- 1.Realty411 Realty411 Print Online Network
www.realty411guide.com | Vol. 3 No. 2 2010 A Resource Guide for
Investors Tips for Long-Distance LANDLORDING Turn-Key RentalsAround
the NationCash Flow from theComfort of HomeMathew Owens, CPA, owner
ofOCG PROPERTIESBuys & RehabsRentals in Tennesseefrom Redondo
BeachGet the Deals DONELearn Creative RealEstate Techniquesfrom
Dave Lindahl, Dolf de Roos,Bruce Norris, Bill Gatten &
more!Look InsideFREE Celebrating the Largest Wealth Issue with More
Pages &Reports!Opportunities than Ever!photo by Sam Green
2. > 7 Secrets from the Master! Charity Walk and Gala Dave
Lindahl shares his latest 37 Join the Ultimate Bus Tour tips for
Investing Success with MemphisInvest.com 9 No Drama in Dayton 39
Creative Financing Options Triple Net Houses Helpswith MMG Capital,
LLC Investors Profit without Issues40 Philbin Capital Discovers 11
California Living withDeals in the Golden State Tennessee Cash
Flow42 The Key to Success by Club Mathew Owens, CPA, owner
ofFounder Sam Sadat OCG Properties, explains why he loves to invest
out of state 14 Beware of the Investment Vampires by RBS Homes 16
Dolf & Carter: A Master- mind with Arizona Investors 19 Enjoy a
Tropical Paradise with Phenomenal Returns photo: Sam Green45 Buy
Bigger and Better Dealsby Kathy Fettke46 Alternative EconomicsClub
Debuts in California51 Stop the Gambling!Mike Woo, a Rich Dad, Poor
In search of their latest gem in Dad protg, advises clients
Nicaragua, Maverick Investor 52 Is Your Mortgage Underwa- Group
traveled the world ter? Perhaps a Short Pay Refi- 22 Investor
Nation Shares theirnance is the Answer Blue-Chip Real Estate
Strategy 55 Pay Off Your Rental House 2 5 G i n g e r M a c i a s T
h r e e in Five Years with the Short FREE Ways to find a GreatTerm
Retirement Program Wholesale Deal 27 Creative Real Es- tate
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 the57 Whos On Your Team? I Survived
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Group Appraisal InstituteNational Auctioneers Beacon Economics
AssociationSean OTooleSarah LettsDaniel Phelan Peter
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PRODUCTIONSLast 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.
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limited, so go to the website or call our o ce today. Thanks you to
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OPPORTUNITIES We cant do this without your help! Businesses or
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1. SPONSOR the I Survived Real Estate Komen Breast Cancer Walking
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Survived Real Estate Komen Walking Team and raise money in your
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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
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registered or may be offered under an appropriate exemption. 6.
published for Investors by Investors Aby Dave Lindahl Realty411 s a
successful real estate inves-tor and top-selling author,
Im&Wealth Real Estateon the road a lot presentingworkshops
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 FOUNDER & EDITOR Linda Pliagas born rich or had a
wealthy mentor [email protected] the inside track to
making money. EDITORIAL STAFFThats not my story. Not by a long
shot.Lori Peebles Fifteen years ago, I was running my ownMatt
Maloufsmall landscaping business in New Eng- Carla FischerGinger
Macias land. I was a guy with a pickup truck andCOPY EDITORlawn
mower. If you havent experienced a Lorie L. West New England
winter, let me simply say itPHOTOGRAPHERS Who Else Wants Up toSam
GreenJohn DeCindisCOLUMNISTS $5,000$10,000 or More Dave Lindahl
Charles SalisburyADVERTISINGExtra Monthly Cash Flow?Kelly Global
[email protected] 310.439.1145 EVENTS & EXPOS
Lawrence Ruanomeans I was literally frozen out of work for What You
Need to Succeedruanoinvestments@gmail a good part of the year.First
and foremost, to succeed as a real 805.791.5457 I spent winters
doing odd jobs to scrape estate investor you must be motivated.
ThisPRODUCTION Lori and Mike Hampton by. A friend asked if I wanted
to repair a business isnt for the undecided. You have Emma Krull -
The Dab Hand property that needed some TLC so it couldto want it
bad enough to take action. Be- CALIFORNIA DISTRIBUTION be resold
fast.cause where theres a strong will, theresProfessional
Distribution SolutionsThe owner was looking for a quick
fixwealth.1.877.418.6500 and flip, and thus I was indoctrinated in
the I was 100% determined to own real es-NATIONAL DISTRIBUTION KJ
Banks: 805.377.6328business of flipping properties before it
be-tate. I didnt let the fact that I had a less PUBLISHED BYcame a
national pastime and the subject of than $800 in the bank stop me
from buying Manifest Media Partners cable TV shows. But what
attracted me to my first property, a three-unit building in
Nikolaos K. Pliagas - Chairmanreal estate was not the quick turn.
It was the my hometown. Our Mission is to Educate & Inspire
steady cash flow. Sure, I was nervous doing that first deal.
INFO/FAX: 310.499.9545 Realty411Guide.com | reWEALTHmag.comThe idea
of checks from renters fillingI had no direct experience. No track
record. Main email: [email protected] mailbox month after
month, regardless No personal wealth to use for collateral.
Realty411 and Real Estate Wealth magazines are published in Los of
the weather, really appealed to me. But I didnt let any of that
stop me. Angeles by Manifest Media Partners (mailing address: 4221
Neo- sho Ave., Los Angeles, CA 90066). Publishers are not
responsibleI wanted other people to pay my mort- This is why I tell
beginners everywhere for unsolicited manuscripts, photographs
and/or other materials.gages, creating huge equity in my build-
that they can own real estate right now. Copyright 2010. All Rights
Reserved. Reproduction without per- mission is strictly prohibited.
The opinions expressed by writers ings. I wanted to sit back and
watch myI dont care if youre broke like I was. If are not endorsed
by the publishers and/or editorial staff. Before buildings
appreciate, making me wealthieryoure motivated to succeed, real
estate investing in real estate, seek the advisement of a trusted
nancial adviser, attorney or tax consultant. Please invest
responsibly. and wealthier. and all the personal wealth it can
generate PRINTED IN THE USA. GOD BLESS AMERICA I wanted to live off
the positive cash flow can be yours once you know how to
findConnect to our network @ that I received each month, so I
wouldntproperties and structure the deal. have to go to a job every
day. No more dai- ly grind. No more living paycheck to pay-How I
Found My First Building check. Best of all, I liked that
millionaire I bought books and tapes on real estate, was the likely
outcome if I did it right.even though I didnt find much on apart-
Back then there was nobody teachingments. I went to local
investment clubs, how to buy rental properties. The gurus
fo-networked with experienced investors, and cused on single family
houses, just as theystarted bird-dogging for them (finding do
today. So I had a big learning curve. Continued on pg.
60Realty411Guide.comPAGE 7 2010reWEALTHmag.com 7. invest without
drama Do 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! I by Carla
Fischern 1903 The Wright(www.triplenethouses.Brothers made
historycom) takes all the un-in Dayton, Ohio, withknowns off the
table.their first power airplane By purchasing a Triple there. When
we rehab a property we prettyflight.Net rental, investors will much
do everything so we know its going One hundred fourknow exactly
what theirto be a maintenance-free property. When years later,
Peter Julian, CEO of cash flow is going to be we finish, its almost
like a new house. Triple Net Houses, reflects onfor the next ten
years.The companys record is impressive. In their short three-year
revolution-Julian explains: When the year 2009, we collected 97.4
percent of ary history that began in 2007 asPeter Julian we lease
the house its aour scheduled rent, Julian proudly states. a
premiere provider of real estate manage-triple net lease, which
means we pay taxes,It even amazes me! ment. Weve reinvented the way
peopleinsurance and maintenance. Basically weIn Dayton, market
rents range from $595 invest in residential rental real estate,
Ju-pay all the operating expenses, so theres to $950. The company
rents with a one lian says proudly. He then adds: Its kindanothing
our clients have to pay. We man- year lease agreement. A typical
scenarioIf 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 dealwith tenants and never have to deal with or pay for
maintenance. overcast. Were going to get some rain laterage the
property so theres no management. is this: A tenant occupies a
three bedroom, on, which doesnt mean a thing for our in-Investors
will never have to deal with a ten-one bath home, 1,100 square
feet, with a vestors who are from all over the country.ant and
never have to deal with or pay for one car garage, for $700 a
month. Many The weather rarely has anything to do withmaintenance,
Julian explains. homes are brick with full basements, some our
business, unlike the Wright Brothers. The company offers a 10-year
NNNare ranch houses built in the late 50s.Julian shifts to business
quickly explain- (triple net) lease. If investors want to ter-
Dayton is home to the largest single ing how he created a NNN
(triple net) in- minate early, all they have to do is provide site
employer in the state of Ohio: Wright vesting model, which is
traditionally onlya 60-day written notice. There is no penalty
Patterson Air Force Base with 26,000 em- found in commercial real
estate transac-and the investor still owns the property.ployees.
