollar or a dime to do
it. SHORT SALES The short sale industry is burgeoning now and will
probably continue to do so for three more years. New short sale
millionaires are being made every day. There are billions upon
billions of dollars (Remember when a billion dollars was a lot of
money?) to be made in the transactional funding of compromised
mortgage defaults loans that would otherwise be forced into
expensive and time-consuming foreclosures, and sold by lenders at
public auction. Def: Short Sale: The acquisition of real estate at
a compromised (wholesale) payoff amount that is less than the
balance of the mortgage obligation. Def: Transactional Funding: The
twostage practice of using another persons
L
by Bill Gatten
money for a day or two at a high interest rate (but at a
reasonable cost), with which to purchase a foreclosedupon property
by means of an allcash offer prior to its scheduled public sale
date. And then selling it on the day of closing, or soon
thereafter, in a separate escrow settlement to an end-buyer who
obtains his own loan and lives in and loves the property forever.
This process is known as the A to B/B to C transaction. In other
words, you, the investor are the B component; the current owner is
A, and the end-buyer is C. In other words, B buys from A
A Brave New World in Compromisefor, or in advance of, services
to be rendered, whether such services are actually performed or
not. Another common violation has to do with sand bagging by
attorneys, and many non-attorneys, who bill on a monthly basis for
services (mostly loan modification schemes) while a short sale or
loan modification process is presumably taking place. Instead,
either there never was any such attempt or the attempt failed,
and
...two REALTORS in Massachusetts were recently sentenced to ve
years in prison each for having used this scheme several times.in
one escrow closing process (taking full ownership of the property),
and then sells the property to C at a reasonable profit in a wholly
separate escrow process. It all sounds simple and it is! However, a
thorough knowledge of all the rules and regulations concerning
short sales, equitypurchasing, equity-stripping, foreclosure
consulting, credit repair and mortgage lending is absolutely
mandatory before becoming too far vested in the business of short
sales. To date, hundreds of otherwise nice-guy and gal would-be
investors have been severally sanctioned, shut down, heavily fined
and/or sent to prison for violating the very stringent laws
regulating short sales and foreclosure consulting in various
states. In my own case, Ive spent my business as a fearless bull
rider: but in this last Rodeo, Im sticking to riding milk cows. I
wont set any records or win any prizes; but Im a lot less likely to
get thrown of and have a horn poked up my rear end ( this, is, by
the way, an analogy not a good one, I agree, but an analogy
none-the-less). One of the most often violated of the many
regulations being put on the books as of late has been that of
taking money the client wasnt informed and was told, Were working
on itbe patient, while the monthly payments continue. Another big
one, and one that is probably most tempting but also most deadly
for REALTORS, is the situation wherein the investor/REALTOR has
already linedup a retail buyer who is ready to take the property at
its true market value following the short sale acquisition by the
investor. When the scheme comes to light, the contention by the
lender in these cases is that if the property were worth more than
they were told in the transaction, there would have been no need
for a short sale and their resultant loss. They see such schemes as
blatant bank fraud and have no sense of humor in such cases. As a
matter of fact, two REALTORS in Massachusetts were recently
sentenced to five years in prison each for having used this scheme
several times. So the long and short of it iskinda like Henny
Youngman was one to say: If its gonna hurt when you go like that
for cryin out loud, dont go like that! Todays short sale market is
burgeoning.Continued on pg. 29
by Ginger Macias odays estate environ real ment can seem a
little tricky to navigate. So many possible ways to make money
exist in this indus try, it can be overwhelming, especially for
those who are just get ting started in real estate investing. There
are many late-night television shows that claim to teach you how to
be a multi-gazil lionaire by next week, but is there any truth to
what theyre saying? Take a look around. Youll notice that there are
a lot of successful real estate en trepreneurs, people who are
making a killing today, in this down market. The ques tion is did
they just start making lots of money by pure luck, or did they have
men-
10 CA$H TWeeks to
tors, courses and systems to help them achieve their success?
