re wealth magazine1

1.Earnconsistent,passiveincomein yourportfolioutilizingPRIVATE LOANSandTAX LIENS. Ourfreegifttoyou:TheMMGCapital GuidetoTrustDeedInvesting LogontoMMGInvestors.comfor moreinformation. BETHEBANK.SAFETY.SECURITY.DOUBLEDIGITRETURNS. www.JasonHartman.com Podcast The Complete Solution for Real Estate Investors TM Featured Properties Platinum Properties Investor Network, Inc. helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Jasons Complete Solution for Real Estate Investors is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs. JasonHartman.com Earn 10-18% in Your IRA! Earn 18-35% with Income Property! ATLANTA Projected ROI 33% Cash Flow $2,456 DALLAS Projected ROI 35% Cash Flow $5,294 MEMPHIS Projected ROI 29% Cash Flow $3,101 See terms of service at: www.JasonHartman.com/terms Yes, it is possible to: Realty411 / reWealth magazine is published quarterly from Santa Barbara County, Calif. Copyright 2013. All Rights Reserved. Reproduction without permission is strictly prohib- ited. The opinions expressed by writers/columnists are not endorsed by the publishers. IMPORTANT DISCLOSURE: Publishers and advertising staff are not responsible for performing due diligence on the opportunities offered by magazine advertisers and/or spon- sors. Before investing in real estate seek the advisement of a trusted financial advisor, attorney or tax consultant. Real estate investing can be risky and may result in loss of capital. PRINTED IN THE USA. GOD BLESS AMERICA Connect to our virtual network online 24/7/365 FOUNDER/CEO Linda Pliagas DRE #01355569 PRESIDENT Nikolaos K. Pliagas EDITORIAL STAFF Bonnie Laslo Robb Magley Isaac Newark III Stephanie Mojica COPY EDITOR Lori Peebles PHOTOGRAPHER John DeCindis COLUMNISTS Tom Wilson Kathy Fettke Chris Clothier Lori Greymont Randy Hughes Jason Hartman Realty411 Wealth Real Estate Questions? 805.693.1497 or 310.499.9545 BROKER/ADVISOR Steve Kendis, GRI DRE #00815859 PRODUCTION Augusto Meneses WEB MASTER Diggs-Design.com ADVERTISING Kelly Global Marketing EVENTS & EXPOS Lawrence Ruano DISTRIBUTION Professional Distribution Solutions KJ Banks: 805.377.6328 SUBSCRIPTIONS/ADVERTISING: Phone: 310.499.9545 Realty411guide.com/subscriptions Realty411Guide.com | reWEALTHmag.com Join Our VIP Social Network: http://realty411guide.ning.com Realty411Guide.com PAGE 3 2013 reWEALTHmag.com

2. Each franchise office is independently owned and operated. Our franchisees have purchased over 50,000 houses since 1996. PROVEN SYSTEM TO PROFITABLY BUY & SELL HOUSES HomeVestors provides you with a system to follow & continuous mentoring & franchise support. RENTAL FINANCING NOW AVAILABLE FOR FRANCHISEES Home prices wont be this low forever. Now is the time to buy & hold for long term wealth. FINANCING FOR ACQUISITIONS & REPAIRS We make it quick and easy to obtain financing for your houses. M.A.P.S.MANAGEMENT & PROFIT SYSTEM This sophisticated software system takes the guesswork out of estimating repairs and keeps you out of the minefields of making costly mistakes. NOW IS THE PERFECT TIME TO INVEST. You are in the right location at the right time to be a HomeVestors franchisee, what are you waiting for? CALL 972-755-1880 FOR MORE INFORMATION www.TimHerriage.com JOIN THE EXPERTS IN REAL ESTATE INVESTING! 3. 07 Publishers note 08 Insurance myths 11 Meet Tim Herriage 13 Its a sellers market 14 What are tax liens? 16 Photo tips for investors 18 Mikes mobile home parks 19 Tips for snail mail success 20 Sound advice on leverage 22 A&Es Flipping Boston 24 Notes with Scott Carson 25 Tips on rental management 27 Questioning convention 31 Profile of Equity Trust 35 Insights by Tony Martinez 36 Senseis entrepreneurial life 40 The 401(K) sinking hole 42 Coast to Coast REIA 44 A secure investment? 46 Nick Vertucci always wins 48 Market selection advice 50 Q&A with IPX/AZ 52 The power of direction 54 Benefits for investors 56 Find your partners contents Heres The KeyTo Your Real Estate Insurance Needs ... The Right Coverage At The Right Time For a Coverage Proposal, Visit or Call: www.nreinsurance.com 888-741-8454 Occupied, vacant, and renovation properties can be included on the same schedule Seamless monthly billing and reporting Realistic insurance-to-value parameters Theft coverage available on vacant locations Coverages underwritten by AM Best A or better rated insurers, such as Lloyds of London, Scottsdale, Allianz/Firemans Fund Insure multiple owner/controlling entities under one inventory schedule Basic or Special form coverage options Premises liability of $1 million per occurrence Liability coverage only is available Available in all 50 states Insure properties held in IRAs, Trusts, LLCs, Corporations, etc. Embedded program(s) available for property managers, private lenders, and turnkey operators Coverage available for non-US citizens IRCA-LA Changed Its Name! We are the ONLY Westside Club in Los Angeles offering FREE ADMISSION Meetings are on the First Tuesday of Every Month LEARN MORE AT: www.prosperitythroughrealestate.com Realty411Guide.com PAGE 5 2013 reWEALTHmag.com 4. I changed one thing one time and left the rat race forever. I can show you how I did it, Matt Theriault Real Estate Investor Founder of EpicProAcademy.com and CashflowSavvy.com Host of the Epic Real Estate Investing Podcast on iTunes 5. Why I click, not drive, for dollars sellers. Personally, I think the public Multiple Listing Service is the most under utilized and under valued investor tool that exists today and its free! Most investors simply dont use or dont even know how to gain access to their local MLS. Think of the MLS as our industrys library of knowledge that holds valuable treasures, much like the real thing. (Our own public libraries are also greatly under utilized coincidence?) The MLS in Los Angeles, www.themls.com, not only provides guests with a listing of current properties, but it also has access to what is pending, on backup, and what just sold. Its an invaluable resource! Some investors mistakenly think that by Linda Pliagas, publisher, investor, agent Continued on pg. 62 O ver the years, I have purchased and sold many properties around the country, from single family homes to multifamily complexes, the location and type of property may vary, but one thing that they all have in common is that they were found on the MLS (Mul- tiple Listing Service). Most investors are taken aback when I tell them that I find my deals on the MLS. What about writing yellow letters? Dont you use bandit signs or do any cold calls? My reply is always: Who has time for that?! Why should I spend money and pre- cious time on techniques like that when all I have to do is a quick MLS search to see todays hot pickings. Driving for dollars? Have you seen the price of gas lately? No thanks, Id rather comfortably kick back at home and click for my deals. Do you think distressed properties and motivated sellers do not exist on the MLS? Wrong! I found my three recent rehab deals on the MLS. Thats three single-family properties in distress with nearly $100,000 in equity in each one. Ive also found my properties out of state on the MLS boards of their respec- tive cities. Ive purchased rentals in five states, all found on the MLS at no cost to me. The MLS has all sorts of distressed deals: REOs, short sales, pro- bates, trustee sales, corporate-owned properties, as well as motivated lindasnote Realty411Guide.com PAGE 7 2013 reWEALTHmag.com 6. Realty411Guide.com PAGE 8 2013 reWEALTHmag.com DEBUNKEDby Stephanie B. Mojica P eople tend to focus more on making fast cash with real estate investments and as a result often do not properly insure their assets. Beginning investors are especially prone to treating insurance as an option rather than an essential part of their business plan, says Tim Norris, President of the National Real Estate Insurance Group (NREIG), which is headquartered in Kansas City, Missouri. Most of us consider insurance as a purchasing endeavor. That is, we either buy it, or it is sold to us. Therein, in my opinion, is the foundational fault of the process. The misconception is still prevalentinsurance is mysterious, difficult to understand, and, at best we hope we can trust the person that is selling it to us, Norris says. Norris, who is also a board member of the non-profit National Real Estate Inves- tors Association, has garnered plenty of re- spect for his authorship of the PowerPoint presentation 13 Myths for the Real Estate Investor. To create the document, Norris utilized more than 20 years of experience working closely with real estate investors to properly insure their assets. Even if people do not ultimately purchase a policy through his company, Norris hopes his advice will still help them protect their investments. Norris 13 myths are as follows: 1. Insurance is exclusive of estate, tax, and financial planning. 2. Being named as an additional insured on the existing homeowner policy will sufficiently protect my interests in a subject-to and/or lease-option deal 3. Buying a property in your personal name and using your homeowners policy liability is fine 4. The personal dwelling fire policy is sufficient to cover my non-owner occupied rental 5. I have a personal umbrella policy (PUL), so I dont need commercial insurance 13 Insurance Myths for RE Investors Continued on pg. 55 ImagebybyDjtaylor Realty411Guide.com PAGE 8 2013 reWEALTHmag.com 7. www.WeCloseNotes.com TURN TOXIC LOANS TO REAL PROFITS Four Day Workshops Orlando, Chicago, San Diego Get the Home Study Course and Class NoteBuyingforDummiesWorkshopLearn HoW to: 3Buy Notes for Pennies on the Dollar! 3Direct from Banks and Hedge Funds! 3Residential and Commercial Notes! 3Buy and Sell Notes Nationwide! 3Raise All the Private Money You Need! 3Work Actual Deals in Class! Scott Carsons TurningProblemPropertiesintoProfitableSolutions 8. Tap Into Nearly Unlimited Real Estate Investment Capital www.TrustETC.com/Realty411 888-382-4727 SAVE THE DATE 2013 Equity University Networking Conference Sept. 19-23 | Omni Championsgate | Orlando, FL Early Bird Pricing ONLY $597* www.equity-university.com/NetCon *Limited time pricing. 