powerpoint presentation reiwealth.pdf · flipping single family rentals, creating turnkey rentals,...
TRANSCRIPT
by Bruce E Dinger
Unites Local Investors with Technology
by Tim Houghten
with National Expos in "HOT" Real Estate Markets to Reach
Magazine's Thousands of Social Media Followers
by Lori Peebles
that May be Costing You Money
by Amanda Y. Han & Matthew T. MacFarland
by Randy Hughes
Leads the Way in Enhancing the Community
by Tim Houghten (Featuring John Aaron)
Became the Co-Founder of the Most Successful
Property Management Company in Houston
by Steven Rozenberg
The “Secret Ingredient” of Overseas Deals
by Clint Coons
Improving Quality of Life through Real
Estate Investment “My training is one on one, and I am very
interested in their success. There is nothing
magic about my training. It is just combining
knowledge with hard work. I have a system that
works, if they do. “ – Dennis Henson
for Small Business Owners to Increase Cash Flow
by Dr. Teresa Martin
to Real Estate Investing Under $50K
by Priti Donnelly
Can Make Your Business Efficient and Profitable
by Leon McKenzie
For Financing Real Estate Assets – Learn About AssetAvenue
by Tim Houghten
Business Model
by Gary Geist
PRIVATE LENDING BRUCE E. DINGER
HAT IS PRIVATE LENDING?
A private money loan is a loan that is given to a real estate investor, secured by real estate. Private money
investors are given a first or second mortgage that secures their legal interest in the property and secures their
investment. As REI,when we have isolated a home that is well under market value, we give our private lenders
an opportunity to fund the purchase and rehab of the home. Through that process, the lender can yield
extremely high interest rates – 4 or 5 times the rates you can get on bank CD’s and other traditional
investment plans.
Essentially, private money lending is a lender’s opportunity to become the bank, reaping the profits just like a
bank would. It’s a great way to generate cash flow and produce a predictable income stream - while at the
same time, provide excellent security and safety for your principle investment. You can do what the banks have
been doing for years…make a profitable return on investments backed by real estate. There is no other
investment vehicle like it.
HOW THE PROCESS WORKS
The process is simple. The Residential Redeveloper (RR) finds an extremely undervalued property to
purchase - and once lender gives the green light, the RR borrows the funds to purchase and renovate the
property. At closing, the lender receives a mortgage on the home along with other important documents. Next
stage is the property renovation. Once the renovations are complete (typically 3-6 months depending on the
size of the project), the RR will list and sell the property. When it’s time for closing, the lender receives his
principle plus 10% interest payment. It’s just that simple! The goal is to keep turning that money for the lender
and keep them making substantial profits so they keep coming back – building a long term mutually beneficial
relationship.
Through private money lending, lender’s have the opportunity to become the bank
OVERVIEW OF THE PRIVATE LENDING PROCESS
PRIVATE LENDING BRUCE E. DINGER
HOW THE LENDER BENEFITS
FROM PRIVATE LENDING
The private money lender (PML) can
benefit greatly from investing their
capital. A real estate mortgage/ deed of
trust provides them with security
instruments they would not get with
other investments. The PML also has
added layers of protection because of
how the RR buys, and because the
PML has recourse available in case the
RR were to default on the loan.
RR currently pay 4-5 times what a
typical bank CD is paying. Rates may
fluctuate some, but not much,
depending on the purchase price and
rehab involved. The lower the price the
RR pays for a home, the RR can pay a
little higher rate to make sure the
lenders make it worth their time.
Private lending means the PML can
relax while the money is in a truly safe
place, working for them.
It’s a win/win opportunity for
both the lender and borrower
Done correctly, equity is built in the purchase of the home,
educated RR are buying 30-40% below a retail buyer – that
creates instant equity at purchase. Also, in a typical transaction,
RRs cut out the middleman cost, such as: commissions, mortgage
broker fees, loan fees; and attorney costs are also lower because
there is less work for them to review.
An experienced and educated RR is able to offer buyers a fully
renovated home at or below everything else in the neighborhood.
The goal is to buy right so you can attract a wide variety of PMLs
for your projects….keep in mind, RR make money when we BUY.
PRIVATE LENDING BRUCE E. DINGER
RISKS VS. REWARDS
Private money lenders bring speed and
efficiency to the RR’s transactions, and
their leverage is far greater when they
purchase using private cash funds.
Many of the homes RR purchase are in
need of a quick sale within 10-14 days.
A traditional bank requires 30-45 days
to close a loan. Many traditional home
Sitting in Bank Real Estate Private Lending
$100,000 x 1% interest $100,000 x 10% interest
12 Month Term = $1,000 ROI 12 Month Term = $10,000 ROI
*Backed by Real Estate Private Lending
PML are making a 10x greater return on their money!
Stock Market Real Estate Private Lending
Completely Unsecured Secured by Deed of Trust or Mortgage Deed
Completely Uninsured Collateral is Fully Insured
Invest at Market Price Collateralized Below Market Value
Returns Are Unknown Returns Are Fixed and Agreed Upon Term
Tangible Asset
HOW PRIVATE MONEY HELPS YOU AS A RESIDENTIAL REDEVELOPER (RR)
sales fall out of contract because of financing issues. Using quick cash as leverage allows the RR to
negotiate a much lower purchase price and reduce risk.
Being able to offer a fast closing with private funds motivates sellers to take the RR’s offer over the
competition, and entices them to take a much lower price than they would from a conventional buyer. Also,
lending guidelines are also continually changing and are requiring applications, approvals, junk fees and strict
PRIVATE LENDING BRUCE E. DINGER
investor guidelines. They also limit the number of
investment properties that can be purchased by
one company.
On a new home purchase requiring renovations,
private lender funds will be allocated to the
purchase price, renovations, carrying costs, cost to
resell and a small buffer for unexpected expenses.
PROTECT YOUR LENDERS
Mortgages offer the banks solid, long-term, fixed
returns. The PML can put themselves in the
position of the bank by directing their investment
capital, including retirement funds to well-secured
real estate mortgages. Mortgages have ultimate
safety because if default occurs, the bank can
recover its investment as the first lien holder on the
property.
Each property acquired should be put through a
rigorous evaluation process in order to assess the
profitability before the property is ever purchased.
“lntegrity" should be an essential part of the RR’s
business. Also, for the PML’s protection, the PML
should be provided these documents to secure their
investment capital:
Promissory Note: This is the PML’s collateral for
their investment capital
Deed of Trust/Mortgage: This is the document
that is recorded with the county clerk and recorder
to publicly secure their investment against the real
property that the RR is providing as collateral
Hazard Insurance Policy: This is where the
private lender would be listed as the “Mortgagee” for
their protection in case of fire or natural disaster, etc.
The RR would pay for a title search as well as a title
policy on the home just as would be done in a typical
transaction. For a rental investment with a long-term
note, the RR always keep a valid hazard insurance
policy on the property to protect against causalities.
PRIVATE LENDING BRUCE E. DINGER
MORTGAGE
Kennsei Trading, Inc.
Kennsei Trading Inc. is a Registered Investment Company – specialzing in buidling wealth through the financial markets,
including the stock and equity markets, and the real estate market. The firm is lead by CEO Bruce E Dinger, who has over
20 years experience as an investor.
Kennsei Trading Inc. has an extensive network of private money investors and understands the thought process of a savvy
investor and what they look for in any investment prior to the deployment of their capital.
Join Bruce Dinger for an incredible session on “Raising Private Money for Your Properties and Learn Key Cash Flow
Strategies”. Also get an opportunity to tap into his Inner Circle of Private Money Investors looking for key investments.
Bruce Dinger can also be reached at [email protected] or 408.639.9793.
PRIVATE LENDING BRUCE E. DINGER
The PML will be named as a mortgagee and notified if the insurance was not kept current. In the event of any
damage to the property, insurance distributions would be used to rebuild or repair the property, or used to repay
the PML.
relion is plugging in the missing links to real estate investment success
REAL ESTATE PLATFORM BRELION UNITES LOCAL INVESTORS WITH TECHNOLOGY BY TIM HOUGHTEN
Real estate crowdfunding has been a popular buzz topic in the media for a couple years now. Investment
through crowdfunding platforms has grown by tens of billions during this time. Yet, much of the capital
changing hands has been to the benefit of big funds, giant corporations and brands, and even the banks that
have littered the nation with distressed properties.
The original vision for crowdfunding was much
different. It was about giving individuals access to
better investments, and enabling small and mid-
sized businesses to access capital without being
captive to a few old institutions. CEO and Founder
of Brelion, Vadim Kleyner, and his team recognized
this, and the many gaps which have created a void
for those that should be benefiting from the new
JOBS Act opportunities. Then they created a new
solution…
Putting the T.L.P in Real Estate
Crowdfunding
There are three core components which have
proven to be key to real estate success for
thousands of years.
1. Technology
2. Location
3. Partnerships
Today we still marvel at the technological and
logistical genius of the pyramids. It takes new
technology and tools to make progress, and
achieve greater things. Everyone knows that winning
in real estate is all about “location, location, location.”
And since the time of the pyramids the crowd and
real estate partnerships have consistently created
the most magnificent works of architecture and
wealth. That’s true of monarchies which still exit
today, of the 50 United States of America, and the
Statue of Liberty.
Yet, today’s crowdfunding platforms appear to lack
unity of the crowd, or thoughtfully curated local
investment opportunities for busy professionals.
Brelion has changed all of this for those living in
Northeast Ohio.
Innovation in Real Estate Investment
Brelion offers an easy to use investment platform
for property investors in the Cleveland, OH area.
Returning to the original design concept for
crowdfunding – the platform specializes in
connecting local investors with local projects. Vadim
explains that “failure to localize investing was a
major flaw in other platforms. Now investors can
confidently and efficiently invest in real estate in the
neighborhoods they know, understand, are
comfortable with, and want to be engaged in.”
REAL ESTATE PLATFORM BRELION UNITES LOCAL INVESTORS WITH TECHNOLOGY BY TIM HOUGHTEN
The platform has been
expanding from neighborhood to
neighborhood in Northeast OH to
offer new opportunities and
revitalize communities. Recent
projects have included fixing and
flipping single family rentals,
creating turnkey rentals, new
development, and small
apartment buildings.