The city also has two universities: tions. Its a turn-key
investment. It pays aWright State University with an enroll-Ive
been a real estate broker for a little high yield and were able to
buy houses at ment of about 18,000, including a medical over 30
years. Ive worked with investors low cost and rehab them
economically. We school. Next is the University of Dayton, my
entire career. When I talk to them, most then pass that deal on to
an investor, as awhich enrolls over 10,000 students and like all
the good things about real estate, totally turn-key investment.
Their total in- also offers a law school program. like the cash
flow, the tax write-offs, build-volvement after the investment is
to collectAs far as the financials, a Triple Net in- ing-up equity,
and potential appreciation.a payment from us each month, which is
vestor can realize up to 17% return on each But when potential
investors get to talking electronically deposited into their
checking house. about managing, theyve all heard the hor-account.
Its a perfect storm. If the investor pays cash then they ror
stories about tenants, maintenance and When asked how Triple Net
Houses canwill receive 9.1%. Julian explains fur- all those kinds
of things. provide guaranteed returns for investors,ther: For
example, if they have a $60,000So Julian and his team came up
withregardless of what is going on with theirhouse the investor
will be receiving $5,460 a unique solution. Its basic and simple,
property, Julian replies: Were very care-a year, which is 9.1% of
the purchase price. even though it tackles a complicated con- ful
in selecting properties in neighborhoods Continued on pg. 47 cept.
The Triple Net Houses program where we know the rents are going to
beRealty411Guide.com PAGE 9 2010 reWEALTHmag.com 8.
CaliforniaInvestors Specializing inthe Memphis Market! 9.
California LifeTennessee Rentals by Ginger Macias | photography by
Sam Green Last year, while working as a pan-Ginger: What did you do
before youelist at a local real estate invest- became a full-time
real estate investor?ment club in Los Angeles, I hadWhat is your
background?the pleasure of meeting Mathew Mathew: Lets see, I grew
up in the tiny Owens, a certified public accountant andtown of Los
Angeles and graduated from owner of OCG Properties. I was so im-
the University of California, Santa Bar- pressed by his experience
and work ethicbara, with a degree in economics and an that I
invited him to partner with me onemphasis in accounting.
Afterwards, I was syndicating real estate projects. able to achieve
one of the accomplishments Having worked closely with him for al-I
am most proud of, passing all four parts most six months now, I can
say that hes theof the CPA exam in one sitting, a feat only real
deal and youll be in for a treat if you 10% of candidates have been
able to do. get the chance to work with him. Mathew After passing
the exam, I worked as a has many strengths that make him a
greatCPA, auditor and business adviser, help- partner: integrity,
organizational skills,ing my corporate and individual clients and
real estate and investment proficiency. increase their bottom line,
helping them Plus, hes very likable.find fraud risk factors inside
their business I have met a lot of people in this business,systems
and auditing their accounting re- and I expect great things from
him in the cords. coming years. I guess that is why I am so good at
do- I recently sat down with him to ask about ing due diligence on
real estate transactions his real estate investing strategies and
thenow. The accounting and due diligence current projects hes
working on out in Ten-skills are a perfect match for a real estate
nessee. Mathew has purchased, renovated,investor, I just had to
adjust my personality and sold or held more than 100 investment to
be more outgoing and personable, which properties in the last three
years alone. most CPAs are not known to be. Being in Below is a
partial transcript of the inter- the real estate industry as a
full-time inves- view I had with him.tor, I am finding it is rare
to find a CPA who understands the tax and legal implications
Ginger: Mathew, in your own words,of investing and the real estate
investment what exactly does OCG Properties do?side in detail.
Mathew: In a nutshell, we help people in- vest in real estate. At
OCG, we sit down andGinger: So tell us, how did you get your go
over our clients financial situation andstart in real estate?
resources to help them find the best ways Mathew: I started
investing about five to invest and meet their individual
goals.years before I decided to take some real With good in-house
management in place, estate education courses and quit my cor- you
can hold for long-term growth and re- porate job cold turkey. I
found that the skill ally get a great return on your money. On sets
I gained from working at CPA firms top of that, the price points
are low enoughwere hugely valuable, and I still hold the that you
can buy with cash and not even partners of those firms with the
upmost have to deal with financing. Talk about low respect for what
they taught me, the eth- risk! ics they instilled in me and the
guidanceWe help our clients achieve great returnsthey gave me.
However, the skills that I on their money while doing all of the
due have developed running my own company diligence on every
investment. We bring a are unparalleled to anything I would have
ton of real estate experience to the table andever expected. While
working for myself, help our investors every step of the way. I
started flipping and holding properties >Realty411Guide.comPAGE
11 2010 reWEALTHmag.com 10. in Memphis. I got through my initial
learn- that the current reported unemployment to go out and develop
a team in every mar- ing curve and kept striving for more dealsrate
is 12.8%, there is a $19.9 billion dollar ket, which is exactly
what we did out in with a magnificent obsession for real estategap
in the California budget, the California Memphis. We have in-house
management that only few can really understand. It was mortgage
delinquency is up almost 100% and a team on the ground there that
helps tough, but after getting through the strug- year on year, 90%
ofus get all of the gles, you find yourself breaking throughthe
Alt-A and Option Mathew Owens, his brother and little sister.
information we and finally achieving success. Working that ARM
loans comingneed to be suc- much taught me multiple things. But one
due are underwater in cessful. thing stuck more than anything else:
Pas- California, 1/3 of Op- sive income is the goal!tion ARM loans
areGinger: What delinquent already, the team members Ginger: You
live in Southern California California tax rate roseshould one have
and invest in Memphis, Tennessee. Why from 9.3% in 2008 towhen
investing do you invest so far away from where9.55% in 2009, and it
out of state? you live? will rise again to coverMathew: There
Mathew: That is right, I live in sunnythe gap in the budget.are a
number of Redondo Beach and invest in Memphis. On top of all
that,team members Most of the investors I meet ask me thispeople
who are under- you need in order exact question, and the simple
answer is: water in their homesto be a success- I invest with logic
and statistics, not based and not in financialful real estate on
what my emotions are telling me. hardship are starting investor. At
the Look at the economics in the Memphisto walk away becausetop of
the list market. It has one of the highest price-to- it does not
make finan- for any buy-and- rent ratios in the nation! It did not
take acial sense to hold them hold investor is a huge dip like a
lot of markets, it had an av- and hope they go up great, and I mean
erage annual appreciation of 4% per year$200,000! G R E AT, p r o p
- over the past 20 years. Its a very stablee r t y m a n a g e r.
market. The population is also expected toGinger: Im an out-
Property man- increase and you can pick up property thatof-state
investor too but other investors agement is the number one reason
an in- not only cash flows but gives you apprecia- may be skeptical
about owning property vestment property will fail to produce posi-
tion potential in the next 10 years, which is so far away. tive
cash flow, assuming you did yournumbers correctly and did not buy
in aghetto. In addition, an investor needs lend-ers, REALTORS,
inspectors, appraisers,attorneys, CPAs, IT consultants,
marketingagents and the whole nine yards to reallydevelop a good
system. Each team memberis crucial to your success, and that is
whyinvesting in real estate can be so difficultat times. Your team
can make or break you, andyou need to have reliable team
membersthat communicate well with you to be suc-cessful.Ginger:
What separates your company, OCG Properties, from the rest? Mathew:
At OCG we have in-house prop- erty management, which is the key to
our A sample OCG Property. and your investment success. We also
take an ethical and conservative approach to in- not something I
can say about California. Mathew: They are really missing
out!vesting and do all of the right due diligence California is a
huge risk right now for buy-Ginger, we both know that with
technolog- on every investment. and-hold investments. ical advances
you can invest anywhere inWe really care for our clients and care
If you take a look at some of the econom- the world now, and its as
if youre invest-about their goals and what their interests ic
indicators in the California real estate ing in your own backyard.
