CashFlow Express

Ca$hFlowEXPRESS

Yes! You can be rich from owning real

estate and trading stocks. We’ve all heard the story of the

little old lady who lived modestly and worked as a school teach-er for forty years. She never earned more than $35,000 per year, owned a modest home, and shared her life with two cats. Once she died, her rela-tives discovered a $150,000 life insurance policy and $1.5 million in stocks that she left to the elementary school’s scholarship fund.

The national media loves to air these stories. It seems there are several old ladies who fit this seemly unique profile year after year. How could that be?

Investing in stocks is not the world’s most challenging task. In fact, at its core, it’s very simple. The truth is that the stock market creates millionaires every year. Investing in stocks, with wealth in mind, is easier than you think.

Invest In What You Know

Wanna be a good stock market in-vestor? Keep it simple and start with

companies and products with which you are familiar.

If you’ve ever opened a can of Coca Cola on a hot summer day and felt refreshed and invigorated, why not own the stock? It’s a product you know with a story you understand. When I say “a story you understand,” I mean to say that you understand

how the Coca Cola Corporation makes money, or to ex-press it in Wall Street terms, you understand how the company earns revenue. The more bottles and cans of Coke that Coca Cola sells around the world each day, the larger the com-pany’s profit. Over

the past ten years Coke stock (symbol KO) has risen from around $40 per share to a high of $71 — $1000 in-vested in Coca Cola stock ten years ago would be worth $4,100 today; $10,000 invested in Coca Cola stock would be worth $41,000 today.

If you spend more than $100 per year eating fast food, why not own the stock? Over the past ten years McDonalds stock (symbol MCD) has risen from a low of $15 per share to a high of $95 per share.

By Doug CarverOrganizer Pasadena and Burbank Cashflow Meetup Groups

I can remember my first time play-ing Robert Kiyosaki’s Cashflow board game about eight years ago and how it started a chain

of events that continues to this day. What stuck with me most was not the “how to” of playing the game but the people that I met at the event. These were not like the normal people in my life that would tell me I was crazy for trying to start my own real estate business or that financial freedom was impossible without a steady well-paying job. The people I met were excited about learn-ing and expanding their knowledge on how to achieve financial freedom. They were active investors in real estate and the stock market. They were small busi-ness owners with a passion and vision for creating more financial success in their lives. Overall, they had a mindset for prosperity that I like to call a “Cash-flow” mindset.

A lot of people complain that Robert Kiyosaki in his books and programs does not provide the specific details on how people should implement his strategies to create financial freedom. Truth is he never spells out a step-by-step “how to” for building long-term financial freedom. What he does teach is far more impor-tant, and that is how to create a “Cash-flow” mindset. Kiyosaki describes it in his book Cashflow Quadrant moving your mindset from the E (employee) and S (self-employed) side of his Cashflow quadrant to the B (business owner) and I (investor) side of the quadrant. In lay-man’s terms, it’s the mental shift from someone who seeks financial security at all costs to someone who can confi-dently and knowledgably take measured risks. This is a simplistic definition but a very important one to understand. With-out the correct mindset, it really doesn’t matter how much you learn the “how to”

of real estate investing, trading stocks, building a strong MLM business, etc. You will not succeed. It’s like trying to grow corn in a field of sand. The seeds will not germinate and you’ll end up with next to nothing to harvest in the fall.

How, you ask, does this relate to the Cashflow game? Well, after playing the game a bunch of times I learned the “how to” of getting out of the Rat Race, but I still was not able to take what I learned from the game and apply it to my real-life fi-nancial situation. However, I real-

ized that the time I was spending with my new Cashflow group friends was chang-ing the way I thought about money and my financial future. I no longer viewed the stock market as a giant rigged sys-tem for losing money. I began to see the tremendous opportunities in the sinking real estate market even as many people I knew were losing money on deals that had gone bad. Overall, I saw for the first time opportunities all around me to cre-ate wealth even as the newspapers talked constantly of the “Great Recession.”

Today as a result of my ongoing in-volvement playing and organizing local Cashflow events in Southern California, I have a thriving real estate investing business. It was after speaking with one of my Cashflow friends who was a real estate investor that I was encouraged to start wholesaling distressed properties. It turned out to be a great decision. More recently, I’ve begun to learn how to suc-cessfully trade in the stock market using options. As a self-proclaimed real estate “zealot”, I never would have dreamed of investing in the equity markets. Howev-er, after playing Cashflow 202 with my Cashflow friend who is an active trader and learning about his trading system, I was able to see the opportunity before me. I now fully expect that investing in the markets will be a huge part of my fu-ture financial success in addition to my

Learn How to Create Stock Market Wealth Today

Investors Manifest a “Cashflow” Mindset

FREEPassive Income for Today & Tomorrow No. 1 / Vol. 1 2012

Personal Finance News from the Publishers of Realty411 Magazine - www.Realty411Guide.com

Continued on pg. 2Continued on pg. 12

By Tyrone JacksonTheWealthyInvestor.net

Doug Carver (left) and Chris Hanson dis-play the Cashflow game to group members.

A great financial opportunity does not stay under the radar for long. The side road with less traf-

fic gets crowded pretty soon as drivers hear about it and jump off the freeway. High yield cash flow real es-tate Investments may be headed for a similar fate.

Retail investors have had this opportunity staring them in the face for a while, and many have taken advan-tage of it. Retirees or people about to retire, individuals suffering from ‘market gyration trauma’ and high-net-worth individuals seeking portfolio diversification have all been adding cashflow residential real es-tate to their portfolio.

So what changed?Like all markets this one is moving be-

yond the early adopter stage. And the fac-tors that have made this a great investment opportunity are compounding. There are more distressed assets hitting the market with a larger shadow inventory waiting in the wings. Morgan Stanley just published

a report that suggests the U.S. is moving towards a rentership society with home ownership declining to 59%. A recent Mortgage Bankers Association study says that home prices may have hit bottom.