Investments are short term with
an average timeline of around 6
to 12 months. With a minimum
investment of just $1,000, and
some projects paying monthly
yields, this provides a great
platform for investors to test drive
the results before putting in more
capital, and more deeply
diversifying portfolios. CEO
Vadim tells Realty 411 Magazine
that “this has really helped
investors to lower risk, and
enables them to invest in 20
different local projects, with the
same amount of capital they
might have barely been able to
enter one investment outside of
their comfort zone.”
One critical feature that other crowdfunding platforms forgot, or failed to
include that you’ll love at Brelion is social functionality. You’re not just a
faceless icon in the crowd here. You actually get to engage with others
investing in the same projects, and to communicate between organizers
and capital investors.
Brelion is open to both accredited investors with money to invest in
local real estate projects, as well as local investors seeking capital for
their projects. According to Vadim, “the platform’s intense local focus
enables the team to quickly and accurately evaluate the safety, value,
and profitability of deals investors want to raise money for. They are all
just a few minutes away. No other platform can say that. To speed up
the approval and funding process the firm has created a proprietary
algorithm which incorporates 25 plus different metrics for evaluating
deals.” The team is so confident in the system that Mr. Kleyner says
he has personally invested his own funds in every single deal
promoted on the site.
Backend support for fundraisers also includes introductions to
investors, facilitating project updates, fulfilling accountability to
investors, and dealing with taxation and bookkeeping.
Delivering What Busy Professionals Need Most
We were fortunate to track Vadim Kleyner down between working on
real estate projects and speaking at Notre Dame where he has been
helping a new generation of student entrepreneurs understand the
science of marketing. In fact, before stepping into the real estate
industry full time Vadim had a strong career in IT and big data.
REAL ESTATE PLATFORM BRELION UNITES LOCAL INVESTORS WITH TECHNOLOGY BY TIM HOUGHTEN
As a busy technology professional himself he wanted to invest in real estate. There just weren’t any viable
platforms around. He says “you had to get out and do it yourself, and buy properties, and be engaged in the
industry every day.” That’s a luxury most busy professionals don’t have today. So Brelion was born to enable
them to invest in great projects, close to home, but with the ease of a few taps on a smartphone.
Discover the platform’s current investment opportunities at www.Brelion.com
REAL ESTATE PLATFORM BRELION UNITES LOCAL INVESTORS WITH TECHNOLOGY BY TIM HOUGHTEN
REALTY411 CELEBRATES NEW ISSUE WITH NATIONAL EXPOS IN “HOT” REAL ESTATE MARKETS… LORI PEEBLES
ealty411 Magazine, the longest-running real estate investment publication owned by the same owner,
is celebrating their new issue by hosting numerous expos around the nation in an effort to meet as
many of their social media followers as possible.
Based in Santa Barbara County, Realty411 publishes
real estate investment resources for investors and
real estate professionals and produces real estate
expos, mixers, and meetings around the country.
Their publications, along with their digital monthly
magazine, REI WEALTH, have the largest social
media network across online platforms such as:
LinkedIn, Facebook, Twitter, Ning, Tumbler,
Instagram, Pinterest, Blogger, Google +, YouTube,
MySpace, and many other up-and-coming platforms.
Realty411 makes their issues available freely
online and also mails out complimentary copies in
an effort to expand real estate education and
compel others to choose real estate as a tool for
building long-term wealth. Many REI WEALTH
issues can also be found complimentary online,
other editions cost an affordable rate of $1.99 to
$2.99 per issue.
Their national tour schedule was specifically created to
reach the "hottest" markets around the country.
Realty411's schedule is as follows:
REALTY411'S SCHEDULE DESIGNED FOR
MAXIMUM VISIBILITY IN TOP MARKETS:
* FLORIDA
- Ft. Lauderdale - July 30th - Life's a Beach - East
Coast Real Estate Investors' Expo
https://realty411floridaexpo.eventbrite.com
* CALIFORNIA
- Pleasanton, Calif., - August 26th - Realty411's
California CA$FHLOW Conference
https://cashflowconference2016.eventbrite.com
- San Jose, Calif. - August 27th - Silicon Valley's
CREATIVE Real Estate Investors' Expo
https://sanjoserealty411expo.eventbrite.com
REALTY411 CELEBRATES NEW ISSUE WITH NATIONAL EXPOS IN “HOT” REAL ESTATE MARKETS… LORI PEEBLES
"The best part of my job is meeting our readers and
social media followers," says Linda Pliagas, owner
of Realty411. "It's great to learn what type of
transactions they are engaging in and find out what
their needs and concerns are. We have very faithful
followers who have been joining us for many years.
It's really nice to see their progression as investors
as well, as they begin to engage in more
sophisticated deals."
Pliagas who started the magazine as a digital
newsletter in 2006 and a print edition in 2007, is a
licensed California real estate sales agent. A
landlord for many years, Pliagas is an active
accredited investor and entrepreneur. Her family
owns several long-standing businesses in Los
Angeles and Santa Barbara Counties.
Currently, Realty411 reaches more people around
the nation with their in-house expos and events
than any other realty investor publication.
Some expos also double as charity benefits where
awareness and donations are raised for numerous
worthwhile organizations focusing on children,
assisting the homeless, victims of domestic
violence, and animal welfare. **
* NEW YORK
- Long Island, NY - Sept. 17th - Long Island
Realty411 Expo - Investors Unite to Learn, Network
and Grow Wealth
https://longislandinvestorexpo.eventbrite.com
- Manhattan, NYC - Dec. 3rd - Our 3rd Event in
Manhattan!
Mingle in the Heart of the Big Apple in Times
Square - Details coming soon.
* TEXAS
- San Antonio - Oct. 7th - ALAMO EXPO with Lisa
Lewis
** A Charity Expo for the Leukemia Lymphoma
Society.
https://alamoreicharityexpo.eventbrite.com
- Arlington, TX - Nov. 12th - GIVE THANKS, GIVE
BACK
** Gives Thanks, Give Back Part 2 - More
information coming.
* NEVADA
- Las Vegas - Oct. 22nd - 3rd Annual Viva Las
Vegas Real Estate Expo
A special tribute to the local Las Vegas market and
Real Estate Insider's Club.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Realty411's jam-packed schedule was created to
maximize its publications in the nation's most active
and investor-friendly markets. While their calendar
may seem full, the company plans to add more
events for 2016 to reach even more readers in new
markets. Currently they are considering several
other keys cities.
REALTY411 CELEBRATES NEW ISSUE WITH NATIONAL EXPOS IN “HOT” REAL ESTATE MARKETS… LORI PEEBLES
This year, both of the Alamo Real Estate Charity Expo and the Arlington Give Thanks, Give Back Expos will be
raising awareness and donations for charitable causes.
To learn more about Realty411 magazine, please visit their websites, including:
Realty411's original website: http://realty411guide.com
Realty411's NEW expo website: http://realty411expo.com
Realty411's NEW magazine website: http://realty411magazine.com
For further information about Realty411 or to inquire about sponsorship opportunities, please
contact: Ryan Gay, Director of Marketing: 805.693.1497
* Schedule subject to change due to conflicts, emergencies or unforeseen issues.
REALTY411 CELEBRATES NEW ISSUE WITH NATIONAL EXPOS IN “HOT” REAL ESTATE MARKETS… LORI PEEBLES
ould you be shocked to learn that the average American “spends” more money on taxes than
they spend on food, clothing, and shelter combined? Unfortunately, this is a true statement.
When you add up federal income taxes, state income taxes, city taxes, property taxes, sales
taxes, and other various taxes we all pay, it is no wonder that taxes are one of our biggest
expenses each year.
TOP 5 MISTAKES THAT MAY BE COSTING YOU MONEY AMANDA HAN & MATTHEW MACFARLAND
For real estate investors, it is even more important to ensure that we minimize
our taxes because $1 saved can provide us with $4 of real estate investments.
For example, if we were to reduce our taxes each year by $5,000, then we
would have $10,000 of extra cash in just two years. With the additional
$10,000, we may be able to use that as a down-payment and purchase a rental
property worth $50,000. Imagine how much faster you can grow your real
estate portfolio when you are able to maximize your tax savings and re-direct
that money to real estate?
It may be surprising to know that a large majority of Americans unknowingly
overpay in their income taxes each year. This begs the question of “Why?”
Why is it that the average American loses so much money to taxes each year?
Well, as tax strategists, we hate to say this but one of the major reasons that
taxpayers lose a ton of money to Uncle Sam is really because they receive bad
advice. As such, we want to share with you some of the most common and
costly tax mistakes that you need to know in order to protect yourself from
overpaying the IRS this year:
Mistake #1: Deducting Expenses in the Wrong Place
Have you heard of the phrase “all men are created equal?” Well, unfortunately,
not all tax deductions are created equal. For example, did you know that your
travel expenses can, on one hand, reduce your tax by 50%, but on the other
hand could save you nothing? Surprisingly there is actually a right way along
with a wrong way to take your tax deductions.
One of the most common
mistakes we see as
CPAs are tax deductions
being taken in the wrong
places. Take the example
of a taxpayer named
Tony. Tony is a pilot by
trade and he also has a
business in which he
sells nutritional products.
For all of Tony’s travel
costs, in previous years
his tax preparer took
those deductions on his
Schedule A as
unreimbursed employee
business expenses.
Based on his income
level and the limitations
on Schedule A, he was
unable to benefit from
any of his $20,000 of
travel costs incurred. Had
he correctly reported
these travel costs to be
part of his business
expenses (i.e.: on his
business tax return or
Schedule C), he would
have increased his tax
refund by close to
$10,000.
TOP 5 MISTAKES THAT MAY BE COSTING YOU MONEY AMANDA HAN & MATTHEW MACFARLAND
Now you can see what we mean when we say not all tax deductions are created equal. To ensure you maximize
your tax savings, make sure that you are taking your tax deductions on the right forms and schedules!
Mistake #2: Real Estate Professional Status
As an investor, you probably already know about the wonderful tax benefits of depreciation. Depreciation is the
ability to write off the purchase price of your rental properties over the life of the asset. However, if you are
someone with higher income, it is possible that your rental expenses are not being used to the fullest extent to
reduce taxes from your other non-rental income. One way around this hurdle is to become a “real estate
professional” in the eyes of the IRS. Let’s go over an example of what this means.