2013 Equity Trust. All Rights Reserved. ET0051-10 Get Your FREE Real Estate Cash Explosion Kit Today! ($497 Value) This kit includes downloads for: Flipping Real Estate Real Estate Acquisitions IRA Real Estate Investment Strategies Case Studies of Successful IRA Investors 9. by Stephanie B. Mojica R eal estate entrepreneur Tim Herriage has become so well-versed in the ins and outs of the business that he can buy a house from an owner just as easily as he can buy milk from a grocery store. Herriage, a native of the Dallas-Fort Worth metroplex, spent the first five years of his professional career as an intelligence analyst in the United States Marine Corps. In 2001, he decided to return to his Texas roots and become a real estate investor. Herriage has purchased more than 1,000 single-family houses in Dallas, Fort Worth, Houston and San Antonio and is involved in numerous aspects of the real estate investment field. In 2011, Herriage founded the REI Expo. The 2012 expo, held in the Dallas-Fort Worth area, offered at- tendees the chance to learn from Texas experts in 66 classes over a two-day period. Herriage requires speakers at REI Expo to offer good content and not turn their talks into those more characteristic of a pitch fest. People attend events like this because they want to learn how to get into that industry or get better at what they do, Herriage said. The last thing they want to do is sit through a weekend of sales pitches. Flip This House A&E star David Montelongo was just one of the speakers at the 2012 REI Expo. When asked about his impressions of the expo Montelongo said, This group was more on the experienced side. They had good flow, communication and energy. I did some good business and will be back. Model My Home President Jana Uselton spoke on staging homes to attract buyers. She and her team wrote up thousands of dollars in orders at the expo itself and said many more investors committed to work with her. We didnt have to do any selling. Once they saw the hard numbers of the results sellers are getting by staging homes it became a no-brainer for them, Uselton said. Out of all the seminars, trade shows and expos we have attended, sponsored or exhibited, this was the absolute best event we have ever done. At press time, the date for the 2013 REI Expo in Chicago was imminent. Herriage hopes to duplicate the educational value at not only the 2013 event, but also future REI conferences. Herriage, often lauded as one of the most successful investors and wholesalers in the real estate market, is president of Herriage Homes as well as a National Development Agent for HomeVestors. HomeVestors, also known as We Buy Ugly Houses, has purchased more than 50,000 American houses since the companys birth in 1989. Herriage, who is married and has two sons, regularly gives public talks about his experience as a successful real estate entrepreneur who also has a happy family life. I enjoy meeting new people and trav- eling, Herriage said. I got my quick start in this business by meeting people who were willing to help me, and I try to do the same. Whether Herriage is speaking to a roomful of people or an individual, he hopes the one message they take away from their time together is that Herriage has a mission to tell only the truth. I love buying houses, but hate the Dallas Wholesaler & Industry Leader Tim Herriage From local wholesaling to cross country travels for HomeVestors and the REI Expo, this former Marine represents a few, a proud select group of investors. Continued on pg. 30 I got my quick start in this business by meeting people that were willing to help me, and I try to do the same. Realty411Guide.com PAGE 11 2013 reWEALTHmag.com 10. Your Default Property Acquisition Specialist Visit PIP-West this July at the REI Expo in Chicago or in California this October. Please call PIP-West for more information: 877-335-2529 3Exclusive Savings when you register with PIP-West 3More than 25 classes included with your attendance 3Engage with multiple resources/leaders in the real estate investment network, who are there to teach you how to succeed! More Than 400 Satisfied Clients and Growing In Chicago & Los Angeles CONTACT US, OR VISIT US ONLINE FOR ALL THE DETAILS An Educational Opportunity for seasoned and new investors No sales, no pitch, no hype - One of the best Educational and Networking events of the year Unique opportunity to meet our clients and learn from their ongoing experiences Learn to invest tax free with your self-directed IRA and with the most trusted and respected Tax Lien/Deed Agents around Clients/Current Investors will have an opportunity for one- on-one meetings with our staff to get account check-ups 877-335-2529 | PIPWest.com877-335-2529 | PIPWest.com 11. by Kathy Fettke F rom 2007 to 2012, the United States experienced one of the greatest housing reces- sions in history. Prices dropped over 50% in many areas, building came to a near complete stop, and foreclosures made daily headline news. There was a glut of available homes to buy, but few people had the guts to pick them up at rock bottom prices.It was a perfect buyers market. The irony is, most people are afraid to buy in a buyers market, even though its the BEST time to buy!You can name your price, negotiate terms, and pick out the best value for bargain prices. But ittakescontrarian thinking, and requires a sophisticated understanding of market cycles. Market cycles can change on a dime. Here we are in the second quarter of 2013, and todays news is all about the terrible LACK of housing inventory, multiple offers over asking price, and people waiting in lines when a property is released to the public. We are back in a sellers market. A sellers market is good for sellers because theres a lot of buyers competing for limited inventory. High demand and low supply allows the seller to negotiate, so prices tend to go up. We are seeing price increases as much as 1-3% per month in markets like Sacramento and Phoenix. What is happening? Where did all those foreclosures and short sales go? From Buyers to Sellers MarketFrom Buyers to Sellers Market marketupdate Continued on pg. 61 Realty411Guide.com PAGE 13 2013 reWEALTHmag.com 12. C harles Sells doesn't like talking about acquiring real estate for "pennies on the dollar," because it sounds too much like a carnival- barker, late-night-TV, shady-character pitch. But Sells, Director of Acquisitions for Plati- num Investment Prop- erties West, often finds himself in the position of offering clients just that -- although he'd prefer a more sober accounting of things. "We try to take all the hype out of the water," said Sells. "We offer a conservative, high- yield opportunity that is backed by government regulations." It's an opportunity that just happens to give clients the chance to, well, you know. Sells and partner Don Fullman have carved out a respectable corner of this niche market, and help investors navigate the seemingly endless rolls of red tape Charles Sells that surround property taxes -- and what happens when property owners don't pay them. In their effort, they've discovered a surprisingly safe investment within a shaky market: acquiring tax liens and, often, deeds. Here's how it works, focusing on Sells' favorite markets at the moment, Illinois and Georgia: in both states, the process begins when at a tax lien auction. "In Illinois, what we buy is a tax lien to the property," said Sells. "In 2013, we would be buying 2012 delinquent taxes." Illinois has a redemption period, two and a half years, during which the property owner can "redeem" their tax lien by paying off the back taxes plus interest; the bid rate starts at 18%, and it can be bid down to as low as zero. But, according to Sells, whatever your bid rate is, in Illinois it doubles every six months. "So if you bought it at 15%, you're actually gaining a net annualized return on a paid-off certificate of 30%," said Sells. After the redemption period ends, if the lien is not paid off, the holder of the lien -- you, the investor -- can initiate foreclosure on the property. That process can take as much as a Taking the The reason we continue to have our success is because our clients are successful. Hype outof TaxLienSales C harles Sells doesn't like talking about acquiring real estate for "pennies on the dollar," because it sounds too much like a carnival-barker, late- night-TV, shady-character pitch. But Sells, director of acquisitions for Platinum Investment Properties West, often finds himself in the position of offering clients just that although he'd prefer a more sober accounting of things. "We try to take all the hype out of the water," said Sells. "We offer a conservative, high-yield opportunity that is backed by government regulations." Sells and partner Don Fullman have carved out a respectable corner of this niche market, and they help investors navigate the seemingly endless rolls of red tape that surround property taxes and what happens when property owners don't pay them. In their effort, they've discovered a surprisingly safe investment within a shaky market: acquiring tax liens and, often, deeds. Here's how it works, focusing on Sells' favorite markets at the moment, Illinois and Georgia: in both states, the process begins when at a tax lien auction. "In Illinois, what we buy is a tax lien to the property," said Sells. "In 2013, we would be buying 2012 delinquent taxes." Illinois has a redemption period, two and a half years, during which the property owner can "redeem" their tax lien by paying off the back taxes plus interest; the bid rate starts at 18%, and it can be bid down to as low as zero. But, according to Sells, whatever your bid rate is, in Illinois it doubles every six months. "So if you bought it at 15%, you're actually gaining a net annualized return on a paid-off certificate of 30%," said Sells. After the redemption period ends, if the lien is not paid off, the holder of the lien you, the investor can initiate foreclosure on the property. That process can take as much as a year, according to Sells, and of course there are C harles Sells doesn't like talking about acquiring real estate for "pennies on the dollar," because it sounds too much like a carnival- barker, late-night-TV, shady-character pitch. But Sells, Director of Acquisitions for Plati- num Investment Prop- erties West, often finds himself in the position of offering clients just that -- although he'd prefer a more sober accounting of things. "We try to take all the hype out of the water," said Sells. "We offer a conservative, high- yield opportunity that is backed by government regulations." It's an opportunity that just happens to give clients the chance to, well, you know. Sells and partner Don Fullman have carved out a respectable corner of this niche market, and help investors navigate the seemingly endless rolls of red tape Charles Sells that surround property taxes -- and what happens when property owners don't pay them. In their effort, they've discovered a surprisingly safe investment within a shaky market: acquiring tax liens and, often, deeds. Here's how it works, focusing on Sells' favorite markets at the moment, Illinois and Georgia: in both states, the process begins when at a tax lien auction. "In Illinois, what we buy is a tax lien to the property," said Sells. "In 2013, we would be buying 2012 delinquent taxes." Illinois has a redemption period, two and a half years, during which the property owner can "redeem" their tax lien by paying off the back taxes plus interest; the bid rate starts at 18%, and it can be bid down to as low as zero. But, according to Sells, whatever your bid rate is, in Illinois it doubles every six months. "So if you bought it at 15%, you're actually gaining a net annualized return on a paid-off certificate of 30%," said Sells. After the redemption period ends, if the lien is not paid off, the holder of the lien -- you, the investor -- can initiate foreclosure on the property. That process can take as much as a Taking the The reason we continue to have our success is because