Embed Size (px)
DESCRIPTION
The Voice of the Profitable Real Estate Investor and the most recent endeavor of SJREI Association.
Citation preview
Nov. 2010 REI VOICE �1
BRUCE NORRIS DRAWS WISDOM FROM EXPERIENCE
MANAGING THE MARGIN • BEST CASH FLOW STATES • ASSET PROTECTION GAMBITS • 4 REASONS TO BUY NOW
www.reivoice.com November 2010
� REI VOICE Nov. 2010
Page 1
LOCATION: DESERT HOT
SPRINGS, CA
APPRAISED VALUE: $86,000
LOAN AMOUNT: $50,000
LOAN TO VALUE: 58.13%
PAYMENT TO INVESTOR: $375
RENT RANGE: $900-$1400
TERM OF LOAN: 8 YEARS
Property Facts:
3 BEDROOM, 2 BATHROOMS, 1,323 SF, 8,712 SF. LOT, BUILT IN 1990.
#
1 $900 TH 3 br/2 ba 1,294 sqft 66444 Desert View Ave Desert Hot Springs,
CA 92240
7/13/2010
2 $900 SFH 3 br/2 ba 1,412
sqft
13725 Richard Way Desert Hot Springs, CA
92240
7/13/2010
3 $900 SFH 3 br/2 ba 1,200
sqft
65635 Avenida Ladera Desert Hot Springs,
CA 92240
7/13/2010
4 $1,025 SFH 3 br/2 ba 1,371
sqft
13227 Calle Amapola Desert Hot Springs,
CA 92240
7/13/2010
5 $1,100 SFH 3 br/2 ba 1,385
sqft
10775 Ambrosio Dr Desert Hot Springs, CA
92240
7/13/2010
6 $1,200 SFH 3 br/2 ba 1,550
sqft
10761 San Miguel Rd Desert Hot Springs,
CA 92240
7/13/2010
7 $1,350 SFH 3 br/2 ba 1,904
sqft
64735 Pinehurst Cir Desert Hot Springs, CA
92240
7/13/2010
8 $1,400 SFH 3 br/2 ba 1,634
sqft
64513 Spyglass Ave Desert Hot Springs, CA
92240
7/13/2010
If you are interested in this trust deed investment and would like to see the entire appraisal,
please call the of ce at 951-780-5856 and ask for Craig Hill.
We currently work with several self-directed IRA companies to enable our investors to fund
these through retirement accounts. If you’d like a list of IRA rms, please call the of ce and
ask for Aaron Norris or Diana Barlet.
Below are a few recent examples of trust deeds available through The Norris Group.
Location: Fontana, CAAppraised Value: $170,000Loan Amount: $102,000Loan to Value: 60%Payment to Investor: $765 per month
Location: Desert Hot Springs, CAAppraised Value: $86,000Loan Amount: $50,000Loan to Value: 58.13%Payment to Investor: $375 per month
Location: Hesperia, CAAppraised Value: $92,000Loan Amount: $55,000Loan to Value: 59.78%Payment to Investor: $412 per month
Location: Victorville, CAAppraised Value: $75,000Loan Amount: $45,000Loan to Value: 60%Payment to Investor: $562 per month
To receive property information sheets of available trust deeds and a copy of our free book and DVD on trust deed investing, call our office at 951-780-5856.
Page 1
LOCATION: FONTANA, CAAPPRAISED VALUE: $170,000LOAN AMOUNT: $102,000LOAN TO VALUE: 60%PAYMENT TO INVESTOR: $765RENTED: $1,650 PER MONTHTERM OF LOAN: 8 YEARS
Property Facts:Duplex with total of 3 bedroom, 2 Bathrooms, 1,470 sf, 9,000 sf. lot, built in 1949. One two bed-
room on bath unit and single one bedroom one bathroom.
If you are interested in this trust deed investment and would like to see the entire appraisal,
please call the of ce at 951-780-5856 and ask for Craig Hill.
Zilpy.com – Rents (One Bedroom) #
1 $775 TH 1 br/ 9351 Bennett Ave, Fontana CA, 92335 6/4/2010
2$750 TH 1 br/
Bennett & Randall, Fontana CA, 92335 5/8/2010
3 $750 SFH 1 br/1 ba 8569 Rosena Ave, Fontana CA, 92335 7/15/2010
4$850 SFH 1 br/
16550 Arrow Blvd, Fontana CA, 92335 7/3/2010
5 $650 SFH 1 br/ 8047 Cypress, Fontana CA, 92336 6/4/2010
6$775 SFH 1 br/1 ba Sierra Ave & Valencia Ave, Fontana CA,
92335
1/17/2010
7 $675 SFH 1 br/1 ba Sierra Ave, Fontana CA, 92335 1/8/2010
Zilpy.com – Rents (Two Bedroom)#
1 $895 TH 2 br/1.5 ba 875 sqft 9151 Date St, Fontana CA, 92335 7/15/201
0
2$945 TH 2 br/1.5 ba
16235 Randall Ave, Fontana CA, 92335 7/15/2010
3 $950 TH 2 br/1 ba 17898 Marygold Ave, Bloomington CA,
92316 5/8/2010
4$945 TH 2 br/
Randall Ave & Citrus Ave, Fontana CA,
92335 7/3/2010
5$1,100 SFH 2 br/1 ba
16751 Hawthorne Ave, Fontana CA, 92335
7/3/2010
6$850 SFH 2 br/1 ba 800 sqft 9210 Pepper, Fontana CA, 92335
5/18/2010
7 $850 SFH 2 br/1 ba 9258 Pepper Ave, Fontana CA, 92335 5/8/2010
8$800 SFH 2 br/1 ba 950 sqft 9142 Pepper Ave, Fontana CA, 92335
40374
9 $775 SFH 2 br/1 ba 875 sqft 9148 Pepper Ave, Fontana CA, 92335 40264
10 $950 SFH 2 br/1 ba9040 Cypress Ave, Fontana CA, 92335 40333
1 bedroom
2 bedroom
w w w.TNGt rustdeeds.com951.780. 5856
Cal i for nia D ep ar tm ent of R eal E s t ate, R eal E s t ate Bro kerBr uce N or r is F inancia l G roup Inc .