Those of you who are living the real dream, you know estate that
luck had little to do with where you are today. It takes concrete
actions, goals and guidance to get to your dreams. Well, for those
of you starting out in real estate who are anxious to get going,
there are wonderful ways to get into all this ac tion. Recently, I
spoke with Matt Malouf about his new program, which helps inves
tors bridge the gap from real estate dream to reality. And by
reality, Im talking about actually owning your very own investment
property at the end of the course! (More on that later.) Malouf is
an investor-friendly real estate agent in California and been
investing has
OW
with Matt Malouf since 2001. Over the years, he has special ized
in wholesaling, owner financing and foreclosures. Malouf has
developed a busi ness model that he describes as T.E.R.M. It is a
model designed to efficiently minimize the investors time, energy,
re sources and money in that order, he explains. To that end, his
program is a 10-week course that walks investors through the exact
steps needed to find, analyze and buy an investment property that
cash flows from day one. Some topics include learning how to set up
your property management team, screen tenants, how to hold title
and financ ing options. The motivation to course create this came
from Maloufs desire to meet the needs of investors who want to get
educat-
ed and match them with the best available product in the real
estate marketplace. This hybridization will enable beginning
investors to buy a property that meets their criteria, after
learning all the basic steps needed to acquire and manage that
property. This is not just a course, Malouf explains. At the end of
10 weeks, theyre going to have a cash-flowing house, an asset to
put in their portfolio. It is all- inclusive in the program.
people on the team. Malouf and his team then go out and find a
property that meets the students needs. They send personalized
updates, letting them know whats being done to find them a
property. This program lays the foundation to successful real
estate investing. Malouf gives this analogy: Its like building a
skyscraper. You have to spend the time to set up a foundation and
set it nice and deep, nice and strong. That way, it will
It takes concrete actions, goals and guidance to get to your
dreams.Maloufs T.E.R.M model is ideal for someone who has a
full-time job and wants to start building a real estate portfolio
as part of their retirement plan. Over the course of 10 weeks,
students receive the entire course through the internet, which
includes 30 to 60 minute lessons by audio, video and text articles.
Each student also receives the Million Dollar Rolodex, which gives
the contact information of all the keyA Brave New World, pg. 27
stand through the good and the bad. Maloufs T.E.R.M program
launched this summer and is available year-round to a limited
number of people. Be sure to reserve your place today. Readers can
contact Matt Malouf directly at (562) 4437042; mention the
out-ofstate magazine special. Or visit: www.buysellwithmatt.com
Enter the promo code Realty411 in the note section.
There really is no limit to the number of homes in foreclosure
that lenders would like to get off their books in order to reduce
their matching fund requirements and free up more cash to lend out.
Millions of dollars are ready to be made by integrally involved
entrepreneurs over the next few years. To miss out on any of it
would be an out-and-out shame if not a crime. There are two sets of
adages to live by that one must ponder and decide upon before
jumping into the business: Set A - Strike while the iron is hot; He
who hesitates is lost; The early bird gets
theRealty411Guide.com
worm, and If everybody is doing it, its time to do something
else. Or Set B - Haste makes waste; Look before you leap; and Wait
until all the bugs are worked out before you jump in, or Wait until
you see everyone else doing it, then jump in why take chances? My
own: Successful people make quick decisions and are slow to change
their minds, the unsuccessful are slow to commit and quick to
change their minds. So, whats my advice regarding the current short
sale market? OK, guess!PAGE 29 2010reWEALTHmag.com
elf-reliance, balance, integrity: these are just some important
mantras in the martial arts world. Step into a monthly meeting at
Black Belt Investors and youll soon discover these disciplines are
in full force. With two locations in Southern California (Downey
and Norco), Black Belt Investors provide a social network for both
the novice and seasoned. It is a club where education is
emphasized, deals are analyzed, and action is taken to reach goals.
Ricardo Valencia, a national investor with holdings in four states
(CA, TX, IN and MO), stressed the importance of attending monthly
club meetings, as we were walking into a community center in
Downey. We have a responsibility to teach those who are newcomers,
he says with a smile, And, at the same time, you learn from those
who are more advanced. Valencia, who travels throughout Los Angeles
County to attend numerous real estate events, admits that the
members of Black Belt Investors keep bringing me back ... its
always nice to mix and mingle with them. What began as a casual
meeting at a coffee house in 2000, by investor, martial arts expert
and entrepreneur, Sensei Sean Gilliland has become an organized
official club boasting two locations and filling the room with a
strong following each month. Sensei chose to stake his claim in
Downey, the city where he was raised. Next, he chose Norco, the
city where he now lives with his wife, Annamaria, a licensed
REALTOR, and their three children. The club meeting room, located
inside a community center, was full and bustling in May. The sweet
aroma of freshly brewed coffee and abundant smiles were inviting.