our clients are successful. Hype outof TaxLienSales Realty411Guide.com PAGE 14 2013 reWEALTHmag.com by Robb Magley 13. going to be attorney and court fees, plus any additional back taxes will need to be paid but at the end of the process, you've acquired clean, clear, quiet title to that property. "Now, the way Georgia works, it's what we call a premium bid state, where the penalty is set at 20%," said Sells. "So say we go to a tax sale in Georgia, and say there's a lien being offered for sale for $5,000. We could spend as much as $50,000 on that tax lien, and the underlying property could be worth as much as $200,000. The homeowner then has to pay us back 20% on top of the $50,000." That pencils out to a $10,000 penalty on top of their $5,000 tax bill that they have to come up with. "The net payback to our investor would be $60,000 on the redemption," said Sells. "So you're getting a high return, either on the redemption of the lien itself, or in acquiring title to the property." Holding the tax lien is an enviable position; you're in line even before the mortgage company; in fact, according to Sells, more often than not his clients find themselves being redeemed by the banks themselves, because taxes are escrowed as part of most mortgages. When owners fall behind on the mortgage, the taxes might not get covered. "The banks have to redeem us out just like the homeowner would," said Sells. "We have rights to foreclose on the mortgage companies just as we do the homeowner; it's a pretty safe spot to be in." Clearly it's a strategy Platinum Invest- ment Properties West has seen success with; according to Sells, despite a lot of talk of declining inventories of delinquent properties, they're busier than ever. "Our company has doubled in size every year for the last six years," said Sells. "This year we performed higher than we ever have in past years. There's still plenty of inventory out there for us, because I think there's a lot that still hasn't come to market yet. There are more investment opportunities than there is cash to put into them." Sells said his clients are looking for longer-term investments with high yields -- he estimates 40% of their investors are self- directed IRA clients and they know that these are not particularly liquid investments to get into. "Now, with an agent like us, do we have more opportunity to make it liquid than someone who just shows up and buys these tax liens?" asked Sells. "Sure, of course. But we still push on all our clients that this is a long-term hold; you'll get redemption checks immediately upon investment, but don't expect that you're going to flip all this stuff out in a year's time and do it again." Sells admits it's a challenging market, and that there's a lot of road between the initial investment and the return. "And there certainly was a learning curve when I got started in '96," he laughed. "But I think we're the best in the business that offers this type of opportunity now. And the reason we continue to have our success is because our clients are successful." Contact PIP-West at: 877-335-2529 or visit online @ www.PIPWest.com Donald Fullman year, according to Sells, and of course there are going to be attorney and court fees, plus any additional back taxes will need to be paid -- but at the end of the process, you've acquired clean, clear, quiet title to that property. "Now, the way Georgia works, it's what we call a premium bid state, where the penalty is set at 20%," said Sells. "So say we go to a tax sale in Georgia, and say there's a lien being offered for sale for $5,000. We could spend as much as $50,000 on that tax lien, and the underlying property could be worth as much as $200,000. The homeowner then has to pay us back 20% on top of the $50,000." That pencils out to a $10,000 penalty on top of their $5,000 tax bill that they have to come up with. "The net payback to our investor would be $60,000 on the redemption," said Sells. "So you're getting a high return, either on the redemption of the lien itself, or in acquiring title to the property." Holding the tax lien is an enviable position; you're in line even before the mortgage company; in fact, according to Sells, more often than not his clients find themselves being redeemed by the banks themselves, because taxes are escrowed as part of most mortgages. When owners fall behind on the mortgage, the taxes might not get covered. "The banks have to redeem us out just like the homeowner would," said Sells. "We have rights to foreclose on the mortgage companies just as we do the homeowner; it's a pretty safe spot to be in." Clearly it's a strategy Platinum In- vestment Properties West has seen success with; according to Sells, despite a lot of talk of declining inventories of delinquent properties, they're busier than ever. "Our company has doubled in size every year for the last six years," said Sells. "This year we performed higher than we ever have in past years. There's still plenty of inventory out there for us, because I think there's a lot that still hasn't come to market yet. There are more investment opportunities than there is cash to put into them." Sells said his clients are looking for longer-term investments with high yields -- he estimates 40% of their investors are self-directed IRA clients -- and they know that these are not particularly liquid investments to get into. "Now, with an agent like us, do we have more opportunity to make it liquid than someone who just shows up and buys these tax liens?" asked Sells. "Sure, of course. But we still push on all our clients that this is a long-term hold; you'll get redemption checks immediately upon investment, but don't expect that you're going to flip all this stuff out in a year's time and do it again." Sells admits it's a challenging market, and that there's a lot of road between the initial investment and the return. "Andtherecertainlywasalearningcurve when I got started in '96," he laughed. "But I think we're the best in the business that offers this type of opportunity now. And the reason we continue to have our success is because our clients are successful." For more information, visit Sells and Platinum Investment Properties West on the web at http://www.pipwest.com There are more investment opportunities than there is cash to put into them. Donald Fullman year, according to Sells, and of course there are going to be attorney and court fees, plus any additional back taxes will need to be paid -- but at the end of the process, you've acquired clean, clear, quiet title to that property. "Now, the way Georgia works, it's what we call a premium bid state, where the penalty is set at 20%," said Sells. "So say we go to a tax sale in Georgia, and say there's a lien being offered for sale for $5,000. We could spend as much as $50,000 on that tax lien, and the underlying property could be worth as much as $200,000. The homeowner then has to pay us back 20% on top of the $50,000." That pencils out to a $10,000 penalty on top of their $5,000 tax bill that they have to come up with. "The net payback to our investor would be $60,000 on the redemption," said Sells. "So you're getting a high return, either on the redemption of the lien itself, or in acquiring title to the property." Holding the tax lien is an enviable position; you're in line even before the mortgage company; in fact, according to Sells, more often than not his clients find themselves being redeemed by the banks themselves, because taxes are escrowed as part of most mortgages. When owners fall behind on the mortgage, the taxes might not get covered. "The banks have to redeem us out just like the homeowner would," said Sells. "We have rights to foreclose on the mortgage companies just as we do the homeowner; it's a pretty safe spot to be in." Clearly it's a strategy Platinum In- vestment Properties West has seen success with; according to Sells, despite a lot of talk of declining inventories of delinquent properties, they're busier than ever. "Our company has doubled in size every year for the last six years," said Sells. "This year we performed higher than we ever have in past years. There's still plenty of inventory out there for us, because I think there's a lot that still hasn't come to market yet. There are more investment opportunities than there is cash to put into them." Sells said his clients are looking for longer-term investments with high yields -- he estimates 40% of their investors are self-directed IRA clients -- and they know that these are not particularly liquid investments to get into. "Now, with an agent like us, do we have more opportunity to make it liquid than someone who just shows up and buys these tax liens?" asked Sells. "Sure, of course. But we still push on all our clients that this is a long-term hold; you'll get redemption checks immediately upon investment, but don't expect that you're going to flip all this stuff out in a year's time and do it again." Sells admits it's a challenging market, and that there's a lot of road between the initial investment and the return. "Andtherecertainlywasalearningcurve when I got started in '96," he laughed. "But I think we're the best in the business that offers this type of opportunity now. And the reason we continue to have our success is because our clients are successful." For more information, visit Sells and Platinum Investment Properties West on the web at http://www.pipwest.com There are more investment opportunities than there is cash to put into them. Realty411Guide.com PAGE 15 2013 reWEALTHmag.com 14. investortools by Tom Wilson I never cease to be amazed at the poor quality of many real estate photographs. Are you aware that the picture for many properties for sale is literally taken from the drivers seat of a car!? For only an extra 30 min. of your time, or $100 paid to a professional photographer, one of the most expensive products you will ever market can go from an also available to schedule a showing today!As a serious amateur photographer for 50 years, Ive learned a few things that make a big difference. Lets take a look at some common mistakes that are made and how to easily rectify them. Equipment For starters I recommend a DSLR (digital single reflex camera), such as an entry-level Canon Rebel ($300 used to $900 new). A point and shoot can take very fine every day shots, but this is not an every day sale. A DSLR allows for better lenses, filter attachments, an external flash, and what you see is what you get because you view the scene through the same lens and filter that shoots the picture. You can still set the camera to a point and shoot automatic mood and dont have to know anything complicated. A Wide Angle Zoom Lens. (can be purchased with the camera or alone for about $200). The lens should be at least 18mm minimum (or 28mm equivalent to the old 35mm film cameras). Wider is even better but 18mm is acceptable. It should zoom to at least 50mm. Most starter DSLRs come with this lens as the defacto standard, so they are readily available. Ninety five percent of point and shoots simply do not have a sufficiently wide