D BA T h e N or r is G roupD R E L icens e 01219 911
California Trust Deed Investing
Savings accounts, CDs, and stocks have offered dismal returns over the past several years. The Norris Group’s trust deed investments earn 9% return backed
real estate.
Since 1997, our experienced team of experts has originated California trust deed investments to private individuals,
accounts (including IRAs).
of dollars every month and demand continues to increase. We scrutinize
a trust deed is ever presented to our private money sources.
resources are helping investors clean
DVD on trust deed investing.
Not everyone has the time or the expertise necessary to be a full-time real estate investor. But there’s still a way to take advantage of the unbelievable opportunity at hand. Welcome to the world of trust deed investing.
1
Call 951-780 -5856 or v isit our web
site today for your
Free Book and DVD.
California Trust Deed Investingby
Navigat ing the prof i table wor ld of t rust deed invest ing with the help of one of Cal i fornia’s leading hard money lending companies.
B y B ru ce N o rri s
8.875x11-IE-Magazine.indd 1 10/16/2010 10:52:31 AM
Nov. 2010 REI VOICE �
TRENDS
6The Self-Destructive Behavior of Loan ServicersHoward Blum recaps the craziness of the robo-signing debacle and what it means for the future.
8The Silver Lining in LendingMortgage broker Michael Ryan on why now is a great time to borrow.
ANALYSIS
11Managing the MarginBenjamin Franklin got it right according to investor/analyst Sean O’Toole. He looks at what it takes to make a successful entrepreneur and finds one element in common.
12High Tech Tools Redefine Cash Flow AnalysisConventional wisdom about the best predictors of future cash flow were put to the test by former engineer and current investor Tom Wilson. By removing preconceptions from the equation, he yielded surprising results.
ADVICE
14Financial Lessons from the Ides of OctoberThree decades in real estate, taught veteran investor and market timing expert Bruce Norris how to roll with the punches. He shares his timeless advice for surviving the real estate roller coaster.
16Navigate the Note Business with your IRA Seller financing is not for the risk adverse, but with advice from Lisa Moren Bromma, investors can make wise decisions and very, very lucrative, tax sheltered investments.
18Asset Protection: A Common Sense ApproachUnlike the frightening hyperbole spun by purveyors of elaborate and costly asset protection schemes, Attorney Jeffrey B. Hare recommends that real estate asset protection begins with the basics.
BASICS
19Who Will Receive Your Real Estate Legacy? Ensuring that your heirs receive the lion’s share of your estate takes planning. Nancy Chillag, attorney & CPA, reveals the fundamentals of estate planning.
21Year End Tax PlanningEnrolled agent Richard Smith provides a 47-point checklist for reducing your �0�0 tax liability. Why not a 50-point checklist? He reduced his advice by 6% to illustrate his methods.
22Entry Level InvestorInvestor/broker Stuart Baeriswyl gives four reasons to pull the trigger and invest now while market forces favor the buyer.
FEATURES
10Allure of Social MediaStop asking “How to” and begin asking “Why to” is the advice of marketing and social media expert Aaron Norris.
26 Ger’s Top 5
24ResourcesFor the profitable realestate investor
TABLE OF CONTENTSSOUND OPINION—WISE DECISIONS: VOICE OF THE PROFITABLE REAL ESTATE INVESTOR
4 REI VOICE Nov. 2010
We didn’t sit on the fence dithering about the timing or worrying about stretching our resources, we jumped in and this beautiful, informative publication is the result.
If you’re reading this magazine, get ready to take action. This is an exciting time to get involved in real estate investing. Here you’ll find the tools and information you need to become a profit-able real estate investor and to increase the profitability of your existing portfolio. Bruce Norris, undisputed expert on trends in the California real estate market, shares his wisdom for surviving and thriving in real estate; Sean O’Toole, foreclosure data min-ing guru and founder of Foreclo-sureRadar.com, offers important advice for managing the margins in foreclosure properties; Lisa Moren Broma—the original wise woman investor—shares her take on investing in seller-financed notes inside or outside an IRA. These, and many other real estate experts, generously offer valuable information to help you make wise decisions.