The group, mostly in their 40s and 50s, was diverse in experience
and background. They were master networkers, with
busiRealty411Guide.com
S
[
Hitting the Club with Sensei at 12 Roundsby Linda Pliagas
ness cards in hand. Dressed in casual clothing, they chatted
while munching on chocolate chip cookies. They discussed their
latest deals, needs and goals. When the master approached the
front, the students took their seats and settled down quickly,
ready to start their lesson. Senseis cash and wealth system is
pure
Sensei Spills His Top 5 Secrets to Land a DealCant seem to
locate a distressed homeowner or unwanted property? Believe it or
not, many people have real estate that they no longer need or want.
(Yes, we first found this concept hard to believe Sensei Gilliland
too!) Follow these five secrets from a master wholesaler, and youll
soon have more deals than time to work them. #5: Code Enforcement:
Many local government websites, such as Los Angeles County, offer
online lists of distressed properties. This is an often overlooked
treasure filled with potential gems. Continued on pg. 59
and simple. He trains his students on how to create cash quickly
through flipping real estate so that resources can be funneled to
purchase income-producing property. And what areas are being
focused on? Right now, he has two major target zones. Phoenix,
Ariz., is his target zone for rehabbing flips and rentals; Southern
California is his bulls-eye for wholesaling properties. He and his
members target Phoenix as their area of operation for fixing and
flipping properties for immediate paydaysPAGE 30 2010
and building wealth through cash-flowing rentals, all using
Senseis Remote Rehabbing program. The Phoenix market is providing
incredible wholesale deals on newer homes starting at $48,000, he
says. Flippers are turning their properties and cashing out about
every 90 days. The buy and hold strategists are capitalizing on
great cash flow averaging $900 per month. Although he started his
career as a remote rehabber (his first deal was in Florida), he now
prefers to wholesale and calls it: The Ultimate Real Estate Cash
Machine. His investing formula, Find it, Bind it and Assign It, is
used in California, but the strategy can be duplicated in any area,
in any market. Wholesaling does not require cash, credit or a
license, which equals NO RISK. He further explains, The intention
is to sell the contract to investors who cant find a deeply
discounted deal on their own. While many people, including Brokers
and REALTORS who do not understand creative real estate, frown upon
any deal that is not a traditional transaction, wholesaling retains
an important role in the community. As a matter of fact,
wholesalers are often the first to spot and service a homeowner or
property in distress. In wholesaling, success depends on
recognizing circumstances and offering solutions. Sensei recalls
one recent transaction in which he assisted a family made up of
siblings scattered around the country who were feuding over an
inherited home in need of many repairs. Because of the stress it
was bringing upon the family, they wanted to dispose of the
property quickly. Sensei packaged the deal and sold it to a local
rehabber willing to put in a lot of sweat equity and cash. The
investor was willing to take a risk for a chance to
profit.Continued on pg. 59reWEALTHmag.com
California Trust Deed InvestingNot everyone has the time or
expertise necessary to be full-time real estate investor. But
theres still a way to take advantage of the unbelievable
opportunity at hand. Welcome to the world of trust deed
investing.Savings accounts, CDs, and stocks have of dollars every
month and demand offered dismal returns over the past continues to
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w w w.TNGtrustdeeds.com951.780. 5856California Depar tment of
Real Estate, Real Estate Broker Bruce Norris Financial Group Inc.