a lens to show all of a room. Period. Wide angle is the only substitute for when it is impossible or not practical to get farther back. I am flabbergasted at the number of ad photos that only show the toilet and a corner of the tub, or the nice family room with fireplace but dont let you see that it is attached to the kitchen for a wonderful Great Room. A wide angle lens solves this problem. Polarizer ($20-$50 at any camera store; the cheap one is just fine). A polarizing filter attaches to the front of the lens and is used to cut glare and reflections. I rarely take a picture that includes sky, water or through a window without a polarizer. The front element rotates until you see that the picture has the least glare, and best contrast and saturation of color. It works best when you are perpendicular to the angle of the sun or rays. The improvement in the picture is dramatic. External Flash ($50-$200). The built in flash is minimally acceptable, however, an external flash (attaches to the metal piece on top of the DSLR called a hot shoe) helps to fill in the shadows at the side of the scene taken with a wide angle, can fill a deeper great room with light more fully and evenly, and can be aimed up so that you dont get harsh reflections from the bathroom mirror and other reflective surfaces. Composition Views. First of all, pretend you are the buyer. What would you want to see in addition to the typical pictures? The neighbors homes, the street, the back yard, the local park, the development entrance, etc? Then include them in your portfolio of pictures! Consider framing some shots with a tree or door- way, use a step ladder for an elevated view, shoot the living room from the stairs, and include artistic detail features such as a nice car- riage light, flowers, garden arch, or fireplace. No Dirty Laundry. Put away or shoot around the trash cans, close the toilet seat, cut the grass, request or pay the resident to straighten up before you arrive, angle your shot to exclude the power pole, the dead bush, etc. Lighting. Time your exterior pictures with the sun and weather. Dont shoot an East facing home in the afternoon; go in the morning on a nice day when the front view is lit up. On the interior, go in the daytime, open the windows, turn on all of the lights, use your external flash and angle it to get more diffusion. You want the scene to look warm and lived in. Staging. If the house is occupied get a stager to recommend what to change and remove. If the house it empty, get it staged at least with accessories if not furniture. As a minimum, take along a bag of small accessories to stage the kitchen and baths just for the shots. I stage almost all of my homes for owner occupant Stamp Out Drive By Shootings! The importance of having a skilled photographer on your team Equipment List DSLR $300-900 Wide Angle Zoom Lens $200 Polarizer $20-50 External Flash $50-200 Total Investment: ~$700-1,000 Amortized over 50 houses: $20/house Realty411Guide.com PAGE 16 2013 reWEALTHmag.com 15. sales. Some agents tell me not to do it because most others in that market do not. Perfect. I always want my product to look and be better that my competition. Using these techniques, you can take better marketing pictures than your competition that will make a big difference in your advertising to entice a prospect to take the next step. If you elect to farm it out to a professional you now know what to look for and what questions to ask. May your next pictures look like you could sell a thousand homes. Tom Wilson is a thirty-seven year real estate veteran who has executed over $100M and 1,800 units of real estate investments. After thirty years of managing some of the Silicon Valleys pioneering technology companies, Mr. Wilson put his business and management experience toward full time investing. One of his companies, Wilson Invest- ment Properties, offers high-quality, high-cash flow, fully rehabbed, and leased properties to other investors. Mr. Wilson is also a weekly host of the Real Estate 360 Radio program on KDOW 1220 am every Wednesday at 3 pm. Catch the podcasts on iTunes or on his website, www.tomwilsonproperties.com Some people believe Photoshop is the solution to poor photography. This notion was tested with the poor exterior shot. However, it is impossible to digitally reframe a poorly composed photograph, and there is no way to recapture the saturated natural looking sky and lawn without having used a polarized filter in the first place. Conclusion: start with a good photograph and use digital tools for very minor touch ups only. INTERIOR Poor interior better Exterior Poor Exterior better INVESTWITHCONFIDENCEI M M E D I A T E C A S H F L O W Discover the lowest-risk, highest-quality residential investment properties in the country. Using sophisticated methodology, the best investment properties are carefully selected by an experienced investor and rehabbed beautifully to secure the best tenants. With competent property management, and instant cash flow, your investment pays worry-free dividends from day one. PROFILE OF YOUR FUTURE PORTFOLIO Highest Cash Flow Lowest Risk Properties & Cities Immediate Equity Quality Newer Brick Homes and Stable Neighborhoods Turnkey Clear Title, Rehabbed, Leased, Managed Home Warranty Contact me for a free cash flow analysis. Mention REI Voice Magazine and receive one-year of free property management with your first purchase. TOM WILSON, President 408-867-1867 [email protected] TomWilsonProperties.com Price: $110,000, fully renovated, built 2005 Currently Rented for $1,195 Typical Property Price $139,000 Rent $1,395 Year Built 2001 Mention Realty411 or reWEALTH and receive 1 year premium home warranty with your first purchase. INVESTWITHCONFIDENCEI M M E D I A T E C A S H F L O W Discover the lowest-risk, highest-quality residential investment properties in the country. Using sophisticated methodology, the best investment properties are carefully selected by an experienced investor and rehabbed beautifully to secure the best tenants. With competent property management, and instant cash flow, your investment pays worry-free dividends from day one. PROFILE OF YOUR FUTURE PORTFOLIO Highest Cash Flow Lowest Risk Properties & Cities Immediate Equity Quality Newer Brick Homes and Stable Neighborhoods Turnkey Clear Title, Rehabbed, Leased, Managed Home Warranty Contact me for a free cash flow analysis. Mention REI Voice Magazine and receive one-year of free property management with your first purchase. TOM WILSON, President 408-867-1867 [email protected] TomWilsonProperties.com Price: $110,000, fully renovated, built 2005 Currently Rented for $1,195 16. Making$100KPerYear with Mobile Home Communities Many real estate investors I meet tell me they have one goal how to make $100,000 per year in passive income. The $100K will provide them financial freedom, i.e. the ability to do what they want when they want. As I explain in my new book Unconventional Wealth, the lack of loyalty from the vast majority of corporations to their employees, especially those over the age of 50, makes it imperative that you start on a path to financial freedom as soon as possible because you are going to be forced out on your own sooner or later. Ive owned and explored numerous businesses through the years and I strongly believe cash flow real estate is the best path to achieving the goal of $100K in passive income. I have chosen the real estate niche of investing in mobile home communities (MHCs) because the cash flow is so much greater than other areas of real estate. As I have discussed in previous articles, even by Mike Conlon in this low interest rate environment that has pushed cap rates back down to historic lows for many real estate investments, I have bought seven distressedMHCs (1,000+ spaces) in the last six months all at 10+ cap rates. I am confident I will have them at 15 - 20 caps within 18 months by adding some homes to vacant sites and increasing rents. I know of three primary ways to get to $100K in annual income investing in mobile home parks: 1) If you have $750,000 to invest and dont want to do any work and take minimal risk, you can get a 12-14% annual distribution (plus a 3% to 5% additional annual return through debt pay down and appreciation) investing with a larger operator like my- self who works with investors. 2) If you have $375,000 to invest and have access to $700,000 $1,000,000 in bank or seller financing, you can buy a distressed 100-space park that is 50-65% occupied, make the necessary repairs, add 10-20 repo homes to fill empty sites, raise rents to market levels, and manage it yourself. Owning one 100-space park and operating it yourself is all you need to make $100k/year! 3) If you dont have any funds yourself, you can start on what I call the 3-Step Plan. Step One is to raise $100K from people you know and buy a distressed (50-65% occupancy) 25-space park for $250,000 or less with 20% down and seller financing. Try to get interest only for the first 12 months. Use the remaining funds after the down payment to spruce up the park (mostly cosmetic repairs) and ... how do you evaluate the myriad opportunities available to you and get to the top of the class? ... how do you evaluate the myriad opportunities available to you and get to the top of the class? Continued on pg. 36 Realty411Guide.com PAGE 18 2013 reWEALTHmag.com 17. S avvy investors utilize many creative ways in their search for suit- able properties. One of our preferred methods at Whiterock Capital includes direct mail campaigns to landlords who own single family units, including condominiums and detached single family homes. The mail campaign includes a personalized letter directed to the non- occupant owners. Our strategy includes simple letters stating our interest in buying homes in the neighborhood for cash. Sellers are often looking for a quick close and fast cash, or they are tired of being landlords, or they may be moving into retirement out of state. Our game plan includes sending letters about every three or four months to our target areas. Many potential sellers become familiar with our letters and save them for later reference. For example, in a recent transaction, the owner seeking an offer called us from a recent letter. This owner is now a potential seller, beginning the acquisition phase. Acquisition includes a field re- view of the property and pulling comps, including other transactions we have completed in the area. By tracking our sales and the sales of others, we have a realistic basis for estimating property values. Based upon neighborhood values Wealth Real Estate Vol. 2 No. 1 2012 RICHARD EDROSOLAN WhiteRock Capital, Inc.Discover why this veteran California investor likes to buy properties in Arizona an offer is made to the seller, negotiations completed to a mutually agreed to price. A contract is executed placing the sale in escrow and binding the seller to the agreed to terms. With the property under contract, the next step is to market to our wholesale and retail buyers list. Many of our current investors have placed