This means that investors have a grow-ing number of properties that they can buy cheaply and then select from a large pool of qualified renters. It all adds up to stable high yields for people investing in buy-

and-hold single-family real estate. This has caught the attention of big money: funds, institutional investors and high-net worth groups. Distributed single-family

real estate investments are quickly be-coming the ‘unapartment’ portfolios of these funds.

So what should the retailinvestor do?

The retail investor should take action. This is still a fragmented market that al-lows an investor to own one, two or three properties. They cannot do this in multifamily commercial real estate other than by investment in a fund or a REIT. But it’s important that investors act pru-

dently. This means not investing in their own backyard favoring proximity over return, not investing with fly-by-night property sell-ers who peddle ‘high return’ properties and then disappear leaving the investor holding the bag. And not doing thorough due diligence on the area, the prop-erty and the provider.

Finally, they should not buy the property from one entity and have another entity manage their invest-ment. In other words, the retail investor has to do the very things that the large funds do before they invest.

Discover a whole new way to unleash fully-managed, high-income cashflow real estate investments, call (866)732-3220 or email: [email protected]

Will Big Money Run Away with CashFlow Real Estate Investments?

CashFlow Express is published in San-ta Barbara County by Manifest Media Partners. ©Copyright 2007-2012. All Rights Reserved. Reproduction without permission is strictly prohibited. The opinions expressed by writers and col-umnists are not endorsed by the pub-lishers and/or editorial staff. Before in-vesting in stocks, bonds, mutual funds, gold, other securities and commodities and/or real estate, seek the advisement of a trusted financial adviser, attorney or tax consultant. Investing is risky busi-ness and may result in loss of capital. Please invest responsibly.PRINTED IN THE USA. GOD BLESS AMERICA

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contents1 Create Stock Market Wealth

1 Have a Cashflow Mindset

2 Will Big Money Run Away?

3 Six Tips for Faster Wealth

4 Focus Versus Diversification

5 Jump Start Success

6 Cash Versus Cashflow

7 Calculate Your ROI

8 The Nested Action Cycle

9 Investor Spotlight

10 Resource Directory

11 Inside Our Expos

Our Goal is to Educate, Motivate & Inspire New Investors

Join BILL GATTEN at his next event and learn the KEY TO CAPITALIZING ON FREE REAL ESTATE

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real estate activities.Robert Kiyosaki’s Cashflow 101 and

202 are great boardgames to expand your financial intelligence, but I hope you can now see they are the basis for so much more. They create a frame-work for building lasting relationships with people who have a “Cashflow” mindset. These are people who are ac-

tively pursuing financial freedom and see the world full of financial opportu-nity and money-making possibilities.

By hanging out with these folks at your local Cashflow group, I know you to will begin to develop your own “Cashflow” mindset and begin to see real changes in your financial future.

CashFlow Mindset, pg. 1

Ready to Make an Extra $5,000 to $30,000 Every Month?

“Your wealth is in your thinking” is the mantra trumpeted most by stock market teacher and trader Tyrone Jackson. For the past five years, Mr. Jackson has been helping creative artists and self-directed investors produce monthly residual income & build long-term wealth in the stock market. His Wealthy Artist/Wealthy Investor program exposes both the experienced trader & novice to the powerful concept of monthly residual income.

Join Tyrone & the CashFlow Express Teamon February 5 for their Success 2012 Seminar

This is a FREE WORKSHOP, but guestsmust RSVP by calling 310.499.9545

The HomeUnion Services team are ready to assist new investors.

CashFlow Express • Page 2 CashFlow Express • Page 3

By Linda Pliagas, editor & publisher

Ev e r y o n e y e a r n s f o r abundance and financial

security, it is a human desire we all share. It is a motivation ingrained in us as part of our survival mechanism. While we all have this in common, only a lim-ited few ever actually reach true financial security. The statistics can be depressing. According to the Retirement Confidence Survey (2006), 53% of Americans have less than $25,000 in retirement savings. Plus, 30% mistakenly believe that they will only need $250,000 or less in total retirement savings.

One of the problems in our society is a lack of discipline in regards to saving. In fact, a recent study by Harris Interac-tive found that 57% of households do not even have a budget (2009 Financial Lit-eracy Study).

In my 20 year plus career in journalism, I have interviewed many successful and wealthy people, from celebrities to company CEOs. Undoubtedly, part of the perk to this profes-sion was being able to unlock their secrets. I’ve compiled a list of impor-tant guidelines, which were followed by many of those who transformed their mediocre life and average paychecks into extraordinary wealth.

These steps are not easy to follow, but they will get you started on a disciplined path and lead you toward creating a wealth-conscious mindset.

1. Reduce Your Household Expenses. Living in California, we have some of the highest real estate prices in the na-tion so reducing living costs can be a sac-rifice. One move that I have seen many real estate moguls make is that they start off their portfolio with a multifamily in-

vestment. For example, if you are a first-time home buyer (or even an empty nester), be open to the idea of purchasing a duplex or other multi-family property instead of a typical single family residence. This way, you can live in one unit and rent out the other for income. As a landlord myself, I know it’s not easy to live near tenants, but if you screen your prospective renters correctly, it will reduce future nightmares. Be smart,

let other people pay off your mortgage! You can always save money and then buy another home later, after you build a pas-sive income stream.

2. Increase Your Formal AND Finan-cial Education. Did you know that earn-ing a bachelor’s degree can increase your income by $25,000 annually? Plus, it gets better: According to Census Data, earning a graduate degree will net a person an-other $20,000 per year — that’s $45,000 more, year after year! Now, don’t com-plain about the high cost of education or how “hard” it is to go back to school. My former neighbor was her 50s, running

her own business and attending graduate school part-time. It’s never to late!