DBA The Norris Group DRE License 01219911
Investors & Industry Leaders Share
an Evening of Glamour & Giving
The 3rd Annual I Survived Real Estate 2010 will Raise Money for
Breast Cancer Research & Unite the Nations VIPs to Discuss
Investingfor investor rights. For the past two years, he has united
real estate giants to discuss oes Shadow Inventory really ex- the
issues that matter, and most importantist? What is the state of the
REO ly, to exchange ideas that can help investors market? These are
just some of do what they do best: rebuild communities the crucial
questions to be and rejuvenate econoBruce Norris with his wife
& son. tackled by real estate inmies. dustry experts on the
eveThe panel were ning of September 17. putting together can The
Norris Group, speak about these issues headed by Bruce Norris, from
several differa 30-year veteran known ent point of views and among
investors as the hopefully provide us Nostradamus of Caliwith some
new fornia real estate, is once insights movagain organizing their
aning forward, nual philanthropic event in Norris explains. Orange
County. Some returning This black-tie affair guests, include: is
one of the most fashJoseph Magdzionable tickets in town, iarz, 2011
presimixing charity, important dent for the Aptrend updates,
education, praisal Institute; entertainment and industry
networking. It Tommy Williams, 2008 president of is always a
sold-out gala, one that attracts the National Auctioneers
Association; and the Whos Who of real estate. Christopher
Thornberg, principal of BeaWhen we attended last year, it was
fasci- con Economics. nating to note that besides all the tuxedos,
New guests are also being added. We satin dresses and crme brules
on fine chi- are very excited to have Sean OToole na, some serious
industry trends and alter- from Foreclosure Radar joining the panel
native solutions were prethis year to add his Guests at the last
years event. sented in just a few hours. data-driven and inIt was
an evening of eduvestor-minded percation with a sophisticated,
spective. entertaining twist, much like For Norris, the I the man
behind the event. Survived Real EsThe theme for I Surtate series is
pervived Real Estate 2010 sonal. This night is a will again focus
on trends, way of honoring his solutions and have an added wife,
his family, his focus on the state of REOs, Norris says. community
and profession. With constantly changing government In the last two
years, the fundraiser has regulations, its been difficult for
anyone in raised over $100,000 for the Susan G. the real estate
business to build a sustain- Komen Foundation; these funds are used
able business model. for breast cancer research. Norris, a 30-year
veteran investor (from My wife, Marsha, was diagnosed with rehabber
to private lender) is a champion breast cancer more than 15 years
ago. Thisby Lori Peebles
D
event honors her courageous effort to fight this disease and
hopefully adds to the likelihood of someday finding a cure. In
addition to raising breast cancer awareness and funds for research,
as well as providing investors of all levels access to information,
I Survived Real Estate has been instrumental in spotlighting the
crucial role investors have in our nations economic infrastructure.
Norris explains: This event gives a chance for investors to be seen
in a different light. We all know investors are often seen as the
sharks Tommy Williams of the real estate i n d u s t r y. We take
this night to show other sectors that we, as investors, play a
significant role in the solution side of the market. Norris knows
firsthand that real estate investors take great risks in a volatile
marketplace. With greater acceptance, their ideas have a better
chance at being heard and being implemented, he says. The charity
event was designed to give everyone, regardless of personal income,
an opportunity to participate. By joining our walk team and raising
the money in their networks, attendees and sponsors can technically
come free of charge, Norris explains. Sponsorship opportunities are
also available. Benefits for advertisers include inclusion in all
mailers to local, state and national government officials, SEO
optimized website advertising, inclusion in mailers and flyers,
plus event program and screen exposure. Each sponsor is also
mentioned in video and radio segments that air before and after the
event. For more information, please visit online:
www.ISurvived2010.comreWEALTHmag.com
Realty411Guide.com
PAGE 35 2010
ALL ABOARD!for The Ultimate Cash Flow Buying Tour
M
The Clothier family, from left to right: Chris, Brett, Kent and
Kent Sr.
ainstream reporters who present real estate as doom and gloom
surely havent been to Memphis. The city, known as the birthplace of
rock n roll and the blues, is bustling with industry activity and
visitors arent just touring Graceland and Beale Street, theyre
leaving as bona fide landlords. Our editorial team was invited to
attend The Ultimate Cash Flowing Buying Tour by MemphisInvest.com,
a boutique, Memphis-based brokerage catering to out-ofstate
investors. The company, which serves more than 200 clients and
manages more than 650 investment properties for them, joined forces
with the San Diego-based FortuneBuilders, Inc., (owned by Than
Merrill and the Flip This House team) and together they organize
one of the largest property buying events in the nation. Youll
never see anything quite like this, promised Kent Clothier Sr.
during our telephone conversation a few months ago. Kent Sr. is
founder of MemphisInvest.com. He takes the helm of the
18-teammember operation, which is managed by his three sons, Kent,
Chris and Brett. In my six years as an out-of-state investor, I had
never attended a property buying tour. Plus, I repeatedly heard
about the benefits of the Memphis market from many sources. I
thought, What a perfect time to put on my reporters cap and go get
the scoop. The Ultimate Cash Flow Buying Tour definitely stood up
to its name. Just being in a room filled with investors from around
the nation was electrifying. On the first day, the event was held
at a ballroom in the Hilton Hotel, a circular 27-story glass beauty
with
Unite Investors from 18 States & 2 Countries
MemphisInvest.com & FortuneBuilders
and Sell 29 Rental Homes in 2 Days!by Linda Pliagas
outstanding views and plump pillows. Investors traveled from 18
states to attend, one couple arrived from Canada. M