Lynne had been working with a CPA for many years and was under the false impression that she had been
benefiting from the tax deductions as a real estate professional. Unfortunately several years after investing in
real estate she found out that her CPA prepared her taxes incorrectly which resulted in lost refunds of $20,000.
Lynn’s returns were prepared so that her excess rental losses were not fully utilized to offset the taxable income
from her husband’s W-2 job. Instead of being deducted, those losses were trapped and could only be used to
offset taxes from “future” rental income.
This is by far the biggest
mistake that we see time and
time again made by real
estate investors. This can be
a costly mistake and one that
may not be undone. So what
exactly is a real estate
professional and how could
that have helped in Lynn’s
situation?
Contrary to popular belief, the Real Estate Professional Status is not taken by simply indicating that as your
occupation on your tax return or even by filling out a specific form or checking a box. Being a real estate
professional does not mean you need to be a licensed realtor or broker. It just means that you have to be
actively involved in your rental real estate and you have to spend at least 750 hours in real estate per year.
Lastly, to be a real estate professional in the eyes of the IRS, you must also spend more time in your real estate
than your other job(s).
TOP 5 MISTAKES THAT MAY BE COSTING YOU MONEY AMANDA HAN & MATTHEW MACFARLAND
We reviewed Carol’s prior year tax return to find out
that her CPA incorrectly prepared her individual tax
return showing her to be a passive investor in the
partnership rather than as an active business
owner. Because of this error, Carol left $30,000 of
tax write-offs on the table! Fortunately for Carol, we
were able to simply check a box in the tax return for
her to claim that $30,000 tax write-off. So if you are
a business owner or someone who receives a K-1
from any of your businesses or investments, make
sure you speak to your tax preparer to ensure you
are not erroneously being limited on your tax write-
offs by the passive loss limitation rules.
Mistake #4: Missing Carryforward Tax Benefits
There are a lot of things on our tax returns that
move with us from year-to-year, better known as
“carryforwards.” For example, if you have had
certain types of tax deductions, losses, or credits
that you were not able to use in the past for any
reason, these generally get “carried forward” to
your future tax returns, from one year to the next.
Carryforward tax benefits being lost between the
years is yet another common mistake we see in
reviewing client’s prior year’s tax returns.
If you invest in real estate, make sure you speak to
your tax preparer to ensure that are claiming real
estate professional correctly and that any
appropriate election is in place before you send off
your tax returns. On average, the tax savings
between a real estate professional and someone
who is not a real estate professional is anywhere
between $5,000 or more each and every year.
Mistake #3: Limited by Passive Loss Rules
This next example is a common situation that we
see time and time again. One of our clients, Carol,
is a retired teacher that operates a home-based
health food business with her friend Joyce. Based
on the suggestion of her advisor, Carol and Joyce
correctly formed a partnership to jointly run the
business. As with many businesses, not every year
was a not a profitable year. For Carol and Joyce’s
business, it was especially bad the first year and
they suffered losses of around $30,000. After
meeting with their tax preparer, Carol was shocked
to learn that after losing so much money, she still
owed taxes to the IRS.
TOP 5 MISTAKES THAT MAY BE COSTING YOU MONEY AMANDA HAN & MATTHEW MACFARLAND
For example, a taxpayer named Jack made some bad investments back in 2014 which resulted in close to a
$20,000 loss carryforward on his tax return. However, his over-worked CPA somehow “lost” that carryforward
when he prepared Jack’s 2015 tax return. It was a mistake that could have cost James close to $8,000 of tax
refunds over the next few years! A small yet potentially costly mistake.
Mistake #5: Not Doing the Appropriate Analysis
Filing tax returns should not be simply putting numbers on forms. Often times, it take analysis and scenario
modeling to determine how to file the returns to provide you with the optimal results. Let’s take a look at how
impactful an analysis can be.
Sherri has two sons who are currently in college. After a review of her previous year’s tax returns, we noticed
her prior tax preparer did not claim an education tax credit of $2,500 each for both her sons attending college
because she was told that due to her high income level, she was not able to claim those credits. This is a
correct statement (there is an income limitation for claiming the education tax credits), however, there is a
loophole that was overlooked. With some analysis, we discovered an easy loophole: Sherri’s sons could have
filed their own tax returns which in turn could have provided them $2,500 each in education tax credits! With a
little strategy and analysis, Sherri and her sons were able to increase their overall tax refunds by $5,000 per
year just by taking advantage of their education credits!
As you can see, not all tax deductions are created equal and not all tax preparers are created equal.
TOP 5 MISTAKES THAT MAY BE COSTING YOU MONEY AMANDA HAN & MATTHEW MACFARLAND
Matthew T. MacFarland, CPA
Matt has over 20 years of experience in
public accounting as a CPA & Tax Strategist.
He has worked for both the “Big 4” and
regional CPA firms. While at Deloitte, Matt
served as a Tax Manager in their Private
Client Advisor (PCA) group where he
focused his expertise in tax planning and
compliance for high net worth individuals,
business owners, commercial real estate
investors, and professional athletes. His
diverse portfolio of clients included real
estate, manufacturing, retail, technology,
and professional services industries.
There are so many strategies that are available for each of us to utilize for saving taxes, and all it takes is
knowing how. So ask yourself:
1. Do I know what I can legally deduct on my tax return?
2. Do I have a plan in place to minimize my taxes each year?
3. Do I meet with my tax advisor throughout the year to learn new strategies that are available to me?
We hope that you can answer “Yes” to all of the questions above. If not, then get in touch with your tax advisor to
do some proactive planning. Take some time now to put strategies in place to keep more of your money. If you
have not already done so, check out our newest book Tax Saving Strategies for the Savvy Real Estate Investor
on Amazon to discover strategies that you can use to reduce your taxes each and every year.
Amanda Y. Han CPA
Amanda has over 18 years of
experience as a CPA with special
emphasis in real estate, self-directed
investing, and individual tax planning.
Amanda has extensive "Big Four" public
accounting experience in the Lead Tax
Group servicing clients in the real
estate industry. She provided tax
consulting and tax compliance for
companies engaged in land
development, residential development,
medical facilities, and conglomerate
shopping malls.
Keystone CPA, Inc.
Phone: (877) 975-0975
TOP 5 MISTAKES THAT MAY BE COSTING YOU MONEY AMANDA HAN & MATTHEW MACFARLAND
SUBSCRIBE NOW
have been a
landlord for 43
years and I have
LANDLORDS AND LAND TRUSTS RANDY HUGHES
always threatened to
write a book of my
experiences. Perhaps
one day I will write a
“tell all” book about the
crazy and unique
tenant situations that I
have found myself in,
but for now, I will limit
this article to those
experiences that relate
to using a Land Trust.
Most rental real estate is owned by mom and pop
operations that have no separation between the
“owner” and the “tenant.” The relationship that
develops is one of an adversarial nature. The
tenant knows that he/she is dealing directly with
the owner of the property and therefore has an
advantage when negotiating lease and
maintenance issues.
For example, when it comes time to renew a
lease it is difficult for the owner of a property to
drive up in his/her Mercedes to demand a rent
increase. Not that the owner doesn’t deserve an
increase, but the perception from the tenant’s
point of view is that the owner does not “need” an
increase.
Unfortunately, most tenants in America today
think that the owner of their property is rich and
has no cares in the world! It is a common
misconception that people who own rental real
estate are wealthy. So, when it comes time to
renegotiate a lease the owner is at a distinct
disadvantage.
Most savvy real estate investors will hold title to their
property in a Land Trust with perhaps the beneficiary
being a Limited Liability Company (LLC) or
Corporation. This structure gives the investor the
anonymity of ownership from a Land Trust and the
asset protection benefits of the LLC.
When a Land Trust owns title to real estate held
inside the trust, the Beneficiary is NOT the owner.
The Trustee is the full legal and equitable title holder.
This means that as the Beneficiary you can honestly
state (to everyone including tenants) that you are not
the owner. This puts the Beneficiary in a much better
negotiating position with tenants.
As the property manager you only have certain
powers bestowed upon you by the owner. Beyond
those powers your hands are tied and it becomes a
take it or leave it proposition. For example, when a
property manager presents a rent increase to a
tenant it is from instruction from the owner of the
property. It is not up to the property manager to
negotiate, just deliver the message. Negotiations
become much more matter of fact when handled in
this manner. The property manager is just “doing her
job.”
LANDLORDS AND LAND TRUSTS RANDY HUGHES
There are other distinct benefits to not being the “owner” of rental real estate. When I was a younger landlord
(with two young daughters) the last thing I wanted was an irate tenant (who was being evicted by the
“owner.”) to come knocking on my door where I lived to seek retribution. With the easy access to courthouse
records that the internet provides looking up the owner of a property is easier than ever.
Many of the benefits to holding title in a Land Trust relate to personal safety like the example above. Another
personal story to drive home this point was the landlady in Florida who called me and wanted to know how
quickly she could put her property into Trust (and get the title out of her name). Seems that one of her male
tenants was taking an interest in her. The tenant had looked her up online and found eight properties that she
owned in her own name. Armed with this information the tenant was going to each property and knocking on
the door looking for her. It never occurred to me before she called that titling your property in a Land Trust
could help avoid a stalker!
Being a property manager and not an owner is a MUCH better position to be in when dealing with tenants. It
puts you in a different light. One with less authority and less ability to change things. It is similar to actors
having agents to negotiate their movie contracts. Actors are good at what they do, but not necessarily good at
negotiating on their own behalf. Furthermore, it takes confrontation out of the equation and always allows the
agent/manager the ability to say, “The owner will not let me do that” or “I will talk to the owner about your
request and get back to you.” This lets you back off and think about the tenant’s request with a clear head
and a lack of emotion.
LANDLORDS AND LAND TRUSTS RANDY HUGHES
I could give many more examples of how beneficial it is to hold title to your investment real estate in a Land
Trust, but space limits me and I think you are getting the gist of my point anyway. So, do yourself a favor and
DON’T OWN REAL ESTATE IN YOUR OWN NAME. There are NO advantages to owning real estate
personally…only disadvantages!