orders for a particular type of property. Matching the property to an investors need reduces the time required to flip the property out of inventory. Managing the property is straight forward as the entire process from identifying the property, through the acquisition to a wholesale flip averages thirty-three days. Many transactions are completed in about fourteen to twenty- one calendar days. Select properties are chosen for rehab at the time of acquisition. A major rehab that includes a new kitchen, updated bathrooms, paint inside and out, tile floors and neighborhood appropriate landscaping typically takes less than four weeks. Rehabbed properties are priced for a quick sale, usually 5% to 15% below the value of other homes in the area. Exit strategies are chosen at acquisition based upon the property value, to fill an order, or the potential for a larger safe return. In this case, a wholesale flip to meet an investors order was determined to be the best course. In order to provide our investors solid returns on their investment, a high velocity of money through each deal is re- SnailMailSuccess Letters Lure Motivated Sellers quired. Based upon pipeline volume of properties and an approximate 60 to 90 days per turn, the investor can expect three to five turns per year on their capital. Right now, the markets most ripe for this strategy are Phoenix, Las Vegas and several California markets. Because our strategy is so successful we, unlike other wholesalers, have more inventory than we, and our network of investors, can handle. Also, unlike most wholesalers, we are true wholesalers who offer properties to our investors at prices which are well below retail, leaving some meat on the table so that our investors take ownership with some equity already in place. And were doing this in rapidly appreciating markets. To reach Richard Edrosolan, CEO and founder of Whiterock Capital, call: 805-766-1130 or email: richard@ whiterockrei.com by Richard Endrosolan Realty411Guide.com PAGE 19 2013 reWEALTHmag.com 18. Smart real estate investors are learning to use leverage wisely and efficiently to put more money in their pockets. Continued on pg. 58 R eal estate investors are being bombarded with advice today from every direction and it is sometimes hard to find two pieces of advice that are the same. There are so many options and so many opportunities that becoming confused is a common feeling among investors. Well get ready, because here comes one more piece of advice that may run contrary to what many are advising investors to do today. I happen to have learned my lesson when it comes to leverage and I have a special place for it in my portfolio. Smart real estate investors are learning to use leverage wisely and efficiently to put more money in their pockets. Surprising Investors With Sound Advice In the 4th Quarter of 2012, I made a presentation to a group of investors in Northern California and I surprised many in the room when I made a statement that I did not believe you should buy real estate and leverage it for cash flow. Given that I am a partner in two companies that specialize in helping investors find properties that provide a positive cash flow after leverage, this statement caught much of the audience by surprise. But I followed that sentence with a bit of a clarification. I told the group that there are many ways investors can be fooled or even fool themselves today into thinking that they are making a positive cash flow on their property. I told the group that often, the biggest mistakes investors make, is sacrificing long-term stability for short-term gains. The Bank Wins Every Time When I purchased my first home, I was given one option by the three different finance companies I visited a 30-year Surprising Investors With Sound Advice on Leverage by Chris Clothier, co-owner of MemphisInvest.com mortgage. The 30-year mortgage has become the staple of real estate investing and even Warren Buffets recent statement about the 30-year mortgage shook the real estate world. What many people fail to recall about Warren Buffets as- sessment of investing in real estate is that he used the phrase if he could which, is very different than stating this is what I am doing. This is worthy of an article all by itself as different investors and investment companies have taken his short interview and turned into the greatest marketing piece they have ever had. His five minute interview has been used thousands of times already to convince investors that they need to mortgage to the hilt all because Warren Buffet mentioned it in his interview. But they all forget two important points. 1. He is one of the wealthiest men on the earth and can af- ford as much leverage as he is comfortable taking on. 2. He never says that he is buying single-family homes. Realty411Guide.com PAGE 20 2013 reWEALTHmag.com 19. http://meminv.es/HTPOA http:// meminv.es/HTPOA http://meminv.es/ http://meminv.es/HTPOA http:// meminv.es/HTPOA http://meminv.es/ 20. by Stephanie B. Mojica Dave Seymour and Peter Souhleris of the Boston area loved flipping commercial and residential properties long before they were offered the A&E television show Flipping Boston, which both entertains and educates audiences about the hard work and great financial rewards of real estate investing. Seymour and Souhleris, owners of CityLight Homes in Peabody, Mass. in the North Shore area of Boston, have flipped houses and taught others how to flip properties for more than 18 years. Unlike some real estate entrepreneurs, the duo places a special focus on refurbishing the properties in which they choose to invest. From conventional real estate brokerage services through to our innovative, creative and effective out of the box home buying and selling solutions, were dedicated to one thing making the sale, Souhleris said. In Souhleris and Seymours book The Flipping Formula, their innovative approach to monetizing residential and commercial properties is spelled out in terms even newcomers can grasp. Every day especially in Boston people drive by what could become tens or even hundreds of thousands of dollars in their pockets, Seymour said. Ignorance of the basics of selecting, purchasing, refurbishing, and reselling a home or quality commercial property is all too common among even otherwise well- educated people, the pair noted. FLIPPING BOSTON Continued on pg. 62 achatwithDave&PeterfromA&EsTOPShow Realty411Guide.com PAGE 22 2013 reWEALTHmag.com 21. Its about more than money. The American Association of Private Lenders is about the self-reliance and rugged individualism that built America. Our purpose is to advance the interests of the entire peer to peer community. We lend our experience, enterprise and energy to elevate the standards of our industry and give you a voice in your future. Build your future with us. Join AAPL today. Private Lending 9 1 3 - 8 8 8 - 1 2 5 0 l A A P L o n l i n e . c o m 22. Realty411Guide.com PAGE 24 2011 reWEALTHmag. com S cott Carson has a message for anyone whos on the fence about investing in bank notes: If youre not in notes, youre going to wish you were 6 to 12 months from now. Buying and selling those mortgages, either indi- vidually or in pools, is the bread and butter of Carsons Inverse Investments a company Carson founded in the middle of the first round of post-boom bank failures. When a lot of banks started going under, I saw an opportunity there, said Carson. I launched my own firm six years ago, when the banks were closing like crazy. The early days were a fever-pitched one-man show, according to Carson, calling 40-50 banks every day, search- ing the nooks and crannies of the mortgage industry for sub-performing (or non-performing) loans the holders would be willing to sell for less than the market value of the property. But it paid off; Inverse Investments is one of the best-positioned boutique firms in the secondary note market, with a reputation and record thats hard to match. Those days helped us build up our database from then going forward, said Carson. We had success buying one-offs and small pools, doing what others were talking about doing but not too many were actually doing at that point. And over time, we built a name for ourselves as the people who were closing deals. That reputation has grown exponentially since Inverse Investments first dipped its toes in the water; Carson and his team have garnered mention in print giants like Investors Business Daily and the Wall Street Journal, and Carson himself was asked to speak at the National Association of Realtors conference in 2010. After that, things really took off; Carson said its in no small part because the entire business is predicated on finding an upside in a down market one thats appealing to every party involved. The banks are looking at their loans; said Carson. Thats where they make their money. So imagine theyve made a half-million- dollar loan, and the propertys only worth $200,000 now. Theyre on the hook for that $300,000. Obviously, the banks have the option to foreclose; but in markets like Florida, New York, or New Jersey, where foreclosure times are measured in years, not months, many are realizing theyd rather clear out their books and get a guaranteed payout instead even if its smaller. If they know they might not get paid for years, theyre realizing theyd rather take a fraction of whats owed right now, and get that, versus waiting for years and then having to sell it as an REO as well, said Carson. So theyd let this property go for $100,000 to an investor. Thats a phenomenal deal. So the bank wins, the investor gets a great deal, and the mortgagee suddenly has a note holder who can work more creatively than any bank ever could. The investor can do either a loan modi- fication, said Carson, or get a deed- in-lieu from the homeowner and let the homeowner walk. All this, Carson points out, potentially without a deficiency judgment, bankruptcy, foreclosure or even any late payments on the homeowners credit. Its an attractive solution to a lot of players. You have HUD and FHA announc- ing they expect to sell more notes over the next year than REOs because theres such a glut of inventory, said Car- son. And theyve created an investor match program, because they know investors have much more opportunity for creative solutions for bor- rowers than they can offer. Carson calls it the perfect storm for investors in the note business. The banks that were saying no just a few years ago are now saying yes today, said Carson. I hear it every day, Can you give us a bid? or Can you give us an idea what you might buy this for? Theyve definitely Continued on pg. 49 Realty411Guide.com PAGE 24 2013 reWEALTHmag.com by Robb Magley Hitting the High Notes with Scott Carson 23. Take control of your properties with these 10 tips written by Matt Theriault. This veteran California investor is an author and host of the most popular real estate investing podcast, Epic Real Estate Investing, on iTunes. He also shows people how to invest in real estate at EpicProAcademy.com, or his team does it for them at: CashflowSavvy.com. 1Seek multiple referrals from other successful real estate investors. Success leaves clues, and a referral from a trusted and prosperous source is more than a clue, its evidence. 