It’s also important to keep in mind that universities do NOT teach people how to get rich. So on top of your formal educa-tion, start taking class-es about investing. Financial classes are taught at most adult

schools and colleges for a nominal fee. I have also attended real estate seminars for many years and have learned great tips from top mentors, such as Dave Lindahl.

3. Be an Aggressive/Conservative In-vestor. Although it may sound like an oxymoron to be both aggressive yet con-servative, it isn’t. It’s all about planning.

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your control over your investments. It’s extremely important to continue to in-crease your financial intelligence in order to protect yourself. Unfortunately, finan-cial intelligence is not taught in schools because such a large portion of the popu-lation, including teachers and politicians, do not have a very high financial IQ. When financial advisors say that an increase in returns means an increase in risk, they are right when speaking about the paper assets they recommend to inves-tors that they make major commissions on BEFORE showing performance. They are wrong when speaking for all assets. Financial advisors are simply salespeople. Most people invest in paper assets such as

savings, stocks, bonds, mutual funds and index funds because they do not want to take responsibility and control over their financial well being. All they want is to turn their money over to an investment advisor who hopefully does a good job. Out of sight, out of mind. If people want more control, the first thing they need to do is increase their financial intelligence and, hopefully increase their financial controls and leverage ratios.

Most financial advisors recommend di-versification but they do not really diver-sify. First they only invest your money in one asset class, paper assets. Second, mutual funds are already diversified in-vestments which are invested in a pool of good and bad stocks which does not increase the value or decrease the risk of the investments. Professional inves-tors DO NOT diversify. Warren Buffett put it perfectly when he said, “Diversifi-cation is a protection against ignorance.

Diversification is not required if a person knows what they are doing.” So if diver-sification is a protection against ignorance then when you diversify who’s ignorance are you protecting yourself from? Your ignorance and your financial advisors’ ignorance? Focus, not diversification, is the key to more sophisticated leverage, higher returns, and lower risk.

The point I am trying to make is that if you increase your financial intelligence about specific asset classes, like real es-tate, you will learn how to control your own financial security and wealth cre-ation, instead of relying on some finan-cial advisor who probably does not know what they are doing. Look at the massive

wealth transfer that just occurred when the market crashed while bailing out the banks (i.e. the top 1% wealthy individuals increased their wealth while the middle class and poor decreased in wealth). This happened because most people do not have the financial intelligence to protect themselves.

Starting to get financially educated is the key to wealth creation. So get to the bookstore and start reading. Take classes on financial intelligence and ways to in-crease wealth. It is key to your success and preserving your wealth so that financial predators (i.e. the government, financial advisors, and large mutual fund peddling companies) do not take all of your wealth away by investing it in asset classes that do not allow you any controls over those investments.

To contact Mathew Owens, please see OCG Properties’ advertisement below.

Most of w h a t h a s b e e n drilled

into our heads about in-vesting in mutual funds, CDs paying down our mortgage and diversify-ing is nothing but smoke and mirrors. The financial services companies like Fidelity, Charles Schwab and financial planners are the ones making all of the money. The problem is that most people have very little financial edu-cation in order to invest for retirement properly so they hand over their money to someone they HOPE will have the right knowledge base to safely increase their wealth. The problem is that these investment types are HUGE-LY RISKY. These types of asset classes, paper assets, do not allow the investor control. Then during market crashes, all most investors can do is watch helplessly as their wealth gets whipped out along with their financial security. If you have more control over your as-sets then you are not affected as much by market crashes. For example, if you in-vest in assets like real estate that produce cash flow through rental income after all of your expenses are covered, if the real estate market and stock market crash you are still in great shape. While everything is crashing you are still receiving your rents and do not need to sell the asset. In-

vesting in non-paper assets (i.e. not mutu-al funds or CDs) allows you to use lever-age as well, which increases your wealth

by making your money work harder for you. Most finan-cial planners will tell you that using leverage increases risk. That is not al-ways the case if you have the right finan-cial knowledge to control the invest-ment and enable safety controls on your leverage use. They will also tell you that real estate is a risky invest-ment. The reason for that is that finan-

cial planners typically lack the financial knowledge about how to control real es-tate and make it profitable. Most finan-cial planners put people into paper assets where the investor does not have control and therefore it is hugely risky to use le-verage. In real estate investments the value of the property should not be based on the “opinion” of an appraiser but on the income that it produces through rents. The value of the rental real estate is de-pendent on jobs, salaries, demographics, local industry, and supply and demand of affordable housing. In a housing crash, the demand for rental units often goes up, which means rents increase causing the value of your property to increase. You can control rental real estate and which geographic areas you invest in unlike pa-per assets that allow no control. Finan-cial intelligence is the key to increasing

Focus vs. DiversificationA CPA/Investor’s Analysis

The SJREI Association provides the education and networking necessary to enable individuals to make wise, profitable investments. Whether you have yet to purchase your first invest-ment property, or are working on your hundredth deal, you’ve found the Bay Area’s most dynamic investors asso-ciation. Receive REI Voice™ Magazine for $19.95 —

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Most financial advisors recommend diversification

but they do not really diversify.

By Mathew Owens, CPAwww.ocgproperties.com


It’s a New Year — time to re-evaluate, improve and refine our daily habits and actions for success. Small, incremen-

tal changes can reap big rewards in terms of productivity and busi-ness opportunities. As a planner myself, I understand the significance of establish-ing goals to create new outcomes. If we can break those down into smaller more manageable components we can achieve results more quickly.