Randy Hughes, aka, Mr. Land Trust™
It is difficult to convey all of the benefits of using a Land Trust in a short article like this. I have
been using (and writing about) Land Trusts for the last 40 years. If you would like to learn more
about how to create your own Land Trusts, for FREE training go to:
www.landtrustwebinar.com/411 or email me at: [email protected] for my FREE booklet,
“50 Reasons to Use a Land Trust” or contact me the old fashioned way by calling 866-696-7347
(I actually answer my own phone!) Randy Hughes, aka, Mr. Land Trust™
LANDLORDS AND LAND TRUSTS RANDY HUGHES
s your small business struggling to make enough profit to pay the bills? Living paycheck to paycheck can
be quite frustrating. Perhaps you started a small business so you could pursue your dream while
earning money at the same time. If so, then you know that it isn’t always easy to get a small business
to bring in the profits you’d like.
3 PROVEN STRATEGIES FOR SMALL BUSINESS OWNERS TO INCREASE CASH FLOW DR. TERESA R. MARTIN
However, if you’re willing to work hard and have a good plan, there’s no limit to how far you can take
your small business. Luckily, there are many ways to increase your current cash flow and free you from the
threat of financial disaster.
Consider these strategies to increase your cash flow:
1. Collect feedback. Many small business owners forget the importance of soliciting feedback from their
clients. There are several effective ways to find out what your clients think about your products and services.
• Ask the client to fill out a quick survey or questionnaire to rate various aspects of your business.
These surveys can provide an excellent glimpse into your client’s point of view. There are many
different websites that enable you to create simple surveys. Look online to find one that meets
your needs.
• Follow up with your clients with a phone-call or email asking for comments about your products
or services. Inquire about which aspects they are satisfied with and which need some work.
• Talk to your clients in person and ask them how they feel about their experiences with your
business.
• Remember, word of mouth is one of the best ways to advertise your business. If you have a
bunch of satisfied customers, they’ll tell their friends and family about their positive experience and
you’ll get more business.
3 PROVEN STRATEGIES FOR SMALL BUSINESS OWNERS TO INCREASE CASH FLOW DR. TERESA R. MARTIN
2. Get rid of products that don’t sell. It’s likely that
you offer your customers a wide variety of products,
but only a few of these products bring you maximum
profit.
• Sometimes a large inventory can work
against your business. Customers often
avoid buying altogether when they’re
overwhelmed with options.
• Instead of offering more products that
likely won’t be sold, trash the
unattractive products and offer more
items or services related to your best-
sellers. This is an excellent way to boost
sales while reducing upkeep and
inventory costs.
• Think about marketing your business online. It’s
becoming easier with each passing day and more
people are prone to search the internet for better
deals. Businesses that have online order options
are often much more successful. It’s a perfect
way to increase cash flow.
• Get the word out. Take advantage of social media
sites like Facebook and Twitter to promote your
business.
• Radio advertisements, commercials, billboards,
and flyers all increase the visibility of your
business. Sometimes, door-to-door marketing is
just as effective.
By using these strategies you can boost sales and
increase the revenue of your business. Once these
strategies have been implemented, there will be no
need to worry about how you’re going to pay the next
bill. You’ll finally have the money to live the life that
you’ve dreamed of.
3. Pursue unique marketing strategies. If your
business is experiencing a steep drop in sales, there
must be a reason. It could be that your marketing
techniques are simply not as effective as you
thought. Consider alternative marketing techniques.
3 PROVEN STRATEGIES FOR SMALL BUSINESS OWNERS TO INCREASE CASH FLOW DR. TERESA R. MARTIN
It just requires determination, persistence, creativity, and an open mind to make your business successful.
Test different strategies and stick to the ones that work best for you. Your efforts will be worth it once you
see those increased profits.
Dr. Teresa R. Martin
Dr. Teresa R. Martin, Esq. is the founder of Real Estate Investors Association of NYC (REIA NYC).
REIA NYC (www.reianyc.org) is a premier real estate investment association serving the New York
City marketplace. Its primary focus and mission is “helping our members build, preserve, and
harvest multi-generational wealth” in the areas of real estate investments, business ownership and
personal development.
3 PROVEN STRATEGIES FOR SMALL BUSINESS OWNERS TO INCREASE CASH FLOW DR. TERESA R. MARTIN
oung Entrepreneur John Aaron reveals his thoughts on the direction of the Florida market, and
where he sees the most attractive opportunities ahead…
YOUNG SOUTH FLORIDA ENTREPRENEUR LEADS THE WAY IN ENHANCING THE COMMUNITY JOHN AARON
Going from small town to leading a popular brand in the Magic City of Miami, John Aaron demonstrates where
his company is going and what’s possible with serious focus, commitment, and a leap of faith.
If you’ve ever heard of Sebring, Florida you know it is a little town without much going on. That’s were John
Aaron grew up. There aren’t many options when you grow up in that type of environment. If you do really well
you might eventually get a job at the local hospital, or perhaps get a football scholarship and a pass to a faraway
college. Sebring doesn’t even have any interstate highways going through it. That didn’t stop this hungry
entrepreneur from pursuing his passion and dream.
During a recent interview with Katrina Campins (The Apprentice) he is described as one of the few next
generation young entrepreneurs that have both hustle and work ethic. Early on he knew he wanted to do
something with real estate, and he believed Miami was the place where you could really make the magic
happen.
Initially starting as an agent John quickly through in the towel and started investing. John formed the Aaron
Organization in late 2012 and began hunting for his own property deals. While he insists that real estate
investing is not a get rich quick gig, his first deal which landed him a check for $19,000 got him hooked and only
emboldened his mission.
In the last four years the Aaron
Organization team has flipped over 200
single family homes in the tri-county
area of South Florida. However, John
tells Realty 411 that more than just
being about the money, his focus and
persistence has really paid off in proving
the ability for you to achieve what you
believe in, in whatever field you are
willing to take a leap of faith towards.
The Aaron Organization has a great
brand and blossoming company culture,
but in John’s words the team is also
winning in “creating something positive”
by enhancing the community and giving
job opportunities.
As John experienced; there will always be the pessimists, the bears, and those that have given up on their
dreams willing to offer their negativity or two cents. Aaron Organization’s founder insists “It’s always a great
market, if you have the right strategy.”
YOUNG SOUTH FLORIDA ENTREPRENEUR LEADS THE WAY IN ENHANCING THE COMMUNITY JOHN AARON
Aaron Organization is definitely on the rise in
South Florida, and boasts a growing team
including Acquisition Manager Darlenys Castillo
who is young, hungry, and has been with Aaron
organization for 2 years. Darlenys has helped
acquire of over 80 homes and counting. Paola
Vizcaino has been with the Organization for over
a year and is closing transactions every week.
Aaron Organizations thoughts on the market now is that there may be more Florida buyers and investors using
loans for leverage today than a few years ago, but for those that have ever visited Miami; you already know the
international attention it commands and its role as a major global banking stronghold, playground for the
wealthy, and investment haven for wealthy domestic and foreign investors. These are trends only likely to
continue and grow with the recent finishing of the Panama Canal widening which is pegged to dramatically
bolster the Florida economy.
This year John reveals that Aaron Organization has gone beyond its stronghold of renovating single family
homes to enhancing the way of life in the region through developing commercial properties. Miami, Fort
Lauderdale, and West Palm Beach have well built up areas, but despite that fact they still have pockets which
are ripe for development and revitalization. John tells us that this is where the biggest opportunities are for both
having the greatest returns for investors who are seeking better value and spreads than can be found in Miami’s
more congested neighborhoods and districts and also have positive impact for the community.
For investment and partnership opportunities for qualified investors find out more about this firm, its founder,
track record and vision online at AaronOrganization.com.
YOUNG SOUTH FLORIDA ENTREPRENEUR LEADS THE WAY IN ENHANCING THE COMMUNITY JOHN AARON
IMPROVING QUALITY OF LIFE THROUGH REAL ESTATE INVESTMENT DENNIS HENSON
ennis Henson has been
investing in real estate
longer than most real
estate experts have been
out of diapers. He’s seen the market
from every angle, seen it rise and dip,
and rise again. Today Dennis Henson
heads up the Arlington Real Estate
Association, and the comprehensive
training portal Single Family Fortunes,
which has seen one student recently
soar to acquiring 23 properties in just 8
months. So what’s enabled him to not
only maintain success, but successfully
train others to get in and win?
An exclusive interview with Dennis Henson
on enhancing life while making fortunes on single family…
Here’s the inside scoop…
How did you get started in real estate?
Dennis: “A combination of moving up from living in a small house to a large one, and badly renting out the
old home, and then reading ‘How To Wake Up The Financial Genius Inside You’ by Mark O. Haroldsen.”
If there is one thing you could credit your success to, what would it be?
Dennis: “Maintaining a burning desire to succeed.”
How did you make
president of the Arlington
Real Estate Association?
Dennis: “I started the group in
order to become more
knowledgeable about REI
Topics. For example; probate.
If I had to do a class on that
subject in front of 50 to 100
people - you can bet I was
going study, learn about that
topic, and master it.”
What’s different about your training system from what else is out there?
Dennis: “Many of the other teachers focus on one technique for examples Short Sales or Wholesaling. The
biggest difference is that my training covers all areas of REI. I call it the 5 M’s of Real Estate Investing.”
1. Mining
2. Money
3. Maintenance
4. Marketing
5. Management
IMPROVING QUALITY OF LIFE THROUGH REAL ESTATE INVESTMENT DENNIS HENSON
You have students who report achieving very
significant results, very quickly. What makes the
difference between them and the rest of the
wannabe investors out there?
Dennis: “My training is one on one, and I am very
interested in their success. There is nothing magic about
my training. It is just combining knowledge with hard work. I
have a system that works, if they do. ”
You have a slogan "Improving the quality of people's
lives through real estate investing" – what does that
mean to you?
Dennis: “Well that is my motto. My goal in life is helping
others become more successful so that they can enjoy a
better quality of life.
What is a better quality of life? It is being able to have the
freedom to do the things you want to do, going to the
places you want to go, and having the things you want to
have.”
Where do you see the best
opportunities in real estate ahead?