2Adopt the mindset of Slow-To-Hire-Quick-To-Fire. Regardless of how many positive answers you get from a property manager during the interview process, sometimes the only way to find a good one is to give them a trial run. If you notice a pattern of actions that conflict with their promises during the interview, cut em loose. This is your livelihood, you are not obligated to someone who doesnt fit your needs. 3Interview more than one. No matter how much you like the first property manager you meet, keep interviewing. Not only do multiple interviews increase the likelihood of finding a great property manager, you will learn a ton about the projected performance of your properties and the market. 4Test their customer service. Intentionally end your interviews with a few unanswered questions. Call back after hours and leave a message. Note how and when your call is returned. When they (if they) return your call, use the unanswered interview questions as a basis for your conversation. Ideally, you want your call returned within 24 hours in a professional and courteous way. Placing a call during business hours can also give you an indication of the companys professionalism and accessibility. 5Hire investors. This tip applies to your entire team as well as your property manager. Although its is not essential that your property manager be an investor, I have found the communication and understanding of each other is MUCH better when they are an investor too. 6Read the Management Agreement. It seems obvious enough, but it is so important that I must make mention of it. As you read the agreement, remember that EVERYTHING is negotiable. Ask for more concessions than you need in order to get what you really want. Having said that, do not over-negotiate and remove the property managers ability to support his business and earn a living. Resentment is the last thing you want in this relationship. 7Drive by. Ask for a list of properties, as many as possible, that the property manager currently manages. Unkempt properties and loitering tell a lot about how much attention their properties are receiving and what type of activities are going on in the neighborhood. Dirt, debris, and rough char- acters are red flags as they make finding quality tenants much more difficult. 8Trust your gut. You know so much more than you think you do. If something doesnt feel right, investigate. Youll find that your hunches are not only correct most of the time, but that theyre often rather conservative. As lucrative as rental real estate can be, it has its dark side as well. Frequently refer to tip #2. 9Be direct in your communication and document everything. Set an example and maintain a standard of clear and honest communication with your property managers. Leave nothing open to interpretation or debate. 10Divide up your portfolio. Once youve acquired more than two or three properties in a specific region, and you intend to continue purchasing there, its a good idea to look for a second property manager for future acquisitions. You want to eliminate any single points of failure in your business, and by main- taining a balance of your portfolio between at least two property managers you help cover your assets. Also, keep no secrets about working with a second or third property manager. When your property managers are aware they have competition, you will find that your expenses have a tendency to drop and performance improves. Watching investors place limitations on their investing due to a few bad long-distance experiences saddens me because it is unnecessary. So, from this point forward, know that the secret to cash flow real estate investing is not shortening the distance you live from your investments. The secret lies in selecting great property management, and now you have some real world tips to help you do it successfully. management 10 Tips for Selecting GREAT Property Managers >> Straight From The School of Hard Knocks Realty411Guide.com PAGE 25 2013 reWEALTHmag.com 24. NORADAReal Estate Investments Marco Santarelli, CEO ofMarco Santarelli, CEO of 25. A nyone whos ever even considered investing in rental properties knows one thing is never guaranteed: having a paying tenant. One real estate entrepreneur asked himself, WHY? Its a question Norada Real Estate Investments Marco Santarelli loves to ask, and its served him well. Its the most important question for so many things, said Santarelli. Why is this property a good investment? Why does this market have potential? Or, in this case, why not offer investors a rent guarantee? So he did. As far as I know, were the only multi-market turnkey provider that offers a rent guarantee on everything we sell, said Santarelli. If a tenant for whatever reason never moves in, or for some reason has to move out, the investor is covered. Santarelli said Norada has offered a 90-day rent guarantee for some time. Weve never had to use it, he laughs. But still, we said How can you take a good thing and make it better? The answer came from additional talks with insurance underwriters: Norada Real Estate is rolling out a jaw-dropping one-year rent guarantee this year. Santarelli said hes working with the insurers market-by-market, and currently about two-thirds of their offerings are already under the new one-year policy. Hopefully well be offering one-year rent guarantees on every property we sell by the middle of the year, he said. No one else is doing that. Continued on next page > Questioning Convention { Transforming the Way We Invest in Real Estate } Santarelli has made something of a name for himself questioning conventional thinking in the real estate market. For example, most agents tend to sell properties within their local area, or focus on becoming experts in a single market. Its yet another heres how things usually work scenario Santarelli asked why? about. While Norada is based in California, the company isnt tied to this region quite the opposite, in fact. Santarelli says he is market agnostic and has always viewed real estate in terms of, live where you want, and invest where it makes sense. The result, he said, is an agile and adaptive company. Were not locked into a specific area, said Santarelli. We dont care which city a property is in, as long as it makes sense from an investment perspective. Accord- ing to Santarelli, companies that are fixed to a specific market might have a lot of product, but its all in one basket. If that market ever turns, theres nothing they can offer. Santarellis high level approach to finding investment properties lets him focus on the fundamentals, not the fads. I start with the metro area, he said. I look at the local economy: unemploy- ment, job growth, diversity of employ- ment, population growth. Do we have a lot of foreclosures? Are there a lot of distressed properties? Is there a high level of inventory? Are prices declining, level, or increasing? If it looks like a city has growth and jobs, and that the housing market is stabi- lized or on the upswing, then before even looking at a specific property, Santarelli said youve minimized a lot of the investing risk. But I like to look at the forest, not just the trees, he added. Something can look like a buyers market, but it could be that there are underlying problems. If people dont have jobs, the demand disappears; if the demand disappears, prices come down, and you have increased vacancies. Santarelli uses Detroit as an example of scratching a buyers market to uncover trouble. A lot of investors look at just the property, they say Wow, this is a great property! Its in good condition, its got great cash flow.And Ill say, Oh, by the way, its in the middle of a war zone in Detroit. You have to consider the market, and the neighborhood, not just the property. When it comes to properties, Norada is quite specific in what they present to investors: no commercial property, no industrial, no apartment buildings or large complexes. The only segment they offer is 1- to 4-unit residential rental property that is genuinely turnkey. And they really mean turnkey. Turnkey means, in its simplest form, theres nothing you need to do but close, said Santarellli. You can just walk in and start collecting a rent check the next month. The properties Norada offers are all either new construction or newly rehabbed; theyre all leased, or are in the process of being leased (in the case of a property in the rehab process, where a tenant simply hasnt moved in yet). And, significantly, theyre all cash flow positive. Santarelli Realty411Guide.com PAGE 27 2013 reWEALTHmag.com byRobbMagley 26. thinks most agents are missing the boat when they dont emphasize the importance of positive cash flow as being part of qualifying a property as turnkey. We dont want to touch a property unless it produces a measurable rate of return for the investor, said Santarelli. We surveyed our investors, and over 52% of them placed cash flow as their highest priority in what theyre looking for in an investment property. In that same poll, according to San- tarelli, appreciation ranked 5th down the list. Investors want to make sure theyre buying a property thats paying for itself. Its all part of what he calls the why of Norada Real Estate: To make wealth creation as easy as possible. The goal was to create a place where investors could shop, invest, and start collecting cash flow, all under one roof or, in Noradas case, practically at one website. Bucking the trend of in-house private data, Santarellis company makes its powerful analytics tools available free online, to anyone whos interested. The Norada website presents its properties by market with exhaustive data and detail about those markets. We put it all on the website so investors can do much of their due diligence right there, said Santarelli. The website software also does price forecasting based on a number of economic models, updated quarterly. Then, theres a green button that says analyze, said Santarelli. If you click on that, it provides a very detailed, customizable cash flow analyzer. Its a proprietary program I had developed just for our website. Santarelli acknowledged that detailed analysis can seem overly complex, and investors eyes can glaze over when pre- sented too much of it. His goal is present it all in a simple way, so investors can get the message of why a particular market is a good one and move on with the decision process. The exemplification of that is Santar- ellis proprietary DealGrader algorithm. Every property on Noradas website has its own DealGrader score. Its a score from 0 to 100, measuring the investment quality of a real estate investment, said Santarelli. Its a snapshot of profitability and investment risk the higher the score, the better the investment quality. Its unique, its our algorithm, and again, no one else has it. Its just one more tool in the bigger picture to help investors. Other tools