Here are some things to consider as you plan for another year:

• If you don’t like things in your life you have the power to change them by simply changing yourself — things don’t change, but you can! Any little modification can make a difference — an introduction of something new, an exercise routine, a dai-ly reading schedule, journaling, or simply bonding with your family.

• How you present yourself to the world makes a difference, how you look, how you speak, how you interact with others, who you interact with, what you read, what you spend your time doing. What is your message to the world? I am here, ready to take on a new challenge and I want to change the world in a positive way... it is your choice. • I have always been incredibly optimis-

tic but now as I grow and learn to navigate this game called life, I have come to embrace this gift that I have been blessed with every day. How do I do that? I start my day with a prayer of gratitude naming the

things that I am grateful for — my fam-ily, my warm cozy home, my friends, a hot cup of tea, a great book, quiet time to think, process or write, my warm SJREI business community.

By appreciating these things, and so many other seemingly trivial things I am happier, more content and I realize that what I appreciate grows more secure, and becomes more defined in my life.

Try it — I think you will like it too.

• There are people who drag us down — nay sayers if you will. Remove those people from your life. If they are your family members, show them a new way to be by mirroring for them your great new attitude. My Dad shared with me (he ran a company, and had a family of six daughters, two sons and a wife!) that sometimes he survived by “psychologi-cally absenting himself” from negative situations.

How do you do that? Tune them out, capitulate, get away from situations, people and attitudes that don’t propel you forward. Remember to be gentle as you work on this and have patience with

yourself, this is a process it does not hap-pen over-night.

• Lastly, live in the moment — whatever you are doing give it 100% of your atten-tion. Walking the dog, having tea with a friend, working, talking to your children - be present, enjoy that moment. Your fam-ily and friends will love you for this level of attention — very few people can truly do this. Be wary of electronics they can be thieves of our time, and our spirit...the things that renew you are not material — they are love, companionship, friendship, family, community, giving back.

Be brave, do whatever it takes to ac-complish new results — Make 2012 your best year yet!Geraldine Barry is founder and president of SJREI Association the premier educa-tional and networking association for real estate investors in the Bay area. Under Geraldine’s leadership SJREI has grown from a half-dozen investors to a vibrant three chapter organization with over 400 investors attending monthly meetings.

In addition to leading SJREI, Geraldine is the frequent host of the radio program, Going Beyond Real Estate, a regular guest on the nationally broadcasted NT-DTV, publisher of award winning publica-tion REI Voice Magazine, and producer of the annual Bay Area Real Estate Expo. Geraldine resides in Silicon Valley, and is the proud mother of Colin and Claire, her two children. Contact Geraldine Barry at: [email protected]

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ating $10,000 of monthly cashflow? If you get nothing from this article, please get this. First, if you ever expect to create wealth and experience any sort of financial independence while you’re still young enough to enjoy it, you’ll need to adopt, embrace and implement a residual mindset. Second, don’t get stopped in your pursuit of residual income by con-fusing the value of cash and cashflow. Making the transition from accumulator to residual-incomer and creating wealth can also take some time, but by maintaing a focus on cashflow, the time it takes will be nothing in the remote vicinity of the 40 year traditional alternative.

Matt Theriault is an author, entrepreneur and host of the fastest growing real estate investing podcast on iTunes. Visit www.EpicProfessionals.com for more infor-mation and to retrieve his free real estate investing course How to Do Deals - No Money Required.

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Price: $110,000, fully renovated, built 2005Currently Rented for $1,195 “Contact me for a free cash flow analysis”

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to travel. For if someday doesn’t arrive, it’s not like you can go back and try again. You’re essentially at the end of life’s road once you discover if it worked for you or not. And what if it doesn’t? Then what?! There is a road less traveled that de-serves your consideration. Additionally, you might want to know that it’s faster and easier, as well. I’ll prove it to you. The alternative road exists within a “re-sidual” mindset. The group that chooses this road lives life quite differently. They

wake up every day with a focus of creat-ing or managing systems to work for their money as opposed to they themselves working for their money. Their focus is placed on creating residual income, whether through a business system or their money earning money itself. They know that once their residual income ex-ceeds their expenses, the accumulation of assets and the creation of wealth will essentially happen automatically whether they get up and go to work or not; And it doesn’t take 40 years for wealth to be created in this manner, either... far from it. Contrary to the “risky” label this road to wealth is commonly given, it is the road that gives you the greatest shot at creating wealth. Maybe this is news to you, maybe it’s something you’ve known for a while or maybe it’s just plain and simple common sense. Regardless of where you stand, one would be hard-pressed to formulate a solid argument against it. The writ-ing is on the wall. Depending on which source you reference, the “traditional” road is failing 90-95% of the country, 4%

are just squeaking by and only 1% of the population actually reaches the age of 65 “wealthy.” A “residual” mindset is what this wealthy 1% has in common. It has been said that success leaves clues. In this context, however, success is leaving evi-dence, isn’t it? As more and more studies and research are conducted, the concept of residual in-come and its wealth-creating power are becoming more common knowledge by the day. That being the case, one has to

wonder why more people don’t ap-ply this knowledge once it has been learned. It’s simple, actually. People looking to make the transition from “accumulator” to “residual incomer” confuse cash and cashflow. Within the real estate investing arena, this con-fusion can be clearly illustrated, and here’s how... One, among many, of the attrac-tive attributes real estate investing possesses is that it can produce two