are. We have a guaranteed tenant and reno- market, some of the
things you will find areThe reality is, everyone has the
resourcesvation on every property, and put the
properRealty411Guide.comPAGE 12 2010 reWEALTHmag.com 11.
structuring and risk miti-exactly what the majority of men do.
gation procedures in placeIf you never quit, you will succeed no on
every investment. We matter what adversity you face. also set up
proper com- Ginger: What is the first step someone munication
procedures needs to take to invest with you? for our management
com- Mathew: They need to call us and sched- pany to keep our
investorsule a consultation. We look at each inves- frequently
updated on the tors resources, financial situation and in- progress
of their invest- vestment goals to make sure we help them ment.
invest the right way and surpass their indi- vidual investment
goals. Once an investor Ginger: What due dili-schedules a
consultation with us, we move gence is done on your them from
sitting on the sidelines to devel- investments?oping a passive
income stream to retire on Mathew: Wow, where as fast and safely as
possible. do I begin? I will give you the quick version. ToGinger:
Do you have anything else you start off, we do a completeMathew: Do
not give up, no matter what.would like to share with our readers?
neighborhood analysis on every propertyAny business, any new
venture or opportu-Mathew: Yes, thank you. I would just like along
with a market value analysis, whichnity that you want to achieve,
is 90% men- to add that some people will make up ev- includes
pulling comparable sales and get- tal and 10% skill. If you never
give up, you ery excuse in the book for why they do not ting an
appraisal done before we close es- can never lose. Its best said in
the book 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 Think and Grow Rich by Napoleon Hill:you
that you can do ANYTHING if you flow analysis, profit analysis,
renovation Before success comes in anyones life,focus and take
ACTION steps towards its analysis and every kind of analysis a
CPAone is sure to meet with much temporaryachievement. can think of
to protect ourselves and ourdefeat, and, perhaps, some failure.
When Do not let your emotions tell you it can- investors. defeat
overtakes someone, the easiest andnot be done, even if you were not
initially In addition, we get an inspection by a most logical thing
to do is to QUIT. That is successful. Even if it is difficult to
see how qualified inspector and compare it to the you are going to
accomplish it, dont give renovation bid. Each renovation bid comes
up. There is always a way, but it comes with an item-by-item,
room-by-roomdown to taking action. Most people give breakdown of
the renovation costs, includ-up at the mere thought of difficulty,
and ing materials and labor. This is extremelyyour success in real
estate, and in life, are important so you know what your costs are
going to be based on your ability to focus going to be on future
renovations. When and take action. leasing a property, it is
important to get aAlso, a successful investor has to be qualified
tenant. If you do not, you will becompletely dedicated. They must
ignore all sorry later when you have to evict them of the people
who have an opinion but are because they cannot afford the rent. We
less- educated about the subject. qualify them similar to a home
loan pro- cess. We look at their debt-to-income ratio Ginger:
Thanks, Mathew. I wish you and credit. We do a background check
andcontinued success in your investments. really get a good
assessment of their per-Mathew: Youre welcome, Ginger. sonality,
which can tell you a lot. For more information, please visit:
Ginger: What tips can you give to peoplewww.ocgproperties.com or
email: who want to get started investing in real [email protected]
| OCG Properties estate? Photograph of Mathew Owens by Sam Green
can also be reached at: (424) 757-4680Realty411Guide.comPAGE 13
2010 reWEALTHmag.com 12. Invest Investment Vampires in YOU for the
Next Decadeby Richard BarrettT Never Miss an Issue! he ten years
ahead of us will be cant inflation soon. Experts argue that de-
Realty411 Realty411 Wealth Real Estate extremely difficult for
investors. flation is the bigger risk. While that may th A e Pu Sp
blish ecia l Ed s oferiti Real on ty fro 41m 1 Yield and growth
will be scarce, be true, it does not make inflation any
lesswww.realty411guide.com | Vol. 3 No. 2 2010A Resource Guide for
InvestorsTips for Long-DistanceVol. 1 No. 1 2010
LANDLORDINGMaverick Investor GroupTurn-Key Rentals but much worse
will be the fourdestructive when it starts nibbling at your Around
the Nation Cash Flow from the Comfort of Homevampires waiting to
suck the life out ofinvestments.almost every investment you
consider. In Mathew Owens, CPA, owner of OCG PROPERTIES Buys &
Rehabs Rentals in Tennessee from Redondo Beach Look Inside Get the
Deals DONE Learn Creative Real Estate Techniques from Dave Lindahl,
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no surprise that investment real es-tion climbing over 10%.
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Receive POCKET Deals by Emailinflation reached over 14% In general
real estate values track2 Years for Only $49annually in 1980,
usher- inflation. That is, their value Circle magazine of
choice:ing in years of stagfla-remains constant or appre-tionhigh
inflation ciates even as the valueRealty411 RE WEALTH combined with
highof each dollar declines.unemployment. In Likewise, the
incomeonly five years the rentfrom
investment_____________________________________ value of
invest-property tends to trackName as it appears on credit
cardments dropped byinflation. And finally,50% and the dollaryou
can leverage yourlost almost 75% of investment
asset._____________________________________ its purchasing
powerCredit Card # (visa, mc, amex)during that decade. But Not Just
Any RealThis year, with unem-
Estate!_____________________________________ ployment and
underem-In truth, most real estate doesExpiration Date CVC
codeployment already approachingnot deliver these three critical
fea-25%, the nation is poised to see a replay oftures. The past few
years, have seen crush-those difficult years.ing drops in the price
of condos in Miami,_____________________________________To estimate
the curve of inflation in this almost any property in Detroit,
suburbanSignature Requirednew decade, we need a basic understand-
tract homes in Phoenix, plus office tow-ing of the causes of
inflation. Noble Prize ers and shopping malls across the
country._____________________________________ winning economist
Milton Friedman said it Buying investment property takes
effort,Mailing Addressbest, Inflation is always and everywhere
considerable research and a team of ex-a monetary phenomenon. In
other words, perts working to assist you. With the rightwhen the
Federal Reserve prints moreguidance and team in place, an
investor_____________________________________ money than the
economy can absorb, thewill never have to worry about those
evilCity StateZip economy catches a bad case of inflation
ininvestment vampires.the next 12-24
months._____________________________________The money supply
exploded in 2009. ItEmail Address or Phone (to join our
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01811908 14. The world of real estate investing is a small
one.Investors rub elbows at similar events, read in-dustry
publications and generally run in the samecircles. Carter Froelich,
an author, investor and CEO of The Property Ledger, recalls the
time he met best- give& the latestDolfreadersCarterTips from AZ
selling 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 Ari- zona-based, Personal Real
Estate Investor magazine. At the time, Froelich was busy developing
The PropertyInterview by Carter Froelich, CEO of The Property
Ledger 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 ex-
tended 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 won- derful 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 Dolf de
RoosCarter Froelich Arizonas top real estate investing giants.The
EditorCarter: Hello, Dolf. Tell us about what Dolf: I like being on
the cutting edge of cloud, you can access your portfolios de- youve
been doing lately and give inves-what is available. I have always
done welltails from any computer connected to the tors your
perspective on the market.with new technology. When fax
machinesWeb. Before long, most services will have Dolf: Well,
Carter, although the media re-came out, it saved us thousands of
dollars athat feature, but by then The Property Led- peatedly
states this is the worst real estate year in courier fees. ger will
have innovated yet another area. market we have seen in decades, it
is onlyNow, we dont fax; scanned attachmentsSurfing is so much
easier one foot ahead of the wave than one foot behind.