Dennis: “I believe that REI always has, and
always will have the greatest opportunities for
those who are willing to learn and work hard.
The number one need for a human is shelter.
Do you ever watch those survivor reality
shows where they leave someone stranded
in a jungle or on an island? What is first thing
they need? Not water, not food, but shelter. It
is the most basic human need, and always
will be. If there is a disaster people will not be
needing stocks or bonds, or gold or silver, but
they will be needing shelter. So I think REI
will always be a great business for my
students and association members.”
Where do you see the best
opportunities in real estate ahead?
Dennis: “I believe that REI always has, and
always will have the greatest opportunities for
those who are willing to learn and work hard.
The number one need for a human is shelter.
Do you ever watch those survivor reality
shows where they leave someone stranded
in a jungle or on an island? What is first thing
they need? Not water, not food, but shelter. It
is the most basic human need, and always
will be. If there is a disaster people will not be
needing stocks or bonds, or gold or silver, but
they will be needing shelter. So I think REI
will always be a great business for my
students and association members.”
IMPROVING QUALITY OF LIFE THROUGH REAL ESTATE INVESTMENT DENNIS HENSON
What’s the best strategy for those that fear the market may be in for a correction soon?
Dennis: “Buy lots of properties. When the people are not buying houses, what are they doing for shelter?
Living in a cave? No, they are renting; so the rental market will be booming.”
Interested in learning more about Dennis Henson, his training, and the Single Family Fortunes he has
empowered others to create? Look out for Dennis and his wife Norma at upcoming Realty 411 Expos, listen in
to him speaking on Blog Talk Radio, and visit his website at SingleFamilyFortunes.com, where you’ll find a
FREE TRIAL for an online app that helps you evaluate your deals faster.
IMPROVING QUALITY OF LIFE THROUGH REAL ESTATE INVESTMENT DENNIS HENSON
Dennis Henson
Dennis Henson is President of Vanguard Marketing and Investments, and founder of Arlington Real
Estate Association of Investors(AREA), one of the largest real estate groups on Meetup.com in the
country!
Find information about AREA here: http://www.meetup.com/realestate-445/
He is the author of “Becoming Wealthy in Real Estate,” an Investor’s Guide to Riches. He is an expert at controlling property
for profit without ever taking title along with many other creative techniques. Dennis has over 38 years in real estate
investing, and has completed numerous,and profitable real estate transactions throughout the Southern United States.
Dennis specializes in single family investing, and is experienced in all aspects of real estate—options, rent to own,
installment land contracts, contracts for deeds, pre-foreclosure, foreclosure, bankruptcy, probate, contracts for purchase
and sales, subject to, wrap around mortgages, seller carry back notes, land trusts, leases, and creative financing,just to
name a few.
As a mentor and teacher, Dennis has helped hundreds of investors off to the right start in this business. He also works with
many experienced investors helping them take their business to the next level. Examples of his teachings can be seen on
his training website at http://www.dennisjhenson.com .
started off as an airline pilot for a major airline at 25 years of age when the average age to be hired
was 35 years old in 1998. After 9/11 and the almost certain collapse of the airline industry as we knew
it, I felt I needed another path for retirement and possibly another income source to survive. As I was
HOW A STRUGGLING REAL ESTATE INVESTOR BECAME THE CO-FOUNDER OF THE MOST SUCCESSFUL… STEVEN ROSENBERG
seeing airlines all around me going out of business or filing bankruptcy and liquidating pilot pensions for
their own survival, I realized this was serious and the dream of job security was gone forever. As I started to
look outside my world of aviation I found that I was so specialized there was not many other things I could
do to make the same type of income.
The more I learned the more attracted to the real
estate world I became, mainly because it seemed
to provide the most leverage of time and money
while still allowing me to do what I loved, which
was fly a plane.
I started off doing some wholesale / flipping and
eventually earned up enough capital to buy and
hold. I realized that was a job and not much
leverage except my time, however I had enough
money to buy into an apartment complex
partnership. After holding that for 3 years, myself
and my business partner began to buy single
family homes.
We got to about 20 doors and realized we needed
some management help. After having no luck with
finding a management company that we felt
comfortable with we decided to create our own
company for self-preservation through the eyes of
an investor (our own).
After fixing our problems and actually running our
properties like a business, they started to make a
decent ROI and we resumed purchasing.
We started to attract other investors asking if we
can fix their problems because there’s were similar
to what our issues were and we were willing to
manage their investment homes. That was the birth
of our management company, Empire Industries
Property Management.
That was about 4 years ago, today Empire
Industries manages over 500 single family homes
in the Houston area and we have had tremendous
success with our business. We have a staff of 20
people and have become experts and educators in
our field.
HOW A STRUGGLING REAL ESTATE INVESTOR BECAME THE CO-FOUNDER OF THE MOST SUCCESSFUL… STEVEN ROSENBERG
In 2014 we were finalists for the Business Excellence Award for best Marketing and Best Customer Service and
this year we were a finalist in 4 categories (CEO of the Year, Best Customer Based, Best Customer Service and
Best Marketing). We won Best Marketing Campaign in North America with a return of 1474% on our marketing
investment dollars along with complete rebranding of our company and earning the most positive reviews on the
internet than any other management company in the Houston area. We recently won a prestigious Better
Business Bureau award as well. My business partner was the president of the Houston chapter of NARPM, as
well as being on the board for HAR (Houston Association Realtors). I have been fortunate to be invited to speak
to different investing groups around the country, including Canada and have been guests on many radio and
podcast shows. And was just asked to consider being part of a TV reality show helping people in our old
situation. Because I am still an airline pilot and fly internationally I am able to meet with investing groups and
individuals around the globe to enhance our presence with investor clients. I also traveled to Australia as an
international guest speaker to top tier property management companies on my expertise in the industry.
I feel that this truly is an
entrepreneurs story, I would not only
like to share it, but think that I can
add value from not only my
success, but more importantly
discussing our failures along the
way and how we overcame them.
We have doubled our revenue and
tripled our size year over year and
in 2016 we were nominated for
several Business Excellence Forum
awards such as Best Marketing
Campaign, CEO of the Year, Best
Company Culture and many more.
Due to Empire’s overwhelming success, we are growing at an exceptional rate. We have recently opened a
second satellite office in the Clear Lake Area of Houston, we have hired additional staff to manage the increase
in properties that we are taking on and our employees and company continue to receive awards.
Also in 2016, our company received another Better Business Bureau Business of Distinction Award, the
Marketing Department was named one of the top 20 Bloggers in Real Estate across the country and our
Business Development Team won a Business Development Manager of the Year award.
HOW A STRUGGLING REAL ESTATE INVESTOR BECAME THE CO-FOUNDER OF THE MOST SUCCESSFUL… STEVEN ROSENBERG
We also recently launched the Realty Services side of our company. This means that we can now also locate
properties for investors to purchase and we have the Real Estate Agents working for us that have the knowledge
and expertise to find you the right home or sell your existing home quickly.
Our plans for the immediate future are to continue to add more clients and staff and expand more offices in
Houston and then start looking at other major cities in the state of Texas and around the country.
We believe our business model makes Real Estate Investors profitable while managing their properties like a
business, we have the systems and procedures in place to increase our portfolio of clients exponentially and we
allow our employees to take ownership of their responsibilities and reward them for doing so. At Empire we
believe our future as a company is very bright and would love to talk to you about our management services.
HOW A STRUGGLING REAL ESTATE INVESTOR BECAME THE CO-FOUNDER OF THE MOST SUCCESSFUL… STEVEN ROSENBERG
Non MLS Investing in SoCal
By JJ Nocco
Whether you Buy & Hold or Buy & Flip, as investors our priority is finding Great Real Estate, in a Hot Area for reasonable prices so we can do
business with it. This usually means investing out of our local areas or out of state which brings its own set of problems. Traditionally
acquiring Foreclosures and Auction Real Estate in SoCal was always risky and expensive due to investor bidding wars and real estate agents
driving up costs.
Now, we have changed the game!
For the last several years, our longstanding banking and mortgage relationships have allowed us to cherry pick non MLS properties in Hot
SoCal areas of our choosing at max cost of about 70% with no competition. Yes, we can access individual properties not buy a tape of mixed,
good, bad and ugly properties. After selecting what we want, we work up a detailed improvement plan to maximize resale value, then we
have our tried and true contractors handle all the improvements to our specifications. We are growing and are offering you the opportunity
to join us.
We are seeking JV Partners who meet the following qualifications:
Minimum $50,000.00 or more plus 1 X 10% Agent Fee*
Minimum term of 12 months
As our JV Partner you are able to evaluate our available inventory meeting your investment level. If you are in the local area, you can visit and walk
thru various properties (if not in the area, we have video tours coming soon). You are free to review the planned improvements via our detailed
scope of work outlines including the APR projection. When you select your property, your funds are deposited in escrow and your name is on title
with us securing your investment. We are completely transparent with our JV partners and you can visit your property anytime during the remodel.
We also partner with a couple of realtors who have a pipeline or prequalified buyers looking for a new home and work closely with them to
promote our almost completed JV projects. With this turn key system in place we are able to we are able to modify and move properties quickly
and keep you, our investors, happy and prosperous.
562-477-9034 [email protected]
Contact:
ost real estate investors are aware they can use their self directed IRA to invest in real estate. I
have quite a few posts on this topic. If you are familiar with any of these prior posts you probably
know I am not a fan of the self directed IRA unless you are dealing with ROTH funds or you plan
DOUBLE YOUR RETURN WITH A TAX EFFICIENT 401K STRATEGY CLINT COONS
If you are familiar with LLCs and their creation, then you should know profits will be split based upon ownership
percentages. If John’s LLC generates $20,000 then John will receive $7,000 and $13,000 will be distributed to
his QRP. From a tax standpoint, John will have taxable income of $7,000 and the QRP will not have any taxable
income from its $13,000 in earnings. Straightforward right. How about the losses? If you recall, real estate is
depreciated over 27.5 or 39 years depending on its characterization. Depreciation is often referred to as a
paper loss because it can be used to offset your real estate income. In my example, the 200k house (175k
allocated to depreciable structures and $25,000 to land) will generate approximately $6,400 per year in
depreciation. John’s will receive $2,240 of the deprecation thereby reducing his income from $7,000 to $4,760
and his QRP will capture the remaining $4,160 depreciation. This of course does not benefit John because his
QRP does not pay tax on its portion of the income.