types of income. Real estate can produce large amounts of cash through short term strategies like fix-and-flip and wholesal-ing. Real estate can also produce smaller amounts of monthly cashflow through longer term strategies like buy-and-hold and lease optioning. The accumulator looking to transition to residual-incomer will frequently, if not always, choose a $30,000 fix-and-flip cash pay out over a $300 a month buy-and-hold cashflow. Al-though they have the greatest intentions of becoming a residual-incomer, their accu-mulation mindset is so ingrained that they can’t resist the big cash pay outs real es-tate offers. It’s their mindset that prevents them from recognizing the true value of $300 of monthly cashflow. And because the accumulator tragically confuses $300 of cash with $300 of cashflow, they con-tinue to exchange time for dollars always in search of that next “flip” and never take that first step toward becoming a residual-incomer. Can you blame them, though? It’s easy to get caught up in the moment, right? What’s so appealing about $300 of cash-

flow when you’ve got $30,000 of cash staring you in the face? I agree, there’s nothing sexy about $300, it has little value today. It might buy you a pair of designer jeans or a fancy dinner and a bottle of wine. However, $300 of cashflow to the residual-incomer has tremendous value. You see, as I’m writing this article, the financial institution ING is advertising a 1% interest rate on their money market account. I choose to use ING as an exam-ple because it’s just about the most gener-

ous savings account available today to the average consumer. So I’ll ask you, “How much cash would you need to deposit into that ING account to generate $300 of monthly cashflow?”

$360,000!

An ING money market account balance of $360,000 would have to be maintained to generate $300 of monthly cashflow. In summary, $300 of cash is worth $300 of cash, but $300 of monthly cashflow is worth $360,000 of cash sitting in the most generous savings account available today. Do you get the difference now? And here’s more... Which is a longer, not to mention more more difficult, road to travel? Accumulating $360,000 of cash? Or, creating $300 a month of cash-flow? You know your situation, skills and re-sources better than I do, but creating $300 a month of cashflow not only sounds fast-er and easier, it is do-able. It’s realistic, as opposed to the traditional-get-rich-slow program that has the country by the balls. Alright, alright... I can hear it now. No, $300 of cashflow isn’t going to make a dramatic difference in your lifestyle. So what would? $5,000 a month? $10,000 a month? By performing the same math with today’s interest rates, you would need to accumulate and deposit $12,000,000 of cash into that ING account to cre-ate $10,000 a month of cashflow. Again, which is a longer more difficult road? Ac-cumulating $12,000,000 of cash? Or, cre-

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Most of America was raised in a household where the road to wealth and success was paved with the

ideology of going to school, getting good grades, getting a good job, investing 10% of your income, maxing out the 401(k), cutting up credit cards and clipping cou-pons. If this is you, STOP IT! That sys-tem is broken. It’s this “traditional” road to success that could potentially be the

demise of society as we know it, if not the entire country itself. It’s no secret that the current economy is a trying one for most. However, for some, it’s the most profitable and suc-cessful economy they’ve ever experi-enced, or will ever experience again. Why are some succeeding today while most are not? What road are they travel-ing? What are they doing differently? I could draw your attention to a number of differences between the two group’s actions, yet what ultimately separates the two is little more than mindset. Those traveling that antiquated tradi-tional road to success possess an “ac-cumulation” mindset. This group wakes up every day and goes to work for their money. Their focus, whether consciously or subconsciously, is placed on exchang-ing time for dollars with the hopes at some point in their life their income will rise, and their investments will perform, to a level that someday they will have accumulated enough to retire. Sure, this mindset has worked for some, but it’s failing the vast majority of our population. The reason being is that this vast majority doesn’t start ac-cumulating (i.e. saving, investing) early enough or possess the discipline to fol-low through to the end. Accumulation takes time, a lot of time. This entire ap-proach to creating wealth is based on a principle called “someday.” Unfortu-nately, someday never seems to arrive. And for the few of which someday does arrive, it’s a 40 to 50 year journey. Contrary to the “safe” label this road to wealth has been given, it’s a risky road

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How to Create Wealth: Cash vs. CashflowBy Matt Theriault, EpicRealEstateInvesting.com and www.REICcashflow.com


Return on investment. That’s the whole point right? Being able to accurately determine

what your dollar is producing is a critical step. Not just after you’ve made your investment, but it is also a critical step in making deci-sions on future investments. For instance, accurately predicting the return on an “all-cash” pur-chase, versus one that is financed can produce very stark results.

Let’s take a look at a typical income-producing residential property. The first step is to identify all the variables we are working with. In this example, we are cal-culating a rate of return over the course of one year.

Net Operating Income (NOI) Every month, you get a happy rent check in the mail. This is your “Gross Rental Income.” Now, let’s take a look at the cost of your investment. For most prop-erties, these are pretty standard and easy to identify.

For this example we will assume the ba-sics: Insurance, taxes, property manage-ment, and a maintenance reserve. We will also assume that the property has a leased

tenant in place. If you did not have a leased tenant in place, you would con-sider this cal-culation as if it were part of a pro forma. You would have to consider things like “Vacancy

Rates,” “Rent Bumps,” and “Tax Con-sequences” and deduct them from your “Gross Rental Income.”

Here is what this calculation looks like:Gross Rental Rate + $12,000Taxes - $1,000Insurance - $500Property Management - $1600Maintenance Reserve - $360Net Operating Income = $8,540

That’s it. Simple right? When you hear talk about “Cashflow”, it is your NOI that we are talking about. So, we have iden-tified our “Gross Rental Rate.” and our “Net Operating income” or “Cashflow.”

Let’s go ahead and calculate our actual ROI for the year assuming that the pur-

Calculate Your ROIReturn On Investment

chase price for this home was $85,000. There are two different ways we can go here. Assuming we paid cash for the property, the ROI calculation would look like this:

$8540 / $85,000 = .1005

So using these assumptions, we have an ROI of 10%. You might be thinking to yourself: “Wow, what if I managed the property myself, or eliminated the main-tenance reserve”. These are great obser-vations, but we’ll talk about that later.

Financing vs. All-Cash PurchaseLet’s assume you financed this property. Again, we’ll use some typical numbers to illustrate. After your 25% down payment ($21,250), you leave behind an amount of $63,750 that is financed at 6% for 30 years.