Furthermore, having all the details of ... with the information
stored in the cloud,a property, including title documents, HUD1s,
leases, management agreements, you can access your portfolios
details fromand the like, stored in one central reposi- tory is
simply a great way to run your prop- any computer connected to the
Web. erty investment business. Once you have experienced it, it is
difficult to revert back. It would be like going back to using
slide- the worst market if you are in the unfortu- are better
quality, in full color and dont rules, or for those readers not old
enough to nate position of being forced to sell. If you require an
outdated phone system to get remember what they are, the
curly-paged are in the fortunate position of being able through to
a recipient. and faded fax machine if they even re- to buy, then by
definition, this is the bestWhen I come across people in the real
es- member that! market we have seen in decades. tate industry who
do not use email, and in- With that said, there are still many
whosist on using faxes exclusively, I think they Carter: Since you
travel often, are the have trepidation about entering our current
must miss out on deals because of their features of Electronic
Library useful? real estate market. This has forced me to
goaversion to new technology. I do not want Dolf: Absolutely. In
fact, more and more overseas. There are many countries rightto fall
into that trap. The Property Ledger companies are trending towards
cloud now experiencing the peak we saw a fewis cutting edge,
extraordinarily useful and computing. Clearly, it is convenient to
years ago so they see the relative merits ofeasy to use. Why would
you not use it?be able to access all the relevant data on bringing
their money to the United States a property from anywhere and not
have and investing here. Carter: What benefits are provided by to
be concerned with taking up space on The Property Ledger, which
other prod-your own computer, keeping data in sync, Carter: Why did
you become interested ucts do not provide?having the data concerned
fall into strange in The Property Ledger? Dolf: With the
information stored in thehands in the event of a computer loss, in-
Realty411Guide.com PAGE 16 2010 reWEALTHmag.com 15. stalling
upgrades, etc. It is all done for theinvestments regularly, with
real estate, you simply the income divided by the invest- end user.
can buy a property and put the title in a bot- ment. With real
estate, since you only need tom drawer, take a six-month cruise,
and to come up with a small portion of the pur- Carter: Why is it
important for investors not worry if you should sell the
propertychase price in cash, the cash-on-cash return to monitor the
financial performance of again. However, it is comforting to be
ablebecomes very important and, dare I say their real estate
portfolio?to put your finger on the pulse of how yourit,
interesting. It is an advantage inherent Dolf: Interestingly, it is
important for inves- investments are performing.in real estate
investing that is often over- tors in stocks and commodities to
maintain looked by financial advisors. a vigilant eye on their
volatile investmentsCarter: What is your favorite financial so that
they can jump ship if the ship starts calculation when analyzing
your proper-Carter: What type of investment do to sink. With real
estate being a much more ties? And why? Here are the choices: you
favor right now and why? stable investment, much of the interest
inGross Rent Multiplier Dolf: When it comes to residential
property, monitoring your portfolio is just that:
inter-Cash-on-Cash Return on Investment I prefer the single-family
home. However, est. However, if you want to know whenAfter Tax
Cash-on-Cash Return for the last two decades, I have personally you
can invest in yet another property, Internal Rate of Return focused
on commercial real estate. That based on cash-reserve build-up,
equity po-Return on Equitydoesnt mean I havent invested in other
sition, available collateral, etc.), then you Dolf: I like to
analyze based on cash-on-sectors but the benefits of commercial
real want to have the up-to-date information cash return. This
calculation shows youestate for the property owner are incred-
available instantly. The Property Ledgerhow the cash you are
putting up is perform-ible. Here are just a few of the benefits:
provides just that when you need it.ing. It is the prime indicator
of how you1. The leases tend to be much longer can truly leverage
your money. What otheranything from three to twenty years. They
Carter: How often should an investorinvestment allows you to get a
$100,000are generally secured by the business, with track the
financial performance of theirasset for only $10,000 or $20,000 in
cash? the owners offering a personal guarantee. real estate
portfolio?For most investors, you cant buy2. Commercial tenants
tend to maintain the Dolf: As often as they feel
comfortable.$100,000 worth of stock or gold or oil property better
as the look and condition of One of the advantages of real estate
invest-without coming up with the entire pur- the property is
important to their business. ing that I often tout is that unlike
the stockchase price in full. When you put up all the market, where
you have to monitor yourmoney to buy an investment, the return
isContinued on next page 16. Dolf & Carter, pg. 17Tenants often
improve and up-the Gilbert Planning Commis- grade the space with
their own sion. This is indicative of the money. long term. In the
short term, 3. With residential property, thethings look pretty
grim, again, landlord tends to pay the outgo- if you are forced to
sell. There ings such as property taxes, in- is word on the street
that there surance and maintenance. Withwill not be a u-turn for
years. commercial real estate, the ten- Things go in cycles. When
ants who are leasing the prop- you get old enough to have erty, pay
for those expenses.experienced a few cycles, youlearn to embrace
them rather Carter: Were both located inthan fear them. There will
be a Arizona; lets discuss the local turnaround. If you can buy
real market. Where is it heading? estate that cash flows now and
Dolf: Im optimistic. There washave a great chance that long an
article in the paper just three term the capital value will go days
ago stating Taylor Morri- up immensely, why would you son Homes
will begin construc- not acquire some real estate? tion in July of
a master-planned Learn more online about community in Gilbert.
ThereThe Property Ledger, visit: will be 17 phases
developedwww.thepropertyledger.com over the next 12 years accord-
To reach Dr. Dolf de Roos, visit: ing to the report submitted to
www.dolfderoos.comFREE e-Book Offer, For a Limited Time! Download
The Real Estate Wake Up Call
Todayhttp://thepropertyledger.com/buy/90-the-real-estate-wake-up-call-e-book-free
17. Maverick Investor Group Scours the Globe for the Best
Investment PropertiesInterview by Linda Pliagas With a name like
Maverick, oneimmediately expects the unex-pected. 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 broker- age 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 devel-
opers 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, mar- keting and other normal overhead. This al- lows
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-mor- tar 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 busi- ness model is their
corporate vision: ToMark Solak Valerie Schrock Matt Bowles Next
Destination: The Hidden Tropical Paradise of...Nicaraguaradically
improve peoples lives throughclose as many as 34 transactions and
paythe international component, is just a con- real estate. out
nearly a quarter of a million dollars intinuation of the global
lifestyle enjoyed byAnd their radical approach to real estatebuyer
referral fees to real estate brokers in its principals. The company
was founded is working. Even during 2009, in a single the Maverick
Referral Network.by Mark Solak, Valerie Schrock and Mat- 90-day
period, the company was able toMavericks business model,
includingthew Bowles real estate investors >Realty411Guide.com
PAGE 19 2010 reWEALTHmag.com 18. and licensed real estate
professionals withworthy people I had ever met, all essential we
use. It was crucial for everyone to start formal, advanced degrees.
Prior to joining qualities for business partners. The three of with
the vision of their own ideal lifestyle. forces, they led
cosmopolitan lives, trav- us began pooling our skills, resources
andMatt likes to work from his rooftop pool eled the world and
lived in foreign coun-creative energies to develop a cutting edge
deck in LA, Mark likes to spend extended tries for extended periods
of time.business model that could provide unparal-time in Europe
each year, and I like to goRecently, I caught up with the Maverick
leled advantages to real estate investors and skiing in Canada and
spend part of the year power trio to discuss their latest
turn-keyreal estate agents. In 2007, it was ready toin Phoenix with
my parents. So we struc- buying opportunitythe Seaside Mariana be
launched so we all quit our jobs, flew totured our real estate
business to facilitate Spa & Golf Resort on the Pacific coast
ofLas Vegas and, while overlooking the Stripour dream lifestyles.