Santarelli makes free and available include weekly newsletters, free membership to Noradas Real Estate Investment Group, and Noradas Hous- ing Market Forecast, recently updated for 2013. Thats essentially an appreciation forecast for the industry, said Santarelli. It lays out the top 100 markets, with a focus on the top 15. If that wasnt enough, Norada offers a free report called Building Wealth in Real Estate, in it, he talks about a wealth accumulation plan that focuses on real estate, with enough of the basics to be useful to a novice and enough detail to appeal to an advanced investor. Its actually a system to accumulate property over time T he simple answer is that it is the most powerful way to accumulate wealth, and more people have become millionaires through real estate than any other means. And despite the obvious need to save for retirement, a recent Wall Street Jour- nal article indicated that a startling 95% of Ameri- cans will face financial difficulties by retirement! Of course, you have several options for building wealth, but most of these options pale in comparison to real estate. Consider options like savings accounts, CDs, bonds, and money market accounts. These are safe options, but you certainly wont reach a goal of building significant wealth through these means. For the most part, these options barely keep pace with inflation. Think about it: How many millionaires do you know who became wealthy by investing in savings accounts? The stock market can bring you some interesting returns, but it can also lead to some big losses. You have very little control over the companies you invest in, and there are no significant tax advantages to owning stock. In addition to the wealth youd create, you would also benefit from the growing annual cash flow being produced by your income properties. The income earned can help supplement your existing income, provide additional capital towards the purchase of additional income property, and eventually give you the freedom to quit your job and retire with passive income! The book details a very simple plan that will create long-term wealth and cash flow for you and your family. The plan is very scalable, which means you can do more or less in order to achieve your wealth and income goals at your own pace. Remember: Dont wait to invest in real estate, invest in real estate and wait. Pre-order Building Wealth with Real Estate today on Amazon.com. Download the first chapter FREE at www.NoradaRealEstate.com Why Build Wealth Through Real Estate? Continued on pg. 30 Realty411Guide.com PAGE 28 2013 reWEALTHmag.com SPECIAL REPORT 27. WWW.NORADAREALESTATE.COM CALL US AT (800) 611-3060 Download a free copy of our valuable 15-page special report, Building Wealth in Real Estate and receive a free membership to our nationwide investor network! FREE REPORT Norada Real Estate Investments helps take the guesswork out of real estate investing. By researching top real estate growth markets and structuring complete turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability. Successful Real Estate Investing Begins with the Right Investment Property! WEALTH CREATION MADE EASY 28. fluff some put behind it, he said. It is hard work, but it pays off. Herriage and his team members can help a distressed owner get out of virtually any housing situation. Herriage Homes works with some of the most challenging cases in the industry, including unwanted rentals, properties in need of major repairs, quick sales, short sales, divorce sales, pending foreclosures, and bankruptcy liquidations. It takes me about 15 to 20 minutes to walk through your house and make you a cash offer, Herriage said. My offer is on an as-is basis. This means you do not have to make any repairs, or even clean out the house in some cases. I call it, Take what you want, and leave what you dont. In an average month, Herriage buys five to seven houses. He wholesales more than half of those properties, flips others, and retains some in a rental portfolio. The dramatic spike in people using the Internet for all types of matters has not changed Herri- ages basic process of buying, fixing, and selling houses. It is still a people business. The best way to make money in this business is to be behind a steering wheel, he said. There are those that teach to sell product, and those that teach to buy and sell more houses. I teach about real world actionable information I obtain weekly by being active in what I teach about. There are few that can claim that. To learn more about Herriage Homes, call 972-755-1880 or visit www.timherriage.com Dallas Wholesaler, Industry Leader, pg. 11 The Complete Solution for Real Estate Investors TM Listen to The Creating Wealth Show, Jason's Highly Acclaimed Investor Podcast: JasonHartman.com So you love real estate... but you hate management? Passive Income 12.25% First Trust Deeds Podcast See terms of service at: www.JasonHartman.com/terms We have access to very unique "insider" private lending opportunities. Youve never seen hard money lending like this before. If you have $100,000 or more to invest and you want conservative, diversified, quick-turn, non-pooled investments that repay in about four to six months contact us for details. Our private lending program is simple and proven. The simplicity of our private lending program is unmatched. Visit www.JasonHartman.com or call 480-788-7823 today. CW 274 - Fiscal Hangover & Global Change with Keith Fitz-Gerald CW 273 - The Decline of the EuroZone with Alasdair MacLeod CW 269 - SWOT Analysis of Income Property, Facebook IPO & Case Study that can be adopted by anybody, said Santarellli, and tweaked whether youre buying one property a year, two a year, or one every two years. You can adjust the pace, but if you stick to the plan you can create a lot of wealth and cash flow. It talks about all the advantages of real estate investing appreciation, leverage, financing, tax advantages, and of course the significance of inflation, which Santarelli thinks few investors consider. A lot of people dont think about inflation, and how your monthly mortgage payment is fixed in current dollars, said Santarelli, but with inflation youre making those payments with cheaper and cheaper dollars every year. All of which paints Norada as a forward-thinking, agile analytics-based real estate investment company, unbur- dened by specific markets, that puts every free tool imagin- able in the hands of its investors. To learn more call 800-611-3060 or visit online at: www.NoradaRealEstate.com Questioning Convention, Marco Santarelli, pg. 28 Realty411Guide.com PAGE 30 2013 reWEALTHmag.com 29. Investor Education a Top Priority for Equity Trust Investor Education a Top Priority for Equity Trust Learn about the history of Equity Trust on the next page >> Continued on pg. 59 by Stephanie B. Mojica T he executives of Equity Trust, a self-directed IRA firm in Ohio, truly believe in investor education. For this reason they host a conference every year to increase aware- ness of basic investment fundamentals to investors. Unfortunately, too many people these days are investing without understanding the basics, said Jeff Desich, Chief Executive Officer. Desich and his staff members work continuously to ensure that each client understands not only his ultimate investment goals, but in which real estate properties he has invested. Desich holds multiple licenses with the Financial Industry Regulatory Authority (FINRA) and is a registered financial principal. When not working closely with clients or giving workshops across the country about the flexibility and profit potential of self-directed IRAs, Desich is a guest professor at Ohio State Universitys prestigious Max Fisher College of Business. Assisting clients in achieving their financial goals is the greatest value we provide, Desich said. Equity Trust is one of the leading firms in the rapidly growing self-directed IRA market. Despite the economic downturn that began in 2008, IRAs around the world are worth about $5.7 trillion. Equity Trust is the custodian of about $12 billion of retirement Realty411Guide.com PAGE 31 2013 reWEALTHmag.com Jeff Desich, CEO of Equity Trust photo by David Gaylor 30. Richard Desich Sr. starts Mid- Ohio Securities on January 1, 1974 The IRS approves Mid-Ohio Securities as a non-bank, passive custodian for IRAs A Drug Mart store in Ohio becomes the companys first non-traditional asset held within an IRA The companys services expand to include all 50 states Equity Trust Company is founded Mid-Ohio Securities moves its self- directed accounts to Equity Trust Company Rapidly growing Equity Trust moves into its new 16,000 square-foot facility in Blyria, Ohio New Equity Trust website created, www.trustetc.com, receives 1 million unique visitors Equity Trust holds 40,000 active accounts Inaugural Equity University Networking Conference brings hundreds of self- directed investors to Orlando, Florida for proven self-directed investment strategies, education and networking Equity Trust hits the 20,000 account milestone 1970s 1980s 2000s1990s EQUITY TrUsT Company founder Richard Desich realized early in his career that investing in real estate and other alternative investments in an IrA could be a valuable retirement savings tool. In 1974 he began Mid-Ohio securities (which later transferred its self- directed IRA accounts to Equity Trust) and the company's first real estate investment in an IrA took place in 1984. 31. Equity Trust Company hits $3 billion in assets under administration Company acquires Texas-based Sterling Trust, bringing Equity Trusts client to 115,000 Jeff Desich is named CEO of Equity Trust Company Equity Trust Companys client base tops 130,000 Equity Trust Company opens Denver office and launches Equity Advisor Solutions Companys South Dakota service and operations center opens - Equity Trust Company now operates from 5 facilities in 4 states Industry first online client portal, myEQUITY launches, giving clients access to 24/7 networking and education Equity Trusts Facebook fan base surpasses 5,000 Ira the bear becomes Equity Trusts official mascot, takes on the task of travelling to spread the word about self-directed IRAs Equity Trust debuts a new look and enhanced services 2010s Almost 40 years later, the company and demand for self-directed IrAs continue to grow. Equity Trust is the nation's leading provider of self-directed IrAs and 401(k)s with over 130,000 clients in all 50 states and $12 Billion of retirement fund assets under custody. Company website, www.TrustETC.com educates and informs 2 million unique visitors Equity Trust Company hits the milestone of $12 billion in assets under administration 32. When you buy within a system, you benefit from strength in numbers! - Nick Vertucci Investors helping Investors PURCHASE: Because we buy so many properties at auction, you benefit from our purchasing power. REHAB: Our team does a complete rehab of every property we purchase. We save on constuction costs because we turn over so many properties. Thats a savings we pass on to you. MANAGEMENT: We DO NOT pass you off to a third party property management company. Our property management was set up specifically for our properties to make them more lucrative for our investors. CASH FLOW: Our guarantee is that your property will have a tennant in it when you take over title. That means you start cash flowing from day 1. Call Us Today 800-328-6418 www.NVcompanies.comwww.NVcompanies.com Purchase Price: $89,900 Yearly Return: 13% Purchase Price: $99,900 Yearly Return: 12.4% Invest in the BEST real estate market for cash flow and appreciation! 