Consider John who would like to
purchase a house for $200,000.
John has a QRP with 150k and
personal funds of $100,000.
John could purchase the house
in his own name with financing or
he could partner with his QRP to
buy the house. To partner with
his QRP John and his QRP
would need to form a LLC and
divide the ownership proportional
to the contributions from each
member, i.e., if John contributes
$70,000 and his QRP contributes
$130,000 then the ownership
would be divided as follows:
John 35% and his QRP 65%.
to buy and hold one property for an extended period of time. Outside of these two situations I believe the risks
of investing through a self directed IRA do not justify the risks given the IRS current interest in these
transactions. My preference is, and will remain, the Qualified Retirement Plan (Profit Sharing Plan or solo 401k)
which offers the same, and many more, benefits over the self directed IRA. Rest assured this is not another
post on why you should avoid self directed IRA, you can read these prior posts if you are in doubt, but a strategy
wherein you can partner with your QRP to buy real estate.
DOUBLE YOUR RETURN WITH A TAX EFFICIENT 401K STRATEGY CLINT COONS
Without QRP
$20,000 net rental income
<$6,400> depreciation
$13,600 taxable to John
<$4,080> taxes
$9,520 net income to John
With QRP W/O an Anderson Tax Efficient LLC
$20,000 net rental income
$7,000 allocated to John
<$2,240> depreciation
$4,760 taxable to John
<$1,428> taxes
$16,332 net income to John and his QRP
With QRP and Anderson Tax Efficient LLC
$20,000 net rental income
$7,000 allocated to John
<$6,400> depreciation
$600 taxable to John
<$180> taxes
$19,820 net income to John and his QRP
9520 x (X)=19820
Wouldn’t it be more advantageous if John could allocate all of the losses to him where then can be utilized. Of
course it would and you can if you use an Anderson Tax Efficient LLC. An Anderson Tax Efficient LLC will allow
John to take full advantage of all the real estate depreciation by specially allocating all the losses to John. The
following table shows the tax advantage of using such a structure:
DOUBLE YOUR RETURN WITH A TAX EFFICIENT 401K STRATEGY CLINT COONS
Clint Coons
Clint Coons is a nationally recognized attorney and author who regularly teaches workshops on
asset protection. His latest book “Asset Protection for Real Estate Investors” is available on
Amazon or his website, www.alglaw.com.
Click HERE for a Free Asset Protection Blueprint Consultation to find out more about how to
properly structure your entity and protect your assets from creditors and other threats.
Partnering with your QRP can produce some desirable tax benefits and opportunities to increase you’re your
overall investment portfolio. However, this is not something you should set up without the assistance of our firm
or another qualified advisor experienced in the tax aspects of LLCs and QRPs. If you would like to explore the
creation of this structure, please call my office to schedule a consultation.
DOUBLE YOUR RETURN WITH A TAX EFFICIENT 401K STRATEGY CLINT COONS
eal estate investing does not necessarily have to be in your backyard. In fact, with volatile markets
around the world, many investors are expanding their criteria to more diverse international real
estate portfolios. International properties can be much more rewarding, both in affordability and
higher yield. To qualify for the under $50K option you must meet the following requirements: have
an open mind to foreign real estate, an interest in cash flow rather than capital appreciation; and
interested in investing under $50k.
FOREIGN INVESTORS APPROACH TO REAL ESTATE INVESTING UNDER $50K PRITI DONNELLY
The Prospect
Now that you qualify, let’s take a
look at properties in the Japan
market. Outside of Tokyo you can
easily find properties from $30K to
$50K. Even more impressive is
the yield of 6% to 12% because
prices haven't risen as sharply as
they have in other cities. For
example, in the center of big
cities, or first tier cities such as
Fukuoka and Nagoya you can
expect a yield of 6% to 8%. In
second tier cities such as
metropolitan Sapporo, you will find
properties with a yield of 9% to
10%. In the third tier are smaller
townships, albeit with good
profiles, a yield of 10% to 12%, all
net pre-tax. With an occupancy
rate of 93% to 94% properties are
usually occupied bringing your
investment property immediate
income of $250 to $400 a month
on average.
Method
To invest in real estate in Japan,
investors work with an
agent/proxy acting as an
extension of themselves for the
property purchase and
management. This is mainly
because of the language barrier.
As agents/proxies ourselves, we communicate on investors’ behalf
with the property/rent manager, building management company, tax
authorities, and insurance company. Since non-residents cannot open
local bank accounts, by having a physical address and telephone
number in Japan to manage the portfolio, we are able to pay bills,
collect rental income, and transfer/accept overseas funds. In fact, you
actually never need to travel to close the purchase, unless of course,
you want to take a leisurely trip to take in the culture, historic traditions
and breathtaking scenery.
Tenants
Japan is a landlord’s paradise -- high, stable and reliable cash flow, very
affordable, and because of Japanese ethics, tenants are polite, docile,
trouble free, and honest. Living away from your investment property,
you will not need to worry about destruction to your property or
evictions. Of course, the same tenant will not last forever but the
average turnover is quite stable at 4.5 years for singles' units, and
higher for larger family sized units, sometime up to 15 years.
FOREIGN INVESTORS APPROACH TO REAL ESTATE INVESTING UNDER $50K PRITI DONNELLY
Selling Your Property
Since the market moves very quickly in Japan, properties are listed only a few days before they are sold.
Therefore, if you decide to sell your property, there is usually a buyer ready to purchase. Keep in mind the tax
implications. A property owner, whether foreign or local, who sells a Japanese property within five years can
expect to pay 40% capital gains tax. After five years, the tax drops to 20%.
FOREIGN INVESTORS APPROACH TO REAL ESTATE INVESTING UNDER $50K PRITI DONNELLY
Earthquake Concerns
While the recent earthquakes have not deterred
investors from properties in Japan, we have had
concerns about the effect of earthquakes on
properties. Under a standard policy, earthquake,
tsunami, volcano and flood damages are covered
by insurance policies and insurance is surprisingly
inexpensive, only a few dollars a month. Since the
building itself carries an accumulated funds pool,
any remaining losses not covered by insurance are
generally covered by the pool. As part of the due
diligence process at the time of the purchase, we
check the status of the accumulated funds to
determine whether 100% coverage is necessary.
Generally, our clients invest in properties for cash flow purposes rather than capital gain. If capital appreciation is
what you are looking for then your ideal market would be Australia, U.K., U.S. and even Tokyo and at a considerable
price. But, for steady monthly income, where yield is high, cash flow is immediate and properties are incredibly
affordable, the real estate market in Japan could be an option to consider to let your cash flow investment journey
begin.
Priti Donnelly
Priti Donnelly is the sales and marketing manager at Nippon Tradings International, a proxy and
buyers’ agency representing foreign investors with purchasing, selling and managing real estate
in Japan. She understands the importance of transparency in today’s international market.
Through her insight, she focuses on breaking barriers and helping investors feel confident about
their overseas property investments. Phone: +1 226 336 4097 / +81 3 4520 9262; Email:
[email protected]; Website: http://www.nippontradings.com
FOREIGN INVESTORS APPROACH TO REAL ESTATE INVESTING UNDER $50K PRITI DONNELLY
USING A PROBATE LEAD SERVICE CAN MAKE YOUR BUSINESS EFFICIENT AND PROFITABLE LEON MCKENZIE
ave you been working in the probate business for a while and aren’t sure you are making any
progress? Do you find yourself dreading your trips to the local courthouse, frustrated by the amount
of paperwork to sift through, when you could be spending time with friends and family? If this
describes your situation, then it may be time to take a hard look at how using a lead service can
save you time and help make you money.
Professional probate leads services are designed to fulfill the needs of probate investors in two major areas.
First, by using a probate leads service, you can have access to a customized list of probate leads that are
located in the areas that you choose to target. Secondly, taking advantage of a leads service can make your
business run more profitably and efficiently. These are the main reasons that highly successful probate
investors take advantage of a leads service.
Probate Leads Fuel Your Business
When a loved one passes away, they
generally leave quite a bit of property
behind, which has to be sold by the
Executor of the estate. The Executor
is the court appointed representative of
the individual who has passed away
and has the job of making sure that
legal and tax paperwork is filed in a
timely manner and, once the assets
are sold, will make distributions to heirs
as noted by the will or the court
system.
Gary Digrazia writes, “In my Probate Real Estate business our life blood, of course, is the leads we work.
Estates have real property which needs to be sold to settle the estate. Where do we receive the leads and
how do we have a constant supply for now and future business?”1 This is really a core question for every
probate real estate investor to answer. If you are working in the probate business, then you know that having
access to data is critical in order to move your business forward. As an investor, you certainly can take the
time to visit your local courthouse to see the records in person. When you are beginning your business, this is
probably a good exercise in understanding the process of how probates are filed and what is necessary in
ensuring that the property is sold and the profits are distributed. Taking the time to see and understand the
process can be helpful in gaining a broad understanding of how the probate process works.
That said, taking half a day on a regular basis to visit your local courthouse can become a drain on your
business. In addition to the travel involved in going, there is the use of gas, the time spent parking, paying for
parking if necessary, and then the hours spent finding and locating viable leads. While having access to
viable probate leads is a necessary part of the business, it frankly might not be the best use of your time.
USING A PROBATE LEAD SERVICE CAN MAKE YOUR BUSINESS EFFICIENT AND PROFITABLE LEON MCKENZIE
Using US Probate Leads Gives You
an Edge
As an entrepreneur, how you spend your
time directly influences the ability of your
business to succeed. Going to the
courthouse week after week can eat up a
good deal of the time that you have
available to actually work your business.
While you are at the courthouse, you
could be sending communications
campaigns, meeting with potential sellers,
networking with attorneys that specialize
in estate law or speaking to business and
community groups in the area, getting
more exposure for your business.