But, more than that, Nicaragua. from a rooftop lounge, raised our
glasses 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 busi- and
announced to the world that Maverickof real estate investors and
agents who are ness partners? Tell us a bit about how Investor
Group was born!focused on using real estate as a vehicle Maverick
Investor Group formed?for designing their dream lifestyles. We MB:
Well, Valerie and I met in graduateQ: The Maverick partners live in
differ-show our clients how to do what we do. school in 1999. We
both got masters de- ent states Matt is in Los Angeles, Valer- You
will notice that we have a section on grees in International Peace
and Conflictie is in Washington D.C., and Mark livesour website
that discusses real estate life- Resolution and then worked in
humanbetween Chicago and Las Vegas. That isstyle design in great
detail, down to the rights advocacy in Washington, D.C., for pretty
incredible! How did you decide tospecific technology products we
use. Real several years. We started investing in realstructure your
company like that and howestate investing is only a means to an end
estate on the side, reading books about it does it affect your
business? its always important to keep your eyes on and learning by
experience. Soon we hadVS: We were intentional about structuring
the larger prize. Money isnt very useful millions of dollars in
real estate holdings in the company that way from day one, andif
you have lost touch with your dreams. states all over the country.
the primary reason is freedom of mobili- How can real estate enable
you to recapture I met Mark in 2005 when he sold me overty for the
Maverick partners. Its all about your time, design your dream
lifestyle and $2 million worth of investment propertieslifestyle.
We can live wherever we want make enough money to finance it? Thats
in Las Vegas. I was blown away by hisand travel whenever we want
for as long the big picture. customer service; it was the best I
had ever as we want, and no business falls through seen in any
industry. These were two of thethe cracks because of the systems
and pro-Q: Maverick has always encouraged most talented, ambitious,
honest and trust-cesses we have set up and the
technologyout-of-state investing, why are you
nowRealty411Guide.comPAGE 20 2010reWEALTHmag.com 19. moving to
international realment in Nicaragua, making estate? it particularly
friendly to for- MS: For the same reasons, eign real estate
investors. were just expanding the play- For example, as an inter-
ground. The reason why Inational investor who lives would never
limit myself to in the US, I can own freehold buying in my own city
or stateproperty in Nicaragua with is because there might be a
bet-title insurance from a North- ter market than the one I
liveAmerican-based title com- in. The failure to consider in- pany,
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. Pres- I want my money in the best ident Ortega has
personally market in the world no matter endorsed the Seaside Mari-
where I live, period. Maverickana resort because it is an- is
opening up a private chan- ticipated that it will result in nel for
real estate investors toan explosion of tourism and access unlisted
properties in be a huge economic boon for premium global markets,
withthe country. So the govern- property management options ment is
very supportive of in place and a variety of exitforeign investors
coming in strategies. Buying throughto buy real estate. Maverick
has always meant Seaside Mariana Spa & Golf Resort sits on 2
kilometers of pristine beach front. getting exclusive prices andQ:
What kind of deal terms terms that are not available to up the
coast is Nicaragua. It borders Costa was Maverick able to nego- 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 theFor detailed
information and private ac- miere 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 Inves- gin 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 cli- ents close on a Maverick Deal. Q: What is the
politicalWe invite smart real estate investors and and economic
climate in savvy real estate agents to contact us today. Nicaragua
right now?We dont care if someone has a lot of ex- 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.comPAGE 21 2010
reWEALTHmag.com 20. Blue-Chip Real Estate Strategy Fits Economic
Climate by Ryan Hinricher, co-founder of InvestorNation.com This
article originally appeared on BiggerPockets.com Ta lot of
investors get well-versed in Section 8 you can profithe housing
recovery isin trouble. The lowergreatly in the lower-end
homes.limping along slowlypriced homes usually The median-priced
home becomes theleaving many real es- have households with
blue-chip property. The blue-chip hometate investors wonder-limited
to no savingshas lower levels of vacancy and rents that ing where
to invest their dollars. or emergency fund. Sohave been buoyed by
average people be- Some speculation is even re- when a tenant loses
aing displaced from their primary residence turning to the market
with new job, the property ownervia foreclosure. In the market
where my investors looking to purchase, feels that impact pretty
company is located, average-priced homes renovate, and resale
distressedquickly. Also lower- are selling for around $115,000.
Obviously properties for short term profits. priced homes tend to
with distressed inventory out there, one can Owning a real estate
investmentbe in older areas giv- purchase properties at lower
prices than Ryan Hinricher brokerage allows me to see a va- ing the
owner a much this, improve them and probably have eq- riety of
transactions, including retail flips higher rate of maintenance.
uity that is more tangible than lower-priced from speculators,
investors buying $8,000 homes. How can one possibly model a homes,
renovating and placing tenants inThe Numbers $115,000 home the same
way as a $30,000 them, and a higher quality purchase and This is
where investors usually make mis- home? The $30,000 home (in most
cases) hold homes closer to median home prices.takes. The surface
numbers can be verywill have significantly higher rates of va- The
latter is a strategy that I believe right deceiving in real estate.
When analyzingcancy and maintenance. now is being overlooked by
many inves-a real estate transaction If you go up a step to tors.
many investors arent the higher-than-average using vacancy and
main- priced homes, youll no- The Product tenance, or applying
thetice those homes might There are many markets where you cansame
vacancy and mainte-offer stable tenants, usu- purchase and hold
homes at the median nance numbers to homesally high-end profession-
or even average home price and receive athat vary widely in
price,als who will reliably pay positive cash flow with a
traditional 20% age, neighborhood, size the rents. The cash flows
down strategy. These homes, are out-per-and city. This can cause
amay look lower on the forming many lower-priced homes frompretty
big disappointment surface than other types of rental prices and
home values perspective.when the cheap property you purchase is
homes but these blue-chip homes perform Median-priced homes in most
markets are affected by socio-economic issues leading more reliably
on maintenance, vacancy, three bedrooms, two bathroom homes, to
high tenant turnover, criminal element,and valuations. which offer
good car storage. Usually thisslow-paying tenants and maintenance
is- is the type of home most Americans desire sues. Financing to
live in ensuring you always have both an Ive seen many people
advertise profor- Financing on blue-chip homes tends to be
available rental pool and an available buyermas with high cash flow
on smaller, older much easier than most any other price point pool.
This product offers real estate inves-homes in areas with high
crime, poverty,for a number of reasons. First because the tors
multiple exit strategies with the abilitypoor schools, and with low
rates of homeprices are low enough you dont worry to sell it retail
versus lower-end properties,ownership. One can argue that these can
beabout jumbo loan pricing, rates, and re- which usually need to be
sold to other in-good investments structured correctly and
strictions. On the lower end not all lenders vestors.by applying
the right metrics to ensure a are lending on homes priced under
$50,000 In addition, median-priced homes aremore accurate
projection of cash flows is and at times have a different rate
table. In usually in areas low in crime, close to achieved. These
lower-end properties have and around the median price nearly every
schools, shopping, houses of worship, and become the penny stocks
of the real estatelender offers investor loan products. Ive with
easy access to employment. The in- investment business. If you get
the perfect also found the appraisal issues are fewer verse of this
is, of course, also true. I per-tenant who doesnt feel the pains of
thebecause normal sales activity exists at this sonally own
properties at much lower pricerecession, maintains the home
themselvesContinued on page 24 points as well. They took the
hardest hit and stays in the property for a long time, on rents and
value. This is where Ive seen you could hit pay dirt. Similarly if
youre Realty411Guide.com PAGE 22 2010 reWEALTHmag.com 21. Blue Chip
Real Estate Strategy, pg. 22 price point. When you have aida, which
were impacted verylot of normal sales, valuationlittle by the
housing boom andtends to be (somewhat) stabi- bust. Many of these
cities havelized.a good economic future, afford-able tax rates, net
populationExit Strategy growth, and high enough rentsHaving an exit
strategy is an es- to achieve positive cash flow atsential part of
your real estatethe median home price.plan. Some investors plan
onnever selling and while thatIn Summarycan make sense to receive
all With distressed properties mak-the benefits of real estate,
livesing up a large percentage ofchange. If you think back
fivetotal sales, then it only makesyears ago and how different
sense to focus on buying blue-things in your life were at the chip
homes at a discount today.time, you might agree that hav- In doing
so, one can realizeing an exit strategy is impor-equity through
quality reno-tant. vation, placing a tenant andWith these blue-chip
invest-holding. These homes shouldment homes, youll find
mul-provide you relative peace of Having an exit strategyis an
essential part of your real estate plan.tiple exit strategies.
Median-mind when compared to lowerpriced homes have the widestprice
points due to the loweravailable buyer pool. Think socio-economic
risk discussedabout that for a minute: Lower- earlier.end homes
typically are resoldThese types of rentals are ato investors. So
imagine buying good fit for people looking toa home on the
lower-end at 60 diversify out of equities andcents on the dollar
and thinkingaccumulate a few properties.you have a lot of equity.