Now, get ready for some publishing heresy—reading this magazine alone isn’t enough. Successful people are not loners. They understand the importance of making connections face-to-face. That is where SJREI Asso-ciation comes in. We are the bay area’s premier real estate investing association. With three chapters in the bay area there is no excuse for staying home. We draw hun-dreds of smart, friendly people to our monthly meetings. They come
to hear the best speakers, to stay connected, to collaborate with others, and some come to give back by mentoring those new to real estate investing. We offer new member orientation and have a new member greeter ready to welcome you and help you make connections.
Are you ready to take action? Read this issue of REI Voice cov-er-to-cover and then come to the next meeting of SJREI Asso-ciation. For a schedule of events and to register, visit www.SJREI.org. We start at 6 p.m. with reg-istration and socializing, at 6:15 our Meet the Experts session is designed to answer fundamental and topical information impor-tant to the real estate investor, at 7 p.m. we begin our general meeting and introduce our key-note speaker.
Please take one other action: the support of our affiliate mem-bers and advertisers is essential to getting the voices of these real estate experts to you—please of-fer our affiliates and advertisers your patronage.
Happy reading. I look forward to meeting you personally.
PublisherPresident of SJREI Association
P.S. REI Voice magazine is yet an-
other free benefit of membership in SJREI Association. Yes, we wel-come subscriptions, but why not join instead!
PUBLISHER’S NOTE
WELCOMEACTION is the word of the inaugural edition of REI Voice™ magazine. We at SJREI Association™ saw a need to voice the sound, informed opinions of experts that enable real estate investors to make wise decisions.
GERALdINE BARRyPublisher
President of SJREI Association
REI Voice™ Magazine
A publication of SJREI Assocation™
Publisher
Geraldine Barry | 408-264-3198
editor-in-Chief
Susan Hare | 408-391-8068
Advertising sAles
Nobuko Isomata | 650-922-1786
Contributors
Lisa Moren Broma | [email protected]
Howard Blum | [email protected]
Aaron Norris | [email protected]
Bruce Norris | [email protected]
Sean O’Toole | [email protected]
Art direCtor
Kevin Bell
direCtor, AdministrAtion
Meghan Koslowski | 408-264-3198
Printer
Western Web
Western-Web.net
SJREI Association is a member of NREIA®
REI Voice™ is a publication of SJREI
Association™ www.SJREI.org
Reproduction or use of any editorial or graphic is
prohibited. To request reprints or reprint rights,
contact [email protected].
subsCriPtions
The annual subscription to REI Voice Magazine
is $29.95 for six issues mailed within the United
States. To order a subscription, visit REIVoice.
com/Subscribe.
REI Voice Magazine
c/o SJREI Association
P.O. Box 90542, San Jose, CA 95109-3542
www.REIVoice.com
Copyright © 2010 SJREI Association.
All rights reserved.
Nov. 2010 REI VOICE 5
PURCHASE WITH CONFIDENCE TODAY P O S I T I V E C A S H F L O W T O M O R R 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
“Wilson Investment Properties did the hard work of finding and securing great properties for me along with all of the rehabbing and leasing;, I get the long-term financial reward with a minimum of cash, risk, and time.”
–Phil Kurjan
MENTION REI VOICE MAGAZINE AND RECEIVE ONE-YEAR OF FREE PROPERTY MANAGEMENT WITH YOUR FIRST PURCHASE.
TOM WILSON408-867-1867TomKWilson@earthlink.netTomWilsonProperties.com
TRENDS
ThE SElf-DESTRuCTIVE BEhaVIOR Of lOaN SERVICERS
6 REI VOICE Nov. 2010
Nov. 2010 REI VOICE 7
By Howard BlumThe Financial News & Information Service
Just when we thought things could not get any more con-voluted and confusing in the housing sector, they did. It is almost as if the bank-ing and loan servicers of
America are determined to self-destruct with what they have (and have not) been doing.
No doubt you have already heard about the “Robo Signing” of count-less tens or hundreds of thousands of foreclosure filings done improperly by entities like Bank of America, JPMorgan Chase, Citibank, GMAC Mortgage and likely others too. These servicers had people sign off on the foreclosure pa-perwork without making any attempt to verify the accuracy or authenticity of the information in the documents. Small items like loan balances, payments in arrears and length of the delinquency. Crazy, aye?
A few days ago there was a press release stating that Old Republic Title Company was no longer going to insure the titles of bank owned REO properties that were sold due to the Robo situation. Yesterday there were stories in the press that Old Republic denied making that a firm policy. Coincidently on my way to the site of the annual American Land Title Company convention at the Man-chester Grand Hyatt Hotel in San Diego I shared a taxi with one of the most se-nior executives of Old Republic. He said off the record that the press release was partially accurate and refused to say more when he asked me if I was going to write a story about it. There is more to this story.
Wednesday it was announced that Fidelity National Title had struck a deal with Bank of America that may become the template for all title companies. B of A agreed to give warrantees to Fidelity for every REO property sold thereby tak-ing the liability burden off the shoulders of title companies and put it squarely back on the servicers. You have no idea just how important this is to the wellbe-ing of the industry. A total shutdown of REO sales due to the non-insurability of the titles would have had devastating consequences for the housing sector and the national economy. Even Trea-sury Secretary Geithner commented on how bad this could prove to be for the housing market recovery.