Taking the time to dig through records
simply might not be the best use of your
time. This is the reason that many
probate professionals choose to use a
probate leads service. Said Leon
McKenzie, the CEO of US Probate Leads,
“Our researchers, numbering into the
hundreds, are in county courthouses
across the country finding a never ending
stream of probate real estate leads. This
really puts us in the unique position of
being the only source of probate real
estate leads with such a broad reach into
this niche market. US Probate Leads is
second to none when it comes to both the
quality and the breadth of research that
goes into providing you with prospects that
are both well vetted and favorably located
for you.”2
Having probate leads that are focused on areas and types of
property that you are looking for gives you an edge in the real
estate market. While other probate entrepreneurs might prefer
to get their leads the “old fashioned way” by going to the
courthouse, you can move right to contacting the Executor and
visiting the property. By the time a competing probate investor
finds what they are looking for, you may have already made a
deal! This is one of the most compelling reasons to use US
Probate Leads.
Why Do Executors Want to Sell?
Once a probate has been filed with the courthouse, in order to
have the best opportunity to purchase it at a low cost, you’ll
have to move quickly. Having access to a lead service can
keep you abreast of the changes in your area and immediately
shows you new filings. Finding out as soon as a filing has
been made gives you a distinct advantage in providing you
time to drive by the property and also in contacting the seller.
There are real reasons that you want to have access to this
information so that you can make a deal. While leads are
generally good for up to eighteen months, there are many
Executors that move at a rapid pace once a loved one has
passed away. They may do this for a variety of reasons. If the
USING A PROBATE LEAD SERVICE CAN MAKE YOUR BUSINESS EFFICIENT AND PROFITABLE LEON MCKENZIE
Executor is struggling with grief, it may be
easier to simply sell the family home to
eliminate the painful memories. Also, if
the Executor lives out of state, they may
feel the need to sell as soon as possible.
This is because they will be facing repairs
and maintenance of a home that they
cannot easily supervise. Selling the home
quickly is a way to eliminate that stressor.
Executors also may need cash in order to
pay bills that have accumulated in the
individual’s name, such as funeral
expenses, tax bills, medical charges or
credit card expenses. By selling the
home quickly they will have cash to cover
these financial needs. The Executor may
also have no one who is willing to live in
the property and may not want to be in the
position of having to rent it out.
All of these reasons are what compels
an Executor to move quickly when
selling a probate property. If you have
access to professional probate leads
then you can take advantage of making
a deal to assist them in moving on from
their family home. This is an important
reason to have a professional lead
service identifying options in your area.
The Professional Probate Leads Process by US
Probate Leads
It might seem too good to be true to be able to have probate
leads delivered into your inbox on a regular basis. With the
US Probate Leads service, you can have just that. Said
McKenzie, “We have relationships with banks and credit card
companies that utilize our service. These contacts have
allowed us to establish a network of Data Researchers
throughout the US. This network coupled with our proprietary
data mining tools and processes allow us to access probate
data at a cost which allows us to provide reasonably priced
information to you. Our network of Data Researchers located
throughout the US provides the first wave of data access. We
couple that with proprietary tools and processes which allow
us to access the data you need.”3
What this means is that every probate investor working with
the experts at US Probate Leads can have access to probate
real estate records without the hassle of sifting through tons of
other types of filings, saving time and effort. McKenzie went
on to say, “We provide all estate-related probates. Most
probate courts also handle guardianships, conservatorships and
cases pertaining to minors. There can be a great deal of excess
USING A PROBATE LEAD SERVICE CAN MAKE YOUR BUSINESS EFFICIENT AND PROFITABLE LEON MCKENZIE
information in these records – information that does
not benefit you as a Probate Investor. We cull those
records out and provide you records that have the
potential for having real estate as part of the estate.”
Once the record has arrived to your inbox, all you
have to do is to contact the Executor and follow up on
a regular basis if it is a property that you are
interested in pursuing. This streamlined process is
what allows probate investors to net huge profits
each and every year.
Finding More than Just Residential Real
Estate with Professional Probate Leads
When you choose to use a professional probate lead
process like the one offered by US Probate Leads,
you may find more than just residential real estate.
Many probate cases have homes, vacation homes,
businesses, commercial property, apartments and
personal property attached to them. This means that
there are many ways to profit. Having access to
information that will propel your business forward is a
powerful tool in a competitive market.
Being able to access information about more than just
residential real estate offers your business the ability
to diversify as well. Instead of simply buying and
selling or holding and renting residential real estate,
you may be able to find a business that will generate
additional cash or add commercial or vacation homes
to your portfolio. Having leads gives you this type of
flexibility which will allow you to adjust to changing
market conditions quickly.
US Probate Leads is the Expert in Probate
Leads Service
Now that you understand why it is critical to have
access to a probate leads service and how the
process works, it is time to take advantage of what
US Probate Leads has to offer. Whether you are a
new probate entrepreneur or you have been in
business for a long period of time, you can be sure
that adding automated data retrieval will give you a
competitive edge in your business investments and
access to the newest properties coming on the
market.
USING A PROBATE LEAD SERVICE CAN MAKE YOUR BUSINESS EFFICIENT AND PROFITABLE LEON MCKENZIE
Sources:
1 http://activerain.trulia.com/blogsview/1936988/how-do-we-find-probate-leads
2 http://www.usprobateleads.com/RealEstateLeads.aspx
3 http://www.usprobateleads.com/FAQ.aspx
Contact US Probate Leads today for more information on how we can assist you in accessing probate leads
for your county. Our trained, friendly team of probate associates will help you get set up in just minutes. And,
if you are looking for additional support, look to US Probate Leads for software, books, webinars, seminars
and individualized mentoring programs that can take your business to the next level. Call today!
USING A PROBATE LEAD SERVICE CAN MAKE YOUR BUSINESS EFFICIENT AND PROFITABLE LEON MCKENZIE
ssetAvenue doesn’t just have the money, but prides itself on constantly opening up new in-
demand loan products that enable investors to make power moves with loans that actually serve
them well.
THE NEW AVENUE FOR FINANCING REAL ESTATE ASSETS – LEARN ABOUT ASSETAVENUE TIM HOUGHTEN
So who is AssetAvenue and what do they offer? How are their solutions different from what the real estate
investor has encountered before? AssetAvenue’s VP of Marketing, Jacqueline Thomas gave us the 411…
Capitalizing on the opportunities out there, and securing deals to ensure
a solid financial future is still reliant on the ability to obtain real estate financing.
THE BACKGROUND - About AssetAvenue
AssetAvenue is an online nationwide direct lender,
offering real estate investor loans on rehab and
rental properties in 44 states. They use technology
to improve the way entrepreneurs borrow money
for real estate investment properties.
In addition, they partner with institutional capital
providers that allows them to offer competitive
rates and friendly loan terms. Their innovative
online platform and propriety data models enables
them to deliver new benchmarks for speed,
transparency and flexibility to borrowers and
brokers; traditional banks and hard money lenders
simply can’t compete.
Their differentiator is providing borrowers with
financing solutions that are completely transparent,
top-notch customer service, and instant online
quotes. They pride themselves in providing real
estate investors with simple, quick and reliable
online lending.
The Rehab Loan
AssetAvenue’s flagship loan product is their rehab
loan. Some unique features of the fix-and-flip loan
product is lower rates than hard money lenders, no
junk fees, free quotes without doing a credit check,
and 10-day funding.
Customers like Scott Moore with BBS Development
have high praise for AssetAvenue’s rehab loan, “I
wouldn’t have been able to close and be awarded
the property without AssetAvenue.”
The 30-Year Residential - Fixed Rate Rental
Loan
Many income property investors haven’t been
finding the love they expected when shopping for
deals and investment property loans. Some
lenders and turnkey property promoters have tried,
but just haven’t been able to create a product that
fits well. AssetAvenue is a mortgage lender
specifically created to fund investors.
Jacqueline Thomas tells us that the
30-year fixed has been in high
demand. “It just makes sense,”
she says, adding: “Our real estate
investors asked for a product that
would expand their investment
portfolio and we delivered. The
new loan product is to finance the
purchase of rental properties,
including single-family homes, two
to four multi-tenant units, condos,
and townhouses.”
THE NEW AVENUE FOR FINANCING REAL ESTATE ASSETS – LEARN ABOUT ASSETAVENUE TIM HOUGHTEN
Is This The Path For You?
Indicative transactions and references from others on the site reveal both real estate brokers and investors
have found this channel extremely valuable, if not invaluable in saving deals that have run into challenges.
In an industry with numerous financial resources running on impersonal automation, it’s evident that
AssetAvenue truly listens and understands what it takes to set investors up for success. What’s going to be
really exciting is seeing what loan program features this tech- savvy lender will roll out next.
For more information or to get a quote online, please visit:
http://assetavenue.com
DID YOU ENJOY THIS ARTICLE?
FOR ADDITIONAL REAL ESTATE RESOURCES, VISIT THE SOURCE FOR ALL REAL ESTATE: REALTY411
Visit our online real estate world:
Realty411 - http://realty411guide.com
Realty411 Magazine - http://realty411magazine.com
Expos & Events - http://realty411expo.com
VIP Networking: http://realty411guide.ning.com
REI Wealth Monthly: http://reiwealthmag.com
Real Estate Magazines: http://realestateinvestormagazines.com
THE NEW AVENUE FOR FINANCING REAL ESTATE ASSETS – LEARN ABOUT ASSETAVENUE TIM HOUGHTEN
Thomas further explains that rental loan approval is
primarily driven by the property’s rental income, with
minimal requirements regarding personal earnings.
AssetAvenues’ unique features open up alternative capital
and credit for entrepreneurs who are often rejected by
traditional lenders.
his is Part 4 of a four
part series discussing
how the US housing
market has changed
over the last 100
years and how
today's investor can
prepare to face
investing in the 21st
century. A copy of
this series can be
downloaded from
www.homereplay.com
NEW PROPERTY MANAGEMENT BUSINESS MODEL GARY GEIST
The Rental Property Investment Model
Successful rental businesses require a competent team to support your operation where each members knows
their responsibilities. Rental operations are largely controlled by the management company's business rules
as well as the goals of the investor. Sometimes the investor may not communicate his requirements well nor
does he monitor current operations closely. Therefore the information provided by the property manager on a
monthly basis must be of sufficient detail to gage the property's performance.