In fact While they may offer strongerif your future end buyer is
anfundamentals than most prop-investor, do you think theyllerties
they obviously arentpay 100 cents on the dollar?bullet-proof. These
are compa-Time on the market is alsorable to owning GE stock
(GEanother factor. At the median-registered no U.S. profit lasthome
price, time on the marketyear). While you can dependis usually
shorter than any other upon these homes most of theprice point. So
in planning yourtime, the downside risk is usu-long-term strategy
it seems toally minor price depressionmake sense to invest in homes
during an economic recession.that could be sold quickly, fi-
Lastly, in many markets thisnanced easily, and sold at or type of
product and strategynear market value?simply wasnt an option
whenprices were higher. I doubt thatWhere to Find very far into the
future thisThere are many markets youopportunity will be as
widelycan find these types of proper- available again in as many
mar-ties in today. Without goingkets as it is today.into much
detail in this article, -there are plenty of cities whichRyan
Hinricher is co-founderlie in states outside of Califor- of
Investor Nation, visit online:nia, Nevada, Arizona and
Flor-www.InvestorNation.com Realty411Guide.com PAGE 24
2010reWEALTHmag.com 22. 3 FREE Ways to Find aGreat Wholesale Deal
Today! by Ginger MaciasI just had a great call with one narrow down
your search of my coaching students on to REOs, probates, fixers
how to get a deal signed up by or other criteria. You dont the end
of today. Times are tough, even need access to thefavorite ways to
find deals is to ask other and although sending direct mail MLS,
just find an investor-wholesalers what they currently have un-
pieces is a great way to get leads,friendly agent and let themder
contract and to market that property sometimes its just not
possible know your criteria. They to my buyers list. Or, if youre a
rehab- to send them out especially if will set you up to receive
ber or landlord, you can pick up amazing youre just starting out.
So over the years,free emails.deals without having to do all the
leg work. Ive learned some cheapskate ways ofIts important to work
with an agent whoWhere do you find these wholesalers? If finding
leads.knows you want a smokin deal, and whoyou see a We Buy Houses
sign, call them. will make lots of lowball offers on your be-Youll
likely be dealing with a wholesaler. 1. Online RSS: If youve been
in real es- half without flinching. Also visit your local REI
meetings, Google tate any amount of time, you probably al- For most
listings, other than REOs, you wholesalers in your area, ask
rehabbers ready know that online sites such as Craig- can also try
and make seller-financingwho they recommend, and ... dont forget,
slist, Redfin, Backpage, Oodle, etc., can deals. The point is to
get your foot in the ME! Im an active wholesaler in Southern have
some pretty amazing leads on For door and start negotiating with
the seller. California who loves working with other Sale By Owner
(FSBO) properties. TheAnother lead system you can set up on
investors. (Shameless plug? Of course.) If only problem is that it
takes tons of time to the MLS is expired listings. These list-you
get a deal done and need to sell your sort through all those sites
to find a decent ings have expired without anyone buying property
really quickly, let me know. deal. the property. This can mean youd
be deal-Well, now there is no excuse for you notRhett Halsey, one
of my good friends and ing with very motivated people! to find a
deal today! Good luck and send an internet marketing guru for real
estateSet up a win-win situation with yourme a brief email letting
me know if you investors, told me of a free feature offeredagent
where they can present your offer,found this helpful. by most
websites: RSS or Real Simpleand if the sellers dont like it, the
agent may Syndication. Instead of multiple searches be able to pick
up a new listing. To contact Ginger Macias or learn about for
leads, the leads come to you in one her speaking engagements and
wholesale spot. You can set up a Google Reader ac-3. Other
Wholesalers: One of my absolutedeals, visit: www.OCWholesalers.com
count 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 of- fice and
within a few days got three proper- ties 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.Craig- slist.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!2. Multiple Listing
Service: Your local MLS (Multiple Listing Service) offers a great
way to find leads for free. You can Realty411Guide.com PAGE 25
2010reWEALTHmag.com 23. A Brave Newby Bill GattenLets face it money
for a dayWorld inthe country, or two at a highthe econ-interest
rate (but atomy and the real a reasonable cost),Compromiseestate
market is with which to pur-just terrible. There chase a
foreclosed-are no more good upon property bydeals. Lets all get
means of an all-out of the business. cash offer prior to People are
not building, buying or sellingits scheduled pub- homes any more.
There are so many over- lic sale date. And then selling it on the
day for, or in advance of, services to be ren- encumbered and
foreclosed-upon cheapof closing, or soon thereafter, in a separate
dered, whether such services are actually properties available for
pennies on the escrow settlement to an end-buyer who ob- performed
or not. Another common viola- dollar that nobody wants them
anymore.tains his own loan and lives in and loves tion has to do
with sand bagging by attor- After all, who can make a living in
this ri-the property forever. neys, and many non-attorneys, who
bill on diculous business these days?This process is known as the A
to B/B a monthly basis for services (mostly loanOh yeah? to C
transaction. In other words, you, the modification schemes) while a
short saleAnd Michael Jackson faked his death, investor are the B
component; the cur-or loan modification process is presumably Elvis
eats at Burger King, and the worldrent owner is A, and the
end-buyer is taking place. Instead, either there never was ends in
three years!C. In other words, B buys from Aany such attempt or the
attempt failed, andNot that theyre needed anymore, but here are a
couple solutions to these hor- rible problems facing real estate
investors ...two REALTORS in Massachusetts were recently in this
disastrous economy:sentenced to ve years in prison each for 1. Stay
in bed with a tinfoil hat on your head. having used this scheme
several times. 2. Go live with your parents and let them feed you
until you win the lottery. in one escrow closing process (taking
fullthe client wasnt informed and was told, 3. Go back to school on
the government, ownership of the property), and then sellsWere
working on itbe patient, while and get a law degree so you can
force peo-the property to C at a reasonable profit in the monthly
payments continue. ple to pay you to stop suing them.a wholly
separate escrow process.Another big one, and one that is proba-
OR...It all sounds simple and it is! However, bly most tempting but
also most deadly for 4. You can capitalize on singularly the a
thorough knowledge of all the rules and REALTORS, is the situation
wherein the greatest money-making opportunity ever! regulations
concerning short sales, equity- investor/REALTOR has already lined-
And you dont even need a dollar or a dimepurchasing,
equity-stripping, foreclosure up a retail buyer who is ready to
take the to do it. consulting, credit repair and mortgageproperty
at its true market value following lending is absolutely mandatory
beforethe short sale acquisition by the investor. SHORT SALES
becoming too far vested in the business When the scheme comes to
light, the con- The short sale industry is burgeoning of short
sales. To date, hundreds of other- tention by the lender in these
cases is that now and will probably continue to do so wise nice-guy
and gal would-be investorsif the property were worth more than they
for three more years. New short sale mil- have been severally
sanctioned, shut down,were told in the transaction, there would
lionaires are being made every day. There heavily fined and/or sent
to prison for vio-have been no need for a short sale and their are
billions upon billions of dollars (Re-lating the very stringent
laws regulating resultant loss. They see such schemes as member
when a billion dollars was a lot short sales and foreclosure
consulting in blatant bank fraud and have no sense of of money?) to
be made in the transac-various states. humor in such cases. As a
matter of fact, tional funding of compromised mortgageIn my own
case, Ive spent my busi-two REALTORS in Massachusetts were defaults
loans that would otherwise beness as a fearless bull rider: but in
this last recently sentenced to five years in prison forced into
expensive and time-consumingRodeo, Im sticking to riding milk
cows.each for having used this scheme several foreclosures, and
sold by lenders at public I wont set any records or win any
prizes;times. auction.but Im a lot less likely to get thrown of and
So the long and short of it iskindaDef: Short Sale: The acquisition
of real have a horn poked up my rear end ( this, like Henny
Youngman was one to say: If estate at a compromised (wholesale)
pay-is, by the way, an analogy not a good one,its gonna hurt when
you go like that for off amount that is less than the balance of I
agree, but an analogy none-the-less). cryin out loud, dont go like
that! the mortgage obligation. One of the most often violated of
the Todays short sale market is burgeoning.Def: Transactional
Funding: The two- many regulations being put on the books stage
practice of using another personsas of late has been that of taking
moneyContinued on pg. 29 24. 10 CA$HWeeks to OW with Matt Malouf T
Macias by Ginger tors, courses and systems to help them since 2001.