In the past few days it was revealed that all 50 states have launched coor-dinated investigations into the admit-ted wrongdoing of these loan servicers. Bank of America has halted all foreclo-sures nationwide while Citibank, GMAC and JPMorgan Chase halted their fore-closure activity in only 23 states where they had to go through the judicial process and they perjured themselves in courts with their filings. We suspect that at the end of the day the offenders will “cut a deal” with Attorneys Generals across the country.
So, what does the future hold for the housing sector and investors? REO in-ventory may be scarce for a while, but it will be back. What was very promising, realistic or not, was the press release today by the National Association of Realtors that the mortgage market will return to a state of good health by the first quarter of 2012. Do you think they are right? Stay tuned.
Contact Howard Blum at 4�5-898-4��0 [email protected]
ThE SElf-DESTRuCTIVE BEhaVIOR Of lOaN SERVICERS
Howard Blum is the founder and owner of The Financial News and Information Service. The Financial News & Information Service pro-duces news-letters on a daily, weekly and monthly basis. The newsletters draw threads through what is happening in the national economy, where things may be headed and why.
8 REI VOICE Nov. 2010
By Michael Ryan
SILvER LINING: Recession is a word that brings fear and anxiety; however, there is a silver lining. Interest rates are down and so are property values. It is the process of the market right-ing itself from fears of doom, the beauty of our free-market system, and the American way. So let’s stop looking at the fear and take time to find a new be-ginning in the midst of a healthy struggle.
REAL ESTATE: Prices have dropped to a point where in many cases, values are now below the cost to rebuild... Why is this good news? Because this is the point where smart investors like to en-ter the market – buying value.
INTEREST RATES: Slow growth and high unemployment slows the demand for money thus low-ering interest rates and monthly payments. How low? Lower than anyone thought possible. Rates are significantly below what they were in 2005. This represents a near 10% increase in purchasing power for home buyers and in-vestors. Combined with current real estate values, this is a once-in-a-life time opportunity to own Silicon Valley real estate. Don’t miss out!
ExAMPLE: Owner-occupied prop-ertyI. Price: $ 500,000 with
$�00,000 down (�0%)Mortgage Payment for 30-year, 400,000 loan at 4.75% plus tax and insurance (PITI)Monthly PITI: $2,657Comparable Rent: $2,600
II. Price: $ �50,000 with $ �0,000 down (�0%)
TRENDS
LENDING IS A MIX OF FEAR AND DOUBT YET THERE IS A SILVER LINING
Mortgage Payment for 30-year, $120,000 loan @4.75% plus tax and insurance (PITI)Monthly PITI: $822Comparable Rent: $ 1,100
SPECULATIvE MARkET: For distressed markets, the possible upside potential versus downside risks, makes this a market worthy of consideration.
INvESTMENT PROPERTy:
Loans are available although stan-dards have yet to relax. Having said that, investor loans are acces-sible and application standards are quite similar, though how one measures the ability to pay is
different. A notable exception is FHA loans which are not currently available for investors.
Lenders have a definate ex-pectation of investment prop-erty having skilled management, stronger cash positions for cus-tomary repairs, as well as a bet-ter DTI (Debt to Income Ratio) to offset fluctuating cash-flows. Also, while lending for up to 10 mortgaged properties is gener-ally still available, finding a single source to fund over 4 properties is a challenge.
Do investment properties make $ense? The old “yes or no” standard was break-even cash flow with expected annual prop-
erty appreciation of + 10 %. Yet with today’s declining values, net positive cash flow is more critical as property appreciation has declined. In simple terms, “income” is back in income property. This means you can buy more income, with the same amount of money down, while appreciation is more suspect. Thus careful property and in-come evaluation, as a discipline, is needed to succeed, while rules of thumb are no longer accept-able.
Contact Michael Ryan at408-986-�[email protected]
Combining his �9 years of
loan experi-ence with his background in managing property, as well as new land devel-
opment, and construction, Michael Ryan
offers a unique insight into all aspects of real
estate. A real plus in these
day when many lender’s favorite word
is no, when you want yes!
Nov. 2010 REI VOICE 9
Learn How to Invest in Real Estate With Your IRA or 401kA self-directed IRA from Entrust California gives you the freedom to invest in commercial property, rentals, rehabs, and more. As an IRA administra-tor, we will help to educate you on the choices available for self-directed investments, and how to achieve tax-deferred or tax-free growth. Entrust o�ers a full range of retirement accounts, so that you can invest in what you know best.
Get started today! Call Lamarr Baxter at (916) 509-7271.
Find out how you can take advantage of a world of investment options.
www.EntrustCalifornia.com
Lamarr Baxter9245 Laguna Springs Drive
Suite 200Elk Grove, CA 95758
phone: (916) 509-7271fax: (916) 405-4000
�0 REI VOICE Nov. 2010
By Aaron Norris
The allure of social media is that it appears to be a cost-free method of communicating to a massive market. There are elements of truth in this: social media platforms tools like Facebook, YouTube, LinkedIn, and Twitter are free to sign up; and they command the attention of a large portion of society. However, it would be foolish to ignore the costs involved in developing and imple-menting a successful strategy, not to mention the waste of a poorly executed plan.