The diagram in Figure 1 shows the controls that can be exerted on rental property - external expenses you
have little control over or those expenses you can control with good financial practices. External expenses are
usually the hardest to predict and therefore the hardest to control, but these costs must be factored into the
investor's business model when deciding to buy the property. The smart investor acquires special tools to aid
in this process to prevent him from buying a "Money Pit". Solid financial controls over the day-to-day
operations are critical to making consistent cash flow each month.
Figure 1 Rental Property Controls
NEW PROPERTY MANAGEMENT BUSINESS MODEL GARY GEIST
Current Property Management Business Model
Property management companies today have various control
mechanisms that are billed as one of three types of fees
associated with managing property. These fees are not all
inclusive, but do describe how the current business models bill the
investor for management services.
• Management Fees
• Maintenance Fees
• Other Fees.
Management Fees - The most widely known fee colleted by
management companies is the management fee. Generally, this
fee is a percentage of the collected funds each month and can run
from 8% to 15% of collections. This fee covers the company's
general operating expenses and to gives the property manager a
satisfactory profit margin. There are other fee structures in use
like the flat fee which is a single fee per property per month no
matter what the monthly rent. No matter which system is used,
these fees are deducted from the collected monthly rent before
the investor gets his check from the proceeds.
Maintenance Fees - These charges
are for maintaining the property. Most
management companies will send
their own employees to the property to
handle maintenance issues.
Sometimes they use contractors who
will be paid by the property manager
with the bill being passed to the
investor. For services performed by
the management company, the
property manager bills the labor and
material cost for each task and
deducts this bill from the collected
rent. If the bill for work is more than
the collected rent, the property
manager will bill the investor for the
balance.
This process can work well, but this is
where a lot of problems develop
between the property manager and
the investor. Many management
companies only have one labor rate
and they charge all their staff this
labor rate for all tasks, no matter what
employee performs the work. Usually
this rate is set to cover the cost of
their most expensive staff member
and when the work is performed by
junior staff members, the investor gets
billed at the same rate and not at a
lower rate. So when low salaried
technicians making $10 an hour work
on your property, you get charged as if
a highly skilled $30 an hour
technicians did the work.
NEW PROPERTY MANAGEMENT BUSINESS MODEL GARY GEIST
Many property managers tout the benefits as being
a one-stop-shop for maintaining property, saving
the investor money. But experience working with
different management companies has proven
otherwise. While it is true management companies
can perform general maintenance tasks, there are
questions about the quality of this maintenance
and what the real costs are for these simple tasks?
For the more difficult maintenance tasks, the
property manager's staff may lack the skills or
experience to perform, and if they do perform the
work, they take too long. And because they lack
skills, training and experience, they can not
properly diagnosis the problem to determine what
needs to be fixed. Thus, when the management
company staff tries to fix the problem and can't,
you will have to hire the "expert" in the end. In
either case, it will cost you more.
When the management company performs the
majority of the maintenance, you have a single
source supplier with no competition. This eventually
leads to over pricing on not only labor, but also
material costs on the work orders. In addition,
because of the maintenance staff's inexperience,
you will be buying many unnecessary parts, paying
for larger quantities of material, and not getting the
advantage of local sales on many components and
materials. Always using the management
company's staff to handle maintenance because you
are a "captive client" can be very expensive.
Other Fees - There are many other fees a
management company can charge depending upon
their business model. Here we will only address the
most common one including: Leasing Fees, Check
Writing Fees, Parts Handling Fees, etc. These fees
are deducted from the collected rent each month and
paid to the management company.
• Leasing Fees - These fees cover the
management company's cost for leasing the
property and can be a flat fee or a percentage of
monthly rent. This fee is generally charged when
a property is leased the first time and is not
charged the second time if the property has to be
re-rented within the first year. Some
management companies have a reduced
"leasing fee" for all subsequent times the
property is leased.
NEW PROPERTY MANAGEMENT BUSINESS MODEL GARY GEIST
• Check Writing Fee - The second service fee is the "check writing fee" and is charged when the
management company pays bills for other vendors, subcontractors, utilities, taxes, or insurance for the
investor. These charges are often on a per check charge and generally run $10 - $25 per check. These
fees are not popular with investors since they should be a cost of doing business and covered by the
management fee.
• Handling Fees - These service fees, maintenance fees and parts handling fees again are charges that
management companies have developed over time to supplement their own business overhead expenses.
Proposed New Fee Structure
The business model described above was based on covering the
cost of property manager expenses for managing the property.
Nowhere in this discussion of this pricing structure was there any
consideration of making profit. The new breed of investor
entering the world of rentals from the stock market and has raised
serious objections to this business philosophy. They are
concerned about every charge - what it was for and why it was
needed. They are requesting justification for all charges including
receipts, labor charges, fees, and all supporting documentation
and the property managers do not like this scrutiny.
Basically the investors want the property
managers to have a "vested interest" in
managing the property by making them
responsible for making a profit each month. If
the property manager always gets 10% of the
collected rent and has his expenses covered
each month, why should he work smarter to
make things better? When tenants move, there
is no rush to get the property re-rented. It is
business as usual and he has his costs covered
whether or not the property is rented. Longer
flip times to flip mean higher the cost and lost
revenue for the investor.
NEW PROPERTY MANAGEMENT BUSINESS MODEL GARY GEIST
Although in the initial stages of development, this concept would have
two primary components defined as:
• Percentage Fee - This would be a 5% fee paid to the property
manager on all money collected during the month. This would
apply to rents, back rents, pet deposits, late fees, and other fees
paid by the tenants.
• Profit Based Fee - This fee would based on how well the
property manager performed his duties each month. This would
be a great motivator for the property manager causing him to work
harder each month for a more profitable operation. This fee
structure would be negotiated between the investor and the
property manager and but would be in the 8% - 10% range of the
monthly profit.
Summary
If you select a property manager whose underlying goal is simply to
collect the management and leasing fees, pay the salaries of his
maintenance staff, and obtain the over-ride charges on material costs
and hired subcontractors, then you need to look for another property
manager. If you don't, your maintenance cost will sky rocket and the
solution to most problems will be to throw money at the problem.
Their philosophy is its much easier to replace the whole thing as
opposed to diagnosing the real problem to find the cost effective
solution.
Today's investors are interested in
changing the property manager's
compensation package to a profit
driven model. What this means is
that the property manager could
receive a bonus each month based
on a percentage of the monthly
profit for the property. This would
immediately change his
perspective on the property, what
materials are purchased, and how
maintenance is performed.
For instance, if a water heater goes
out, instead of replacing the water
heater for $500 because there is
money in the account, a competent
technician would be sent to service
the burner assembly and relight the
water heater. A $65 service call
instead of the $500 replacement
charge. Or if a furnace goes out in
the middle of the winter, instead of
buying a furnace from the first
vendor called, he obtains several
quotes and save 50% on the job.
Both of these are real examples of
what we have had with property
managers.
NEW PROPERTY MANAGEMENT BUSINESS MODEL GARY GEIST
AUTHOR'S COMMENT:
If this paper has stirred some thoughts you would like to share and become part of the campaign to change the
property management business model to make it performance driven, please share your thoughts by emailing
Finally, as the condition of the rental property deteriorates, so do the class of available tenants who are willing
to rent the property. Generally a property will have a long history of this type of neglect before the Investor
finds out about the problems with the property. Then when action is finally taken, it costs a significant amount
of more money to correct all of the "so called" problems and damages to the property. So good property
management is essential to keeping good cash flow.
Appendix A
Key Questions to Ask a Property Manager
Listed below are questions you need answered before hiring a property manager. Many profess to meet these qualifications, but you need to
verify their performance by talking to current and past clients. As an out-of-state investor it is essential that you find a good property manager
- it will make or break your investment.
General Business Questions
1) How long have you been in the property management business?
2) How many properties do you currently manage?
3) How many staff members do you have working for the company?
4) What type of property management software do you use?
5) Do owners have on-line (read only) access to the property records?
6) Do you have properties of your own that you manage?
7) How do you prevent a conflict of interest arising in filling vacant properties?
8) Are you a member of property management associations or support groups?
9) Can you provide references (must include current investors)?
10) Can I tour some of your managed properties?
NEW PROPERTY MANAGEMENT BUSINESS MODEL GARY GEIST
Property Leasing Questions
1) Can you have a copy of their Tenant Application for review?
a. What type of personal references are asked for?
b. Are credit references requested?
c. Are the names and telephone number of past landlords requested?
d. Is there a place to list previous evictions?
2) What type of Lease do you require? (1 year, 2 year, etc.)
3) Do you rent to Section 8 Housing?
4) What type of deposits do you require?
5) When do tenants get the keys to the property? (Must be after utilities are in tenant's name)
6) What proof do you require to show utilities have been transferred to the Tenant?
7) What type of tenant screening process do you use?
a. Criminal background check
b. Court records check for evictions/judgments?
c. Credit check?
d. Is it a national based screening process?
8) What is your late fee policy?
9) What is your pet policy?
10) What is your process when tenants are late with their payments?
11) What internal program(s) do you have to get tenants caught up on their rent?
12) How do you handle evictions?
13) What do you do with the judgments against the tenant after eviction?
14) What debt collection service do you use?
15) How successful is the debt collection service you use?
16) How often do you evaluate current market rents?
17) How do you handle rent increases/decreases?
Property Maintenance Questions
1) Who manages your maintenance department?
2) What is their experience and background?
3) What certifications do you have on staff?
4) Can your company pull permits at the county offices?
5) Who are your major suppliers? Do you have accounts with these suppliers?
6) How often do you inspect the properties you manage?
7) How often do you perform drive bys of the properties you manage?
8) How do you find out about code violations?
9) How do you handle code violations?
10) How do you maintain the utilities on vacant properties in the Winter?
11) Describe your "Winterization Program" and how is it implemented?
12) What is you goal for down time on Flips between tenants?
13) Can I tour some properties you have ready to show to tenants?
a. Properties that are owned by the management company
b. Properties owned by your clients
14) What is the dollar amount you spend on Flips before you call the Investor?
15) How many bids do you get for major projects?
16) Do you send cost estimates to the Investor for approval before starting Flips?
NEW PROPERTY MANAGEMENT BUSINESS MODEL GARY GEIST
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