Here is what your calculation would look like:Gross Rental Rate + $12,000Taxes - $1,000Insurance - $500Property Management - $1600Maintenance Reserve - $360Principle and Interest - $4,586.52

Net Operating Income = $3,953.48

So, that’s a big difference right? You bet. Let’s take a look at the difference in your actual ROI.

Remember, your Cash Flow is calcu-lated against the dollar amount you have invested. In this case your total out-of pocket investment is your down payment of $21,250.

$3,953.48 / $21,250 = .1860

So you can see that by financing this par-ticular property, you are actually receiv-ing an ROI of 18.6%.

The Value of Your TimeRemember those thoughts you had earlier about reducing things like maintenance reserves or eliminating property manage-ment? As you can see, calculating your ROI is a simple and powerful tool that you can use to make decisions on poten-tial investments. But there is something missing from this equation — the value of your time.

For some reason, we have the tendency to consider our own time as some infinite

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Continued on pg. 10


By Daniel CunninghamPresident, Leonardo Management, Inc.

One of the interesting things about managing multi-family apartments is that two simi-lar apartment communities,

in close proximity, can have such vastly different levels of success even though the product might be quite comparable. Vacancies and rentals can vary greatly among similar product types within the same market. One property can appear well-kept and wel-coming; the other, com-pletely uninviting. Staff at one property may convert a greater number of tours into leases than the other. What makes the differ-ence in a well-run, highly occupied property isn’t luck, and most of the time it isn’t even related to the physical property itself. The most signifi-cant factor, responsible for at least 90% of the success in this business, is the lo-cal staff running operations. Behind every successful property is a manager who is passionate about the job and, even more important, is thorough and consistent in the day-to-day management—a manager who really sweats the details.

And therein lies the problem. There are a LOT of details involved in running any apartment building, and trying to “sweat” all of them can cause burnout in even the best managers. You see, an apartment building is a self-contained, (hopefully) self-sustaining business, and a compli-cated one at that. It has income and ex-penses, labor costs and marketing plans, budgets versus projections, and even hu-man resources and legal matters that must be dealt with. Often the lion’s share of co-ordinating all this falls to a lone property manager. There are a bazillion moving parts, hundreds of levers to manipulate

to maximize profit, and dozens of distinct roles a manager must play throughout the week to get it all done. On any given day, a manager may act as psychiatrist, coun-selor, contractor, lifeguard, janitor, police officer, accountant, salesperson, IT tech-nician, gardener, cheerleader, marketing rep, and lawyer, just to name a few. I’m getting tired just writing about it all and,

frankly, it’s more than some people can han-dle if they aren’t able to prioritize. It’s tre-mendously difficult to keep focused on what’s most impor-tant when there are so many demands on one’s time. And when an individual proper-ty can be worth tens of millions of dollars with revenues of sev-eral million dollars a year, losing focus for even just a short time

can have serious financial ramifications.I learned all this the hard way. I had

been an asset manager most of my career — most notably director of asset manage-ment for AIMCO, one of the largest own-ers of apartment buildings in the United States. So when the developer for whom I worked in 2007 asked me to start an in-house property management company for them, I figured it would be a piece of cake.

I couldn’t have been more wrong. The year we took over property management for the 1,300 units owned by that devel-oper turned out to be one of the most chal-lenging of my career. My prior high-level “asset management” experience had im-printed a hands-off instinct, which left too many details to the on-site staff, and the wheels started to come off the cart. For every process that lacked a solid, well-documented procedure in place, the man-agers would quickly default to whatever habits they had developed under a pre-

vious company or whatever process was easiest for them. Even when we did have a defined process, I found that if we didn’t constantly audit compliance with the pro-cedure, invariably it would be neglected in practice. We adopted a very “reactive” mode of management, whereby we would get one problem under control just as the next one would arise, with no opportunity to plan and get ahead of the game.

That was when I invented the “Nested Action Cycle” (the “NAC”) approach to property management. I mapped out every daily, weekly, monthly and annual task that needed to be done and worked out a sys-tem to track them so that we’d never drop any balls on the operations side ever again. The shorter cycles nested within the longer cycles, ultimately producing a clockwork-like conductor of management activity that covered the gamut of everything a manager needs to think about to efficiently and ef-fectively operate an apartment community. By “dialing” the NAC to today’s date, the nested action cycles would instantly pro-duce all of the tasks a manager should be doing on that date. The NAC was difficult to formulate, but amazingly straightfor-ward in its application. Taken as a whole it actually provides an entire year’s worth of explicit day-by-day activities that, when followed in a regular, disciplined fashion, without question will result in a meticu-lously managed property that will enjoy higher occupancy, lower expenses, and better resident satisfaction than neighbor-ing competitors, with the end result being a more profitable business.

The NAC gave us such an advantage in operating these properties that I was in-spired to buy that management company from the developer and establish a pure third-party management company of my own, which would be based on the prin-cipals established by the NAC. That be-

came Leonardo Management and we started using the tag line “The Science of Property Management” to recognize this new, methodical way of approaching operations.

But then we took things once step fur-ther. Once the NAC was formulated and in use by the property managers within Leonardo, we then used the same ap-proach to develop a software platform which we called the Leonardo Intel-ligent Property Management System (IPM). Now all our managers have to do is log into IPM every morning and it tells them exactly what they need to be do-ing that day, that week, and that month. Like a friendly electronic Regional Man-ager looking over their shoulder offering guidance, IPM never takes a vacation, never gets distracted with other issues at other properties, and never, ever forgets what needs to be done. It sweats all those details I mentioned earlier and so now we can manage more properties with fewer regional staff and still make sure balls never get dropped. Owners can log in any time to see what action items are complete and when they were done. It provides unprecedented transparency and our clients love it.