Without clear planning, time and money can be wasted, and most importantly - the lost oppor-tunity to win friends that influence people.
The new face of the Internet has shifted power to the customer. While we’d like to think the buying cycle ends with a customer sale, web 2.0 platforms have empowered regular consumers with a keypad and an Internet connection to up-set even the largest of Fortune 500 companies (see “United Airlines breaks guitar” on YouTube). One well-connected customer can ei-ther rave or rant your company to stardom or oblivion. It is critical to tap into the potential of your well-connected customers and encour-age the network effect of Word of Mouth Marketing.
Most of us recognize the im-portance of these tools but get overwhelmed with either pulling the trigger or how to properly use these tools. Far too many people get hung up on the “How to” instead of the “Why to.” This issue is elegantly covered in one of our favorite books, The Groundswell by Josh Bernoff and Charlene Li of Forrester Re-search. While this book was writ-
FEATURE
Social media
ten in 2005, the content remains relevant and is a must read for all business owners planning on using social media within their marketing mix.
THE POST METHOdThe book does a great job of
providing useful strategies that can be implemented by any com-pany such as the POST method. POST stands for People, Objective, Strategies, and Technologies and is an easy to remember formula for properly selecting and implement-ing any new marketing venture. The key point in this method is to start with People and understand your customers before considering any type of technology.
People: “Assess your customers’ social activities.”
Understanding the online be-haviors of your customers helps you sharply focus on the most ap-propriate and profitable strategies
and tactics. Bernoff and Li intro-duce us to technographics which is a huge help pinning down online activities of our customers depend-ing on region, age, and sex.
Objective: “decide what you want to accomplish.”
Sounds simple doesn’t it? Un-fortunately, far too many take the throw-everything-at-the-wall-and-see-what-sticks approach, not tak-ing the time to set goals to measure success or failure.
Strategy: “Plan for how relation-ships with customers will change.”
Understanding your objectives and then carefully deciding how it is you want your relationship to change with your customer is ex-tremely powerful. Do you want to engage in dialogue? Are you creat-ing a forum to allow customers to help each other? How about letting them help you design your next product or service?
Technology: “decide which social technologies to use to accomplish goals.”
Only once you understand your audience, what you want to accomplish, and how you ex-pect your relationship with your customers to change should you pull the trigger on technol-ogy. Think of the time and stress you’ll save by selecting the cor-rect technologies for your objec-tives instead of doing everything and hoping something magical works.
If you’re stuck in the TSOP method, take a step back and re-view the above steps. If you need more inspiration, get the book and read of incredible examples of how companies have learned to harness these tools to create new customers and life-long fans.
Contact Aaron Norris at 95�-780-5856 [email protected]
Aaron Norris is vice President
of the Norris Group where he is respon-
sible for busi-ness devel-
opment and production of TNG’s awards winning radio show, events,
and educa-tional semi-
nars. Aaron is also principal
at Palisoul, Norris, +
Conroy, a marketing
and strategy team based in Southern
California and hosts of the
marketing and business podcast, The
Cocktail Party Statement.
Thanks to Phil Palisoul and
karin Conroy for their con-tributions to
this article.
By Sean O’Toole
When I picture the wealthy real es-tate investors I’ve met over the years,
I don’t picture lavish lifestyles, fancy cars, jets and the fabulous vacations you see pitched on late night TV. Instead, I see frugality. Olde r, reliable, paid for cars. Prac-tical clothes…the kind you can crawl under a sink if you need to. And with a modest but comfort-able home which, like their cars, is paid for.
I think the same can be said for most successful entrepreneurs. They became successful by watch-ing every penny, and reinvesting, rather than spending, their hard earned profits. A penny saved is a penny earned after all.
Investing at the foreclosure auctions has been changing over the last year. Competition has be-come more intense, and I think the difference between success and failure is going to be careful man-agement of costs.
Many auction investors have done well on a 50/50 split for years, with the partner doing the work taking 50% of the profit, and in-vestor putting up the cash taking 50%. With some groups having annualized returns of 50-80% this has worked well, and has kept ev-eryone happy.
Those huge margins have been dropping and I don’t expect them to return.
If you’re the partner doing the work, you should be actively look-ing for cheaper sources of money. If your money partner is used to
getting 30% annualized returns, and your competitor is only paying 15% for capital, you will find your-self at a serious disadvantage. With the FED’s zero interest rate policy, lowering your capital costs should not only be doable, but it should be a top priority.
Clearly there are other opportu-nities to cut costs as well. We used to buy prefab granite counter tops and cut them using a worm drive skill saw and a diamond blade. We could replace Formica counter tops with granite for about $1000. Calling out a granite shop to do custom countertops for that same kitchen would have been $5000. That $4000 savings meant that we could pay more at the court house steps then a competitor that used custom countertops.
And, it doesn’t end with busi-ness costs. If your lifestyle costs twice what your competitor’s costs, they can beat you on every deal. More importantly, eating lunch out every day, going to Starbucks, and driving a nicer car then you really need may be the very things that, over time, have you kept you from building the capital you need to reach your real estate investing goals, and more importantly per-sonal financial security.