Over the years, he has special- real odays estate environ-achieve
their success? Those of you whoized in wholesaling, owner financing
and ment can seem a little estate are living the real dream, you
know foreclosures. Malouf has developed a busi- tricky to navigate.
So many that luck had little to do with where you are ness model
that he describes as T.E.R.M. possible ways to make today. It takes
concrete actions, goals and It is a model designed to efficiently
money exist in this indus- guidance to get to your dreams. minimize
the investors time, energy, re- overwhelm- try, it can beWell, for
those of you starting out in real sources and money in that order,
he ex-ing, especially for those who are just get- estate who are
anxious to get going, thereplains.ting started in real estate
investing. There are wonderful ways to get into all this ac-To that
end, his program is a 10-weekare many late-night television shows
that tion.course that walks investors through the ex-claim to teach
you how to be a multi-gazil- Recently, I spoke with Matt Malouf act
steps needed to find, analyze and buy an there any truthlionaire by
next week, but is about his new program, which helps inves-
investment property that cash flows fromto what theyre saying? tors
bridge the gap from real estate dreamday one. Some topics include
learning how Take a look around. Youll notice that to reality. And
by reality, Im talking aboutto set up your property management
team,there are a lot of successful real estate en- actually owning
your very own investment screen tenants, how to hold title and
financ- are making a kill-trepreneurs, people who end of the
course! (More onproperty at theing options. ing today, in this down
market. The ques- that later.) create this The motivation to
coursetion is did they just start making lots of real estate Malouf
is an investor-friendly came from Maloufs desire to meet the or did
they have men-money by pure luck, has agent in California and been
investingneeds of investors who want to get educat- 25. ed and
match them with thepeople on the team. Malouf and best available
product in the his team then go out and find a real estate
marketplace.property that meets the stu-This hybridization will
en-dents needs. They send per- able beginning investors to buy
sonalized updates, letting them a property that meets their
cri-know whats being done to find teria, after learning all the
basic them a property. steps needed to acquire andThis program lays
the foun- manage that property. dation to successful real
estateThis is not just a course, investing. Malouf gives this
Malouf explains. At the end of analogy: Its like building a 10
weeks, theyre going to have skyscraper. You have to spend a
cash-flowing house, an assetthe time to set up a foundation to put
in their portfolio. It isand set it nice and deep, nice all-
inclusive in the program. and strong. That way, it willIt takes
concrete actions, goals andguidance to get to your dreams.Maloufs
T.E.R.M model isstand through the good and the ideal for someone
who has a bad. full-time job and wants to start Maloufs T.E.R.M
program building a real estate portfoliolaunched this summer and is
as part of their retirement plan. available year-round to a
limit-Over the course of 10 weeks, ed number of people. Be sure to
students receive the entire reserve your place today. course
through the internet,Readers can contact Matt which includes 30 to
60 minuteMalouf directly at (562) 443- lessons by audio, video and
text7042; mention the out-of- articles. Each student also re- state
magazine special. Or ceives the Million Dollarvisit:
www.buysellwithmatt.com Rolodex, which gives the con-Enter the
promo code Real- tact information of all the key ty411 in the note
section.A Brave New World, pg. 27There really is no limit to the
worm, and If everybody is number of homes in foreclo- doing it, its
time to do some- sure that lenders would like to thing else. get
off their books in order toOr reduce their matching fund re- Set B
- Haste makes waste; quirements and free up more Look before you
leap; and cash to lend out. Wait until all the bugs areMillions of
dollars are readyworked out before you jump to be made by
integrally in-in, or Wait until you see ev- volved entrepreneurs
over the eryone else doing it, then jump next few years. in why
take chances?To miss out on any of itMy own: Successful people
would be an out-and-out shame make quick decisions and are if not a
crime. slow to change their minds, theThere are two sets of adages
unsuccessful are slow to com- to live by that one must ponder mit
and quick to change their and decide upon before jump-minds. ing
into the business: So, whats my advice regard-Set A - Strike while
the iron ing the current short sale mar- is hot; He who hesitates
is ket? OK, guess! lost; The early bird gets the
Realty411Guide.comPAGE 29 2010 reWEALTHmag.com 26. [ Hitting the
Club with Sensei at 12 Roundsby Linda Pliagas Self-reliance,
balance, integrity: ness cards in hand. Dressed in casual cloth-and
building wealth through cash-flowingthese are just some important
ing, they chatted while munching on choc- rentals, all using
Senseis Remote Rehab-mantras in the martial arts world.olate chip
cookies. They discussed theirbing program. The Phoenix market is
pro-Step into a monthly meeting atlatest deals, needs and
goals.viding incredible wholesale deals on newer Black Belt
Investors and youll soon dis-When the master approached the front,
homes starting at $48,000, he says. Flip- cover these disciplines
are in full force. the students took their seats and settled pers
are turning their properties and cashingWith two locations in
Southern California down quickly, ready to start their lesson.out
about every 90 days. The buy and hold (Downey and Norco), Black
Belt Inves-Senseis cash and wealth system is pure strategists are
capitalizing on great cash tors provide a social network for
bothflow averaging $900 per month. the novice and seasoned. It is a
club Although he started his career as a where education is
emphasized, deals are analyzed, and action is taken to Sensei
Spills His Top 5 remote rehabber (his first deal was in Florida),
he now prefers to wholesale reach goals.Secrets to Land a Dealand
calls it: The Ultimate Real Es-Ricardo Valencia, a national
investortate Cash Machine. His investing with holdings in four
states (CA, TX, formula, Find it, Bind it and As- IN and MO),
stressed the importanceCant seem to locate sign It, is used in
California, but of attending monthly club meetings,a distressed
home- the strategy can be duplicated in any as we were walking into
a communityowner or unwantedarea, in any market.property? Believe
it center in Downey. Wholesaling does not require cash,or not, many
peopleWe have a responsibility to teach credit or a license, which
equals NOhave real estate that those who are newcomers, he saysthey
no longer need RISK. He further explains, The with a smile, And, at
the same time,or want. (Yes, weintention is to sell the contract to
in- you learn from those who are morefirst found this con-vestors
who cant find a deeply dis- advanced. cept hard to believe counted
deal on their own.Valencia, who travels throughout Sensei
GillilandWhile many people, including Bro-too!) Follow these Los
Angeles County to attend numer- five secrets from a master
wholesaler,kers and REALTORS who do not ous real estate events,
admits that and youll soon have more deals thanunderstand creative
real estate, frown the members of Black Belt Investors time to work
them.upon any deal that is not a traditional keep bringing me back
... its alwaystransaction, wholesaling retains an nice to mix and
mingle with them.#5: Code Enforcement: Many local gov- important
role in the community. ernment websites, such as Los AngelesWhat
began as a casual meeting atAs a matter of fact, wholesalers are
County, offer online lists of distressed a coffee house in 2000, by
investor,often the first to spot and service a properties. This is
an often overlooked martial arts expert and entrepreneur, treasure
filled with potential gems.homeowner or property in distress.