We’ve had lots of requests to license the Leonardo IPM and we’re taking an honest look at that possibility. But until that time comes, Leonardo Management benefits by having a real and proprietary value proposition to offer property own-ers — a way to do things better. You can read more about us and Leonardo IPM at www.leonardomgmt.com. We’d be pleased to offer a demo to any interested property owner.

To receive a free demo, please contact Leonardo Management at 213.674.4140 or email [email protected]

An Innovative Approach to Property Operations

Leonardo Management & the Nested Action Cycle

About Leonardo Management, Inc.Headquartered in Santa Monica, Calif., Leonardo Management was es-

tablished in 2008 by veteran real estate executive Daniel Cunningham and has grown quickly to provide third party management services to com-mercial office, retail and multifamily clients throughout California, Arizona, Colorado and New Mexico.

Leonardo’s customer service and leasing was recently ranked #1 in the entire country by Ellis Partners in Mystery Shopping and by utilizing its proprietary software, which automates on-site operations. Leonardo also offers a one-two punch in operations and leasing, which adds unprecedent-ed value to their clients.

Representatives can be reached at:[email protected] or at 213-674-4140

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The amount of risk you take with your money should be related to your age. The younger you are, the more risk you can handle. But, don’t be foolish: One should never invest in something they do not ful-ly understand. If stocks interest you, start learning about the market. Learn how to decipher financial statements. If real es-tate is your game, start attending REIAs (Real Estate Investment Associations).

Also, don’t get greedy! I’ve known in-vestors so desperate for that 20% return that they gave their money to unscrupu-lous companies only to never see their principal again! Guard your principle, settle for less interest if need be. If the money is lost, it can take years to rebuild.

4. Don’t Follow the Crowd. Most Amer-icans are broke, why on Earth would you follow their bad habits? Trying to keep up with your neighbors can destroy your chances of financial freedom. Also be mindful of competition between family members. For example, some families love to outdo each other in their travels. It’s non-stop cruises, trips to Hawaii, and weekends in Las Vegas. But guess what? They’re BROKE! Some people who know me may make fun of my frugality. They can jest all they want because I’ll be laughing all the way to the bank!

Many wealthy people are odd and ec-centric, I used to think that money made them like that, but now I realize that they just don’t care about what others think. It was probably this defiant attitude that helped make them rich in the first place.

5. Saving is Sexy, It’s Fun to Be Frugal. If saving is a deplorable chore, you won’t

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Marck de Latour is a native New Zealander currently living in the Kansas City area. He graduated from the University of Missouri, Kansas City with an MBA in International Business Management. For the past 10 years, he has been a full-time real estate investor, spe-cializing in the pre-foreclosure market in the Kansas City area. Marck currently owns over 90 properties, all acquired using techniques that he developed into a program, which he created to help others. He has a thorough understanding of all phases of the foreclosure process, from pre-foreclosure negotiations, acquisition, courthouse foreclosure auctions, rehab, leasing and property management. Be sure to give Marck a ring to learn how easy it is to start your cashflow portfolio.

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do it. If clipping coupons and wearing off-the-rack clothes is beneath you, then you need to change the attitude. Start making a game out of saving and being frugal. See how much money you can put away in the cookie jar each week. Before you spend a dime, consciously think about the action you are taking. Figure out if there is a better way to get what you need at a lower cost. Can you buy it second hand? Does someone else you know need the same thing? Can you barter an item or ser-vice in exchange for what it is you need? Hold on to your pennies because they can accumulate into a fortune.

6. Step it Up a Notch. Let’s get one thing straight, the 4-hour work week is a com-plete myth. The reality is: Success doesn’t come easy. If it did, everyone would have a few million dollars in their bank ac-count.

The wealthy people I know who were not born with a silver spoon toiled end-less hours to get where they are. Some-times they worked two jobs just to be able to pay off college debt or save enough money for a down payment on a home. Others returned to school and juggled employment and family obligations for many years.

If you are not happy with your lot in life and you feel you deserve better, don’t just wish it to be so and wait. TAKE AC-TION. Don’t be lazy, don’t make excuses, and don’t feel sorry for yourself. Stay positive, keep focused and you will see abundance before you know it.

I hope these ideas will inspire and light your path towards financial freedom. I welcome your comments, please contact me at: [email protected] or 310.499.9545

All hard work brings a profit, but mere talk leads only to poverty. (Proverbs 14:23)

DAN HOLZER - JVD ASSET MANAGEMENTDan Holzer is the chief investment officer of JVD Asset Management located in San Diego. JVD is one of the top 10 purchas-ers of first trust deeds at foreclosure auc-tions in San Diego County. In fact, they have purchased well over $25 million in distressed real estate. What is the secret to their success? “We have developed our own proprietary software to select profit-able homes with a 94% accuracy,” says Holzer. Past returns for investors ranged from 10% to 20% ROI. If investing in California distressed properties is of in-terest to you, be sure to contact Dan with JVD Asset Management.

JVD Asset Management, LLCwww.jvdassetmanagement.comPh: (619) 794-1004

6 Keys for Financial Freedom, pg. 3


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property management? Is the cost of your time competitive with that of a property management company? How many hours can you devote to marketing your rental property? How many hours can you devote to showing your property? How many hours can you devote to screening ten-ants? How many hours can you devote to managing maintenance and repairs? Can you do all this and still ensure the property is leased starting on day one of the investment period?

Let’s look at the same ROI calculation (paid for in cash) but add some reasonable assump-tions based on you managing the property vs. your property man-agement firm. We will assume you spent a total of twenty-five hours marketing, showing, pro-

cessing rental applications and leasing your property alone. Let’s also assume, you weren’t quite able to get the property leased in month one, so you only have eleven months of rental in-come.