So as 2010 comes to a close, I suggest taking a look at your busi-ness and asking yourself what opportunities you have to reduce costs. Both to increase your com-petitiveness in the market, and to build greater wealth over time.
Contact Sean O’Toole at 9�5-5��-7�[email protected]
MANAGING AT THE MARGIN
Prior to launching ForeclosureRadar.com, Sean O’Toole successfully purchased and flipped more than �50 residential and commercial foreclosures. Leveraging �5 years in the software indus-try, Sean used technology as a key competi-tive advantage to build his suc-cessful real estate investment track record.
ANALYSIS
Nov. 2010 REI VOICE ��
ANALYSIS
By Tom Wilson
When analyzing investment proper-ties, conventional thinkers knee deep in real estate dogma worry about property tax rates and property management fees and any number of other data points. However, a scientific approach to prop-erty data yields a far more accurate and simple buy/no-buy decision. Yes, science (specifically, sensitivity analysis) helped me identify the most important predictor of cash flow success of an investment.
When I retired from my thirty-year Silicon Valley high-tech career in 1999 and went from part-time to full-time real estate investor, my goal was to re-place my corporate salary with cash flow from rentals. In order to identify the highest cash-flow properties available, I needed to understand what factors to look for. I’d heard the conventional wis-dom used in judging the strength of a rental property, but no one I met had an actual, proven, dispassionate, method-ology. No offence, but gut feeling doesn’t guarantee a payday.
In the scientific/engineering world it is common to perform a sensitivity anal-ysis. This is a process where one tests varying independent variables to see which ones affect and by how much, the desired outcome. For example, one can vary a cell phone receiver bandwidth to determine the optimum signal to noise reception. Pulling a page out of my for-mer career’s bag of tricks, I decided to apply sensitivity analysis to the problem of rental investment evaluation. The re-sults yielded some surprises.
The Cash Flow Sensitivity graph il-lustrates the relative importance of seven common property cost variables to cash flow. Using one typical prop-erty as an example, its cost variables are adjusted to reflect a 20% improvement (i.e. taxes 20% lower; occupancy 20% higher, etc.). For each variable, the cost improvement also reflects an improve-ment cash flow; however (and this is the key point), by vastly different orders of
HIGH TECH TOOLS REDEFINE CASH FLOW ANALYSIS
Tom Wilson has been
investing in real estate
since the 70’s. He first invest-
ed as a part-time activity,
and then after thirty years
with some of Silicon valley’s
pioneering technology companies, Tom put his
business and manage-
ment experi-ence toward
full-time real estate invest-
ing. Wilson Investment Properties offers high cash-flow,
fully-leased investment properties.
RE
PA
IRS
INS
UR
AN
CE
OC
CU
PA
NC
Y
PR
OP
ER
TY
MG
MT
PR
OP
ER
TY
TA
X
INT
ER
ES
T R
AT
E
RE
NT
RA
TIO
PE
RC
EN
TA
GE
CH
AN
GE
0
20
40
60
80
100
120
Internal Rate of Return (IRR)
Cash/Cash Return
CASH FLOW SENSITIvITyPercentage change to cash flow and IRR for a 20% change of each inde-pendent cost variable. Sample based on a 3br/2ba $125,000 home rent-ing at $1,250/mo in the Dallas/Fort Worth area.
RENT RATIOS By CITybased on median rents and median house prices as of Jan 2010
�� REI VOICE Nov. 2010
Nov. 2010 REI VOICE ��
HIGH TECH TOOLS REDEFINE CASH FLOW ANALYSIS
Do you want to know what to do with a Cash Bleeding House?
IT’S FREETO ASK FOR HELP!
No equity, no problem. We have helped investors and families find solutions regarding properties under water. We have proven results with our Local Short Sale Team. You may even qualify for HAFA’s $3,000 relocation incentive.
THE TIME TO ACT IS NOW!Ask for Natalie KnowltonSenior Short Sale Negotiator “Nat Knows Sort Sales”[email protected]
Direct 650-386-1264, Cell 831-402-5107NickofTimeResultsTeam.com
DRE#01885366
Stressed? Trapped? Not sleeping?
Nick of Time Results Team
magnitude. Clearly a 20% decrease in taxes improves cash flow, but not nearly as much as a 20% improvement in rent ratio! So you can now see that you don’t want to purchase in a lower tax rate city for example, if that means settling for a much lower rent ratio.
Cash flow sensitivity methodology was used to analyze hundreds of prop-erties of all types from numerous parts of the U.S. and the conclusion remained the same: Rent Ratio is king. Interest rate is the second most important predictor of performance, but it doesn’t vary much from one property or region to another.
Rent Ratio is the ratio of the monthly rent as compared to the property value [Monthly Rent/Total Property Invest-ment or Value = Rent Ratio]. It was also determined that this ratio typically needs to be greater than .01 or 1.0% with a 20% down payment in order to yield positive cash flow, regardless of the region or price range. For example, a rental property with an investment of $100,000, after all costs are included, should have a minimum rent of $1,000 or 1% per month of the total acquisition cost.