Sensei Sean Gilliland has becomeIn wholesaling, success depends on
an organized official club boasting Continued on pg. 59 recognizing
circumstances and offer- two locations and filling the rooming
solutions. with a strong following each month. Sensei recalls one
recent transac-Sensei chose to stake his claim in Downey,and
simple. He trains his students on how tion in which he assisted a
family made the city where he was raised. Next, he chose to create
cash quickly through flipping realup of siblings scattered around
the country Norco, the city where he now lives with hisestate so
that resources can be funneled to who were feuding over an
inherited home wife, Annamaria, a licensed REALTOR,purchase
income-producing property. in need of many repairs. Because of the
and their three children.And what areas are being focused on?stress
it was bringing upon the family, theyThe club meeting room, located
inside a Right now, he has two major target zones. wanted to
dispose of the property quickly. community center, was full and
bustling in Phoenix, Ariz., is his target zone for rehab- Sensei
packaged the deal and sold it to a lo- May. The sweet aroma of
freshly brewed bing flips and rentals; Southern California cal
rehabber willing to put in a lot of sweat coffee and abundant
smiles were inviting.is his bulls-eye for wholesaling
properties.equity and cash. The investor was willing The group,
mostly in their 40s and 50s,He and his members target Phoenix asto
take a risk for a chance to profit. was diverse in experience and
background.their area of operation for fixing and flip- They were
master networkers, with busi-ping properties for immediate
paydaysContinued on pg. 59 Realty411Guide.comPAGE 30
2010reWEALTHmag.com 27. California Trust Deed Investing Not
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 9% Return offered dismal returns over the
past continues to increase. We scrutinize1st Trust Deeds Only
several years. The Norris Groups trust deed investments earn 9%
return backed a trust deed is ever presented to our No Pooling
private money sources. 8-Year Term real estate.60-65% LTV Since
1997, our experienced team of resources are helping investors
cleanCash Flowing experts has originated California trustCA
Properties deed investments to private individuals,Ideal for
Retirement accounts (including IRAs). Accounts (IRAs)Experienced
TeamDVD on trust deed investing. Navigating the prof itable world
oftrust deed investing with the help of one of Californias
leadinghard money lending companies.Call or visit our websitetoday
for yourFree Book and DVD. w w w.TNGtrustdeeds.com 951.780.
5856California Depar tment of Real Estate, Real Estate BrokerBruce
Norris Financial Group Inc.DBA The Norris GroupDRE License 01219911
28. Investors & Industry Leaders Share an Evening of Glamour
& GivingThe 3rd Annual I Survived Real Estate 2010 will Raise
Money forBreast Cancer Research & Unite the Nations VIPs to
Discuss Investing by Lori Peebles for investor rights. For the past
two years, event honors her courageous effort to fightD he has
united real estate giants to discussthis disease and hopefully adds
to the like-oes Shadow Inventory really ex- the issues that matter,
and most important- lihood of someday finding a cure.ist? What is
the state of the REO ly, to exchange ideas that can help
investorsIn addition to raising breast cancermarket? These are just
some of do what they do best: rebuild communitiesawareness and
funds for research, as well the crucial questions to be and
rejuvenate econo-as providing investors of all levels access Bruce
Norris with his wife & son. tackled by real estate in-mies.to
information, I Survived Real Estate dustry experts on the eve- The
panel werehas been instrumental in spotlighting the ning of
September 17. putting together can crucial role investors have in
our nationsThe Norris Group,speak about these issues economic
infrastructure. headed by Bruce Norris, from several differ-Norris
explains: This event gives a a 30-year veteran known ent point of
views and chance for investors to be seen in a different among
investors as thehopefully provide us light. We all know investors
are often seen Nostradamus of Cali-with some newas the sharks
fornia real estate, is once insights mov- Tommy Williams of the
real estate again organizing their an-ing forward,i n d u s t r y.
We nual philanthropic event in Norris explains. take this night
Orange County.Some returning to show otherThis black-tie
affairguests, include: sectors that we, is one of the most
fash-Joseph Magdz-as investors, ionable tickets in town,iarz, 2011
presi-play a signifi- mixing charity, important dent for the Ap-
cant role in the trend updates, education, praisal Institute;
solution side of entertainment and industry networking. It Tommy
Williams, 2008 president ofthe market. is always a sold-out gala,
one that attracts the National Auctioneers Association; andNorris
knows firsthand that real estate the Whos Who of real estate.
Christopher Thornberg, principal of Bea- investors take great risks
in a volatile mar-When we attended last year, it was fasci- con
Economics.ketplace. With greater acceptance, their nating to note
that besides all the tuxedos,New guests are also being added. We
ideas have a better chance at being heard satin dresses and crme
brules on fine chi- are very excited to have Sean OToole and being
implemented, he says. na, some serious industry trends and alter-
from Foreclosure Radar joining the panelThe charity event was
designed to give native solutions were pre-this year to add his
everyone, regardless of personal income,Guests at the last years
event. sented in just a few hours. data-driven and in-an
opportunity to participate.It was an evening of edu-vestor-minded
per-By joining our walk team and raising cation with a
sophisticated,spective. the money in their networks, attendees
entertaining twist, much likeFor Norris, the Iand sponsors can
technically come free of the man behind the event. Survived Real
Es-charge, Norris explains.The theme for I Sur- tate series is
per-Sponsorship opportunities are also vived Real Estate 2010
sonal. This night is a available. Benefits for advertisers include
will again focus on trends, way of honoring hisinclusion in all
mailers to local, state and solutions and have an added wife, his
family, hisnational government officials, SEO op- focus on the
state of REOs, Norris says. community and profession.timized
website advertising, inclusion in With constantly changing
governmentIn the last two years, the fundraiser hasmailers and
flyers, plus event program regulations, its been difficult for
anyone in raised over $100,000 for the Susan G. and screen
exposure. Each sponsor is also the real estate business to build a
sustain- Komen Foundation; these funds are usedmentioned in video
and radio segments that able business model. for breast cancer
research.air before and after the event.Norris, a 30-year veteran
investor (from My wife, Marsha, was diagnosed with For more
information, please visit online: rehabber to private lender) is a
champion breast cancer more than 15 years ago. This
www.ISurvived2010.comRealty411Guide.com PAGE 35 2010reWEALTHmag.com
29. ALL ABOARD! for The Ultimate Cash Flow Buying TourThe Clothier
family, from left to right: Chris, Brett, Kent and Kent Sr. M
ainstream reporters who present real estate as doom and gloom
surely havent been to Mem- phis. 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. MemphisInvest.com &
FortuneBuilders Our editorial team was invited to attend The
Ultimate Cash Flowing Buying Tour Unite Investors from 18 States
& 2 Countries by MemphisInvest.com, a boutique, Mem- phis-based
brokerage catering to out-of-and Sell 29 Rental Homes in 2 Days!
state investors. by Linda Pliagas The company, which serves more
than 200 clients and manages more than 650 in- outstanding views
and plump pillows. In-where we have our own personal invest-
vestment properties for them, joined forces vestors traveled from
18 states to attend,ments, Chris says. The Clothiers person- with
the San Diego-based FortuneBuild-one couple arrived from Canada.
ally own more than 100 rental homes in a ers, Inc., (owned by Than
Merrill and the Most of the attendees were investorshandful of
quality, long-term buy-and-hold Flip This House team) andwanting to
learn how to be-areas of Memphis. together they organize one ofcome
MemphisInvest.com Typical home prices range from $34,000 the
largest property buyingclients. Many were referrals to $85,000,
rents average out be $850 per events in the nation.from their
existing client month. The city boasts high rents and low Youll
never see anything base, and some were repeat prices. But
surprisingly, 48% of Memphis quite like this, promised customers.
residents rent. Kent Clothier Sr. during our Our average client
buys The Clothier family, who were formerly telephone conversation
a few four homes and refers us toin the grocery business, moved to
Tennes- months ago. Kent Sr. is found- all of their friends and
fam-see because they saw such an opportunity er of
MemphisInvest.com. Heily, says Chris Clothier, for long-term real
estate investing and takes the helm of the 18-team- director of
sales and market-monthly cash flow. member operation, which is ing.
At the time, Kent Sr., Kent and Chris managed by his three sons,
MemphisInvest.com pro- were scattered about, working in different
Kent, Chris and Brett.vides clients with an option of either buy-
real estate markets (Texas, Colorado and In my six years as an
out-of-state inves- ing a turn-key rental home or one that
needsFlorida). Memphis real estate brought the tor, I had never
attended a property buy- rehab. The company oversees the work
forfamily together. Its an additional perk for ing tour. Plus, I
repeatedly heard aboutthe investors. Each property has a separate
proud papa Clothier. Im the luckiest man the benefits of the
Memphis market from quote for the renovation included in its pro-
in the world to have my sons working next many sources. I thought,
What a perfectforma profile. If the rehab goes over bud-to me, Kent
Sr. told the crowd that day. time to put on my reporters cap and go
get get, it comes out of the companys pocket.On the first day of
the tour, the investors the scoop. MemphisInvest.com caters to
investors gathered to get educated on the local mar- The Ultimate
Cash Flow Buying Tour def- who are looking to buy in typical
middle- ket, meet the Clothier family, and mingle initel