33. TheStateoftheNoteMarketTheStateoftheNoteMarket Why is now the time to invest in bank notes? F or Asset Ventures Tony Martinez, the answer is as clear as writing on a wall. Martinez entered the bank note business through his earlier experiences buying and selling real estate in particular, short sales. I negotiated more than 300 short sales through the real estate side, said Martinez, and I was looking for a better way. And for the past several years, that better way has been investing in notes. A mortgage note is a lien against a property, created where someone has borrowed money against it. Its basically an IOU, which states the terms by which the borrower has to pay back the lender, said Martinez. What we do is buy institutional notes that were created by a bank or mortgage company. notes The real opportunity began in 2007, according to Martinez, when the market shifted and suddenly those notes were nearly worthless to banks; the unpaid balance stayed in place, but when the loans stopped performing, the banks were in a bind. Millions of dollars worth of notes were no longer of any value to the banks, said Martinez. Remember, they used the value of those notes in order to borrow money to lend and make their money, and now they had nowhere to go with all this collateral. Imagine youre a bank, said Martinez, and you have 1,000 notes, and every one is performing. Youre sitting in a pretty good position, he said. If one goes bad, its not really a big deal, youll just sell it off, or foreclose, or whatever options are available. You might spend the time and work out something really attractive for the borrower, because youve got all those other notes working for you. But in a major financial crisis, its another matter. When theres a huge hit, and all of a sudden youve got 50% of your WanttoMakeaFortuneinNotes? WehavetheBlueprintforSuccess entures LLC sset Industry Speaker & Coach Tony Martinez Sound Investment Strategy Proven Track Record of Success www.AssetVenturesllc.com PH: (855)798-1411 Take advantage of this unique opportunity! Call us or visit our website to receive a FREE DVD! Mentor to the note industry Continued on pg. 36 Realty411Guide.com PAGE 35 2013 reWEALTHmag.com by Robb Magley 34. inventory becoming worthless, and youve got to figure out a way to create some liquidity, said Martinez. So youll start selling off your bad paper at fire sale prices. The need for that liquidity is fundamental, according to Martinez. If Im a big bank, the government requires me to freeze some of my good liquid assets to protect my bad debt, he said. That limits my lending power on the other side. Thats because a bank is allowed to loan as much as ten times its liquid assets; for every $100,000 in liquid assets, it can loan $1 million. Now, if I have a loan of $100,000 thats not performing, I have to freeze the equivalent of $1 million in lending, said Martinez. That really affects my business in a negative way. Now, he added, imagine if the bank can sell a non-performing loan thats worth on paper $100,000 to someone for $20,000. Suddenly I have $20,000 in liquid assets, and I can loan $200,000, he said. Theres a huge benefit to them to do this; the benefit to us is we can buy these notes for pennies on the dollar. Several other factors have come into play that make this a good time to get into notes, said Martinez. Right now, he said, most of the notes that are available for investment are ones that were taken on originally by larger banks and their time is running out in at least two ways. Those big banks have until the end of this year to relin- quish as much of the bad debt as they can, and still receive up to an 80% reimbursement for their loss, said Martinez. So thats a huge motivating factor for the banks to get these off their books. Also, after the TARP money runs out at the end of this year, the government is putting increasingly complicated lending regulations in place for the following year. So the banks want to put themselves in as much of a liquid position as possible right now, to continue to be able to borrow from the government at a very low rate while there arent as many regulatory restrictions, said Martinez. Finally, banks are simply tired of the resources they expend keeping up with non-performing notes. The maintenance of a bad note costs them so much more than that of a good performing note, probably 10-15 times more, said Martinez. They really dont want to deal with them. You have to think at their scale; while were looking at 10 or 100 of these, theyre dealing with thousands. It makes more sense to sell it off. Martinez said the note market is probably going to remain strong for several years, particularly due to the volume of inventory. Theres hundreds of thousands of delinquent notes, said Martinez. Its going to be impossible to move them overnight. Were probably looking at a year or twos worth of inventory lagging behind, even if the market changes dramatically. And, he said, no one he talks to thinks thats less than 3-5 years away. For more information or to receive a free informational DVD on the note market, visit: www.assetventuresllc.com bring in 7-8 older repo homes to increase occupancy and sell them on a lease-to-own program. Then raise the lot rents by $10-$25/month (de- pending on the market). After 18 months when you have increased the annual lot rent income by $30,000, sell the park for $450,000, which would be a 10 cap for a new buyer (dont be greedy on the sale leave a nice return for the buyer). After paying the seller back and your investors a nice profit and returning their principal, you should have at least $125,000 in your pocket. Step Two of the plan is to get the original investors to reinvest their $100K along with your $125K and buy a distressed 50-space park. Use the exact same formula as Step One for the 18-month period. You should end of with $250K in your pocket after that sale. Step Three is to buy your 100-space park as notated in #2 above. This business is not rocket science. Anyone can do it. A quick example: A guy I bought a park from in Raleigh, NC at the end of 2009 had owned the park since 1979. He never went to college. He raised his family in the park and the cash flow allowed him to send three kids to college. After I purchased it, he netted out $3 million! I paved some of the roads, added some cosmetic repairs, and brought in 15 older repo homes to fill empty sites. I owned the park for two years and was able to net out $1 million in profit after I sold it in December of 2011. Mike Conlon is a President/Owner of Affordable Communities Group, LLC, (www.acgmhc.com), which invests in distressed mobile home communities throughout the Southeast and the Midwest. He is also President/Owner of Carolina Turnkey Properties, LLC, which buys distressed single-family homes in the Raleigh and Charlotte markets. He has been a full- time real estate investor for the last 10 years. He is based in Cary, NC. He is also an author, speaker, and educator on real estate investing. His book, Unconventional Wealth: The New Main Street Millionaires, was released in August 2012. Mike Conlon can be reached at [email protected] The New Main $treet Millionaires M I K E C O N L O N Mike has the unique ability to provide Americans with a realistic, no B.S. view of the nancial world today one that comes from his years of street-wise investment success in three different businesses nancial planning, mid-sized apartment complexes, and mobile home communities that have made him a true Main $treet Millionaire. He has bought, rehabbed, and sold over $50 million worth of commercial multi-family (affordable apartment complexes and mobile home parks) involving 15 projects over the last ten years. He was a leader in the nancial planning business in the 1990s and early 2000s as he grew a nancial planning broker-dealer from $1.2 million in gross revenues to $40 million in six years and then sold it to a large national insurance company; he also managed over $100 million of client money in his own nancial planning practice before becoming completely disillusioned with Wall Street money machine. He is a 1990 graduate of the University of Minnesota Law School. Mikes basic investing premise has brought him success over the last decade and he foresees even more opportunities over the next 10 years. Unconventional Wealth gives readers insight into the skillz they need to become Main $treet Millionaires. UNCONVENTIONAL WEALTH: The New Main $treet Millionaires In this book, Mike Conlon will show you an unconventional path to prosperity in this very difcult economy by providing quality, ethical, and affordable services to Americas largest and fastest growing consumer group. In order to prosper on this path, you dont need a college degree, only the willingness to work hard and learn. UNCONVENTIONALWEALTH:MIKECONLON TheNewMain $treetMillionaires Making $100,000 per year, pg. 18 The State of the Note Market, pg. 35 Realty411Guide.com PAGE 36 2013 reWEALTHmag.com 35. Why Should You Invest In A Mobile Home Community? Why Should You Invest In A Mobile Home Community? Log on to any websites below to get more information on investing in Mobile Home Communities and to score a free copy of Mikes new book: Unconventional Wealth Creating the New Mainstreet Millionaires Learn how I made over $500,000 in profit in two years by buying one distressed community This advertisement is an offer for an educational product is in no way an offer to solicit or sell any investment or security. All investments contain risk, including potential loss of principal. Please consult your financial advisors before making any financial decisions. AFFORDABLE COMMUNITIES GROUP 3 Thedemandforaffordablehousingis skyrocketing 3 Verylittle,ifany,affordablehousinghasbeen builtintheU.S.sincethemid-1990s 3 Muchhighercashflowsthanapartmentcom- plexesastheyarelessmaintenanceintensive, havemuchlessresidentturnover,andmuch lowerongoingcapitalexpenses 3 Higherbarrierstoentryasthecoststobuild anewparkarehighandavailablelandnear largermetroareasisscarceandexpensive 3 Mucheasiertomanagewhenthemajorityof residentsarejustleasingthedirt Why affordable communities group? 3 10+yearsexperienceinbuying,rehabbingand sellingover3,000units 3 Havecompleted15fullcycledeals(buy,rehab, sell)resultinginover$50millionproceeds 3 Expertsinthepropertymanagementbusiness asweself-manageallourproperties-very hands-on 3 Keepatightgeographicfocus-diversified,but nottoospreadout 3 Weputourowncapitalintoeverydeal Mike Conlon, President/CEO MIkeConlon,akaMainStreetM