The second illustration shows how amazingly much the rent ratio varies from one MSA (Metropolitan Statisti-cal Area) to another and gives you a first order guide to where the best cash flow regions and properties are without do-ing a complete analysis on hundreds of properties. Now you no longer have to guess or wonder about where and what to look for: just follow the numbers.
In his book, Predictably Irrational, au-thor Dan Ariely observes “We are all far less rational in our decision making than standard economic theory assumes.” By using rent ratios as a key component of rental investment decision making, we can base our buy/no-buy decisions on rational data and enjoy a more profit-able and stress free buying experience.
Contact Tom Wilson at 480-867-�[email protected]
Financial Lessons
from the Ides of October
ADVICE
�4 REI VOICE Nov. 2010
By Bruce Norris
During my three decades as a real estate investor, I’ve learned countless valuable lessons. Here are three that came in handy the final few weeks of October.
�. SOLvE yOU dAILy LIvING ExPENSES WITH POSITIvE CASH FLOW.
Mid-October, the real estate market iced up in only 72 hours. Many real estate professionals counting on a closed escrow for their next pay day got a rude
awakening. The foreclosure process nearly stopped in its tracks. Just 10 days prior I was the keynote speaker for the an-nual meeting for the California Mortgage Association. I asked the audience if they were wor-ried about the damage MERS might cause to the market. Out of two hundred attendees, only a few were even concerned (or aware) about what now has become the worst mess I ever witnessed.
Covering monthly expenses with a positive cash flow port-folio gives you the time and resources to make careful and thoughtful adjustments to mar-kets in transition. Those more exposed tend to make rash and abrupt decisions out of necessity and fear.
�. SET ASIdE MONEy FOR A RAINy dAy.
Many investors earned life-changing money in the years
from 2000-2007. Unfortunately, many kept rolling their profits forward, never taking enough chips off of the table to make a permanent difference in their long-term finances. The only reason some of us did this cycle is lessons learned from our expe-rience from the early 90s. When the party ended, we were left holding the bag.
�. NEvER RELy ON JUST ONE METHOd OR TECHNIqUE OF BUyING PROPERTy.
If you went to the court house steps in September, you’d see a group of people who made a great living buying and selling houses. As I’m writing this ar-ticle, this entire group has had the only method of finding deals taken from them and at no fault of their own.
Many rely on just one “Buy-ing System” to make their liv-ing. It’s been my experience that markets can change abruptly. In
2004 through 2006, The Norris Group made big profit building new homes. In 2007, that oppor-tunity disappeared entirely as REOs gradually took its place. A sudden change in the appraisal world in early 2009 made that niche less attractive in our area so we shifted gears and began buying at the trustee sales. That niche is currently on hold as we wait to uncover the ramification of the moratoria. For The Norris Group, it won’t be critical, but for many unprepared investors, it could severely affect their fi-nances.
Three lessons: Live off of cash
flow, save your profits, and learn multiple ways to buy wholesale deals. Do these and you’ll put the odds in your favor that suc-cess will be yours.
Contact Bruce Norris at 95�[email protected]
Bruce Norris, founder of The Norris Group, is an active investor, hard money lender, and real estate educator with over �9 years experience. Bruce has been involved in over �,000 real estate transactions as a buyer, seller, builder and money partner.
Nov. 2010 REI VOICE �5
�6 REI VOICE Nov. 2010
By Lisa Moren Bromma
One of the strategies that is on the rise is using your self-directed IRA or 401(k) to grow your portfolio with paper investments.
What is paper? Paper is an IOU, a promise being made from the per-son who needs the money to you, the person who is lending the mon-ey, with the terms of how they will pay you back. If an investor lends money secured by an asset, the IOU will also have a security docu-ment like a mortgage on a piece of real estate. If the borrower defaults, then the security instrument, the mortgage, gives the investor the right to take back the property. Pa-per can include houses, cars, boats, planes, businesses—you name it. I have even seen cemetery paper! Paper can be secured by assets like the ones I just mentioned, or unse-cured as in a loan with no collateral at all.
Private mortgages are bought at a discount off of the face rate of the loan. Here is an example.
Sally sells her home to Sue and takes back a second mortgage for $10,000. Sally will receive $132.15 for 10 years at 10% interest. Should
Sue not make her payments, Sally could foreclose and take the prop-erty back. Sally would rather have a lump sum than take payments, however she needed to sell her home and this was one way to do it quickly. Along comes Mary who offers to buy Sally’s seller financed note. However, in order for it to make financial sense to Mary, she cannot pay $10,000. She offers to buy the payments for $7,000 cash today. This is a 30% discount. Mary gets the right to receive the pay-ments, Sally gets cash, of course not all of it but she feels it was worth the discount. Sue makes her payments to Mary instead of Sally.
I have simplified this process to illustrate how seller financing, or buying notes at a discount, works. If you would like more recommended reading on this subject, please email me.
Back in the mid to late 80s seller financing was very popular. How-ever, when interest rates came down, more people were able to qualify for commercial loans, so seller financing dried up. Today, seller financing has made a come-back. One must be very careful when using personal or IRA funds
to purchase a seller financed loan at a discount in today’s market. This investment is not for every-one.