Here is what your ROI calcu-lation (accounting for your time) might look like:

Gross Rental Rate + $11,000Taxes - $1,000Insurance - $500Self-Managed - $1,575Maintenance Reserve - $360Net Operating Income = $7,565Your ROI $7,565 / $85000 = .089 or 8.9%.

Again, this example is only meant to illustrate what your in-vestment returns might look like

if you viewed the value of your time the same way you view your cash out of pocket. You have spent almost as much in time getting the property leased as your property management company would have billed you for the entire year.

To some, this is not only an ac-ceptable expense, but an essen-tial one. Some may not have the time to devote to being actively involved in their investments. It isn’t the point of this article to judge, only to emphasize how critical it is that you properly evaluate your ROI. Only then will you be able to accurately determine your investment’s real worth.

Deborah Gordon is a Real Es-tate Investment Specialist at In-vest Arizona.

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Vol. 1 • No. 4 • 2011

INSIDE:Get Out of theRat Race withPassive Income

Discover Why Now is the Time to Buy!

Learn fromthe RE Divas

Welcome to Sam’s RE Club at the Beverly Hills Country Club

Make 2012 the Year of SUCCESS!You May Also Join by Calling:

310.499.9545or email: [email protected]

inside our expos & mixers

Above: LAPD cop turned real estate mogul Mike Barker with REO Bailout.

Above: Sam Tunnel (right) with HSM Investment Group, Inc. joined our event from Kansas City, MO.

Above photo (right): Sylvia Saldivar Valdez representing Black Belt Investors. Above photo (left): Anthony Patrick and Richard Edrosolin with WhiteRock Capital.

Above photos (left): Karen and Stan Baggett with Emerge Investments, LLC; (right) The HomeUnion Services team had a great vendor booth.

Kathy Fettke (right) with RealWealthNetwork.com with Lori Hinrichs from TrueWholesaleHouses.com; Above: Kaaren Hall with uDirect IRA Services; Right: Leonardo Management Team.

Left: Premier Equity joins us from Alabama and Mis-sissippi; Above: David Dziedzic from Arizona’s Hous-ing Angels; Right: Chris Clothier and Mo Woods from MemphisInvest.com with publisher Linda Pliagas.

Left to right: Team Gerchick showcased deals from Arizona; Tom Wilson (wearing a tie), an investor/broker, likes the Dallas market; Matt Theriault from Epic Profession-als and his assistant, gave away books; Ace Capital Group spoke on land banking; Cassandra Harris from the Royal Medals Group taught guests about investing in gold.


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Each one of these companies also pays dividends to shareholders. What’s a divi-dend? A dividend is your piece of the company’s profits distributed on a quarter-ly basis. So, for example, Coke currently pays .41 per share every three months to its shareholders. If you currently own one hundred shares of KO, you would receive a check in the amount of $41 in your mail box every thirteen weeks. If you owned one thousand shares of KO, you would receive a check for $410 every quarter in your mail box.

Imagine for a moment you owned five thousand shares of Coca Cola stock. That being the case, your quarterly dividend check would be $2,050 per quarter. That’s

over $8,000 per year in passive dividend income. This kind of passive income re-sults from being a shareholder in one of the largest multi-national corporations on

the planet. Best of all, you never have to leave home or step foot in a corporate board room to collect your share of the company’s profits.

Reinvesting Your Stock Dividends

Many investors choose to reinvest their dividends back into the company’s stock. Divi-dend reinvesting is a

fast and popular way of building wealthy over time.

Question: How fast could you build wealth if instead of waiting for Coca Cola

stock to rise, you strategically “build a po-sition?” Building a position means that you purchase additional shares when the stock increases five dollars above your last purchase point. At the Wealthy In-vestor program, I teach this technique to self-directed investors who trade stocks from home. Building positions on long term dividend paying stock allows any-one with an open mind to change their life financially.

Growth Stocks In Today’s World

Now let’s take a look at two growth stocks. What’s a growth stock? In the Wealthy Investor program we refer to a growth stock as any stock that is not a member of the Dow Jones Industrial Av-

erage. That would include a stock like Google. In the past ten years Google’s stock price has gone from $100 to over $600 per share.

A $1,000 investment would be worth over $6,000 today. Not bad. Another growth stock that has soared over is Amazon.com. Over the past ten years, as on-line shopping has become more of a main stay, Amazon.com (symbol AMZN) has made shareholders rich. The stock price has gone from a low of $20 to a high of over $200 — $1,000 invested ten years ago would be worth $9,000 today. That means a $10,000 invest-ment ten years ago would be worth $100,000 today.

Those who have a financial education and understood the power of investing in e-com-merce have benefited greatly. Here’s how: A $100,000 invest-ment in Amazon.com ten years ago would be worth $1,000,000 today. So what’s’ the moral of the story?

Anyone can create wealth in the stock market just by paying attention to the products and services they see around them every day. I’d like to think there’s sweet old lady in all of us who deserves to be rich from investing in stocks.

When Hollywood actors and Silicon Valley executives want to increase their wealth, they turn to Tyrone Jackson. He’s the founder and creator of the Wealthy Investor program. Each month, Mr. Jackson teaches beginners and seasoned stock market investors how to pro-duce monthly income ranging from $5,000 to $30,000. He’s also the creator of The Wealthy Investor’s Guide to Stock Mar-ket audio CD series. Visit www.TheWealthyInvestor.net for de-tails. A frequent radio and TV guest, Mr. Jackson has been seen on CNNFN and NBC’s The Other Half. Send us your feedback on this month’s column. We’d love to hear from you.

Please email feedback@the wealthyinvestor.net

Create Stock Market Wealth, pg. 1

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