Private lending to others is also on the rise. Most people look at private lending as lending money to family or friends who need the money to say, buy a car. However, there is a large potential opportu-nity for private lenders who want to participate in an investment by lending money that is used to acquire an asset. Or the investor is lending money to someone to start a business. There are as many ways and reasons why investors make loans to others. Many investors lend money out of their IRA or (k) plan to others to get a higher return on their money than they could get with conservative investments such as a money market account or CD.
Of course, when you self-direct your IRA or Individual (k) you, the IRA owner does the work—you identify the investment, you do the research, you instruct your ad-ministrator to make the purchase on behalf of the IRA or (k), and you get the profits or income back into your retirement plan tax-deferred
or in the case of a ROTH, tax-free! It’s no wonder that others are utiliz-ing OPI (other people’s IRAs) to help them accomplish their dreams.
Many investors prefer to use paper as their investment of choice instead of real estate. In the paper business, investors evaluate which is better: 1% in a savings account or investing in paper at rates that will be higher then 1% (of course the return will be greater than 1%–I am using this for illustrative purposes only)
They also ask themselves “which is better for me; greater than 1% tax deferred or 1 % that you pay tax on?” If you came up with 1% tax-deferred, than using your IRA or (k) plan is right for you!
Investing in paper whether through lending or purchasing notes can make sense to an inves-tor who understands what he/she is getting into, does the required due diligence necessary to protect themselves and their retirement accounts before making the invest-ment, and sees the value of alterna-tive investing.
Contact Lisa Moren Bromma at [email protected]
NAVIGATE THE NOTE BUSINESS WITH YOUR IRA
Lisa Moren Bromma is
the author of Promote your
Note Business, a marketing program for
the private mortgage
industry, Soup to Nuts, a Cd
ROM series on everything you
need to know to become a
successful real estate inves-
tor, as well as Real Estate
Investing for The Utterly
Confused and Wise Women
in Real Estate.
ADVICE
Nov. 2010 REI VOICE �7
MILES/BARRY CONTRACT FURNITUREWorkplace solutions to fit your business
MILES/BARRY CONTRACT FURNITURE is a full service independent furniture dealership providing quality, cost-effective interiors for businessesof all sizes.We offer creative, flexible solutions tailored to individualspace requirements, budget and aesthetic concerns.MILES/BARRY CONTRACT FURNITURE’s experience in the industry brings you prompt, professional service for every aspect of your project. You will enjoy the care, accuracy and efficiency of working with just one contact.
PRODUCT SALES• Ergonomic Products• Workstations-New and Refurbished• Casegoods-Veneer & Laminate• Filing Systems• Conference Rooms• Lunch Rooms• Training Table
PROJECT SERVICES• Consultation and Project Phases• Design CAD Drawings• Installation• Reconfiguration• Affordable Pricing• Panel Cleaning• Leasing• Extensive Product Lines
Call Barbara Miles at 650-359-5611 [email protected]
ASSET PROTECTION – A Common Sense ApproachBy Jeffrey B. Hare
“Asset Protection” – sounds good. Where do I get some?
Investors are often advised to “protect their assets;” most com-monly by setting up limited li-ability company (“LLC”) or other corporate entity. Using an LLC can be an effective tool as part of an overall investment strategy, but there are other important factors to consider.
Let’s start by ask-ing “What is an “as-set?” Webster defines “asset” as prop-erty that is subject to debt. The Latin origin comes from the word “satis” or
“enough.” In other words, an “as-set” is something of value that is more than “enough” to satisfy one’s debts and liabilities. New investors are often convinced that in order to be successful, they must set up elaborate “as-set protection” schemes to avoid “losing everything.” Frightened by unscrupulous vendors who warn of pending financial disas-ters, gullible investors are often duped into paying thousands of
dollars to establish com-plicated corporate entity structures in the name of “asset protection.” Asset protection is a valid con-cern. But I recommend a common sense – and less expensive – approach.
The first step is to distinguish between an asset and a liabil-ity. Do the math. An investment property is a real estate asset if it is worth more than all of the costs and expenses associated with that property. The combi-nation of appreciation and rent-al income must be greater than the combined mortgage debt, maintenance and repair costs, taxes, insurance, commissions, and fees associated with that property. If not, it is a liability. For example, your home may be very valuable for a number of reasons, but if it isn’t worth more than the combination of the mortgage(s), taxes, insurance, maintenance and upkeep costs, it technically is not an “asset.”
For your home, it’s fair to consid-er your spouse’s preferences, tax considerations, and proximity to the local school district, but this doesn’t make it an “asset.”
Second, make sure your asset is properly man-
aged. If you own a rent-al income
p r o p e r t y , you should engage the
services of a profession-al property
manager, who will take steps to ensure that the property is in maintained good condition and free of hazards. Pre-vention is a key component of lim-
iting your exposure to liability. The third step is to obtain and
maintain adequate insurance coverage, both for the property and for yourself. In addition, consider making it manda-tory for your tenants to obtain renter’s insurance. It’s inexpen-sive and provides coverage for damage to the tenant’s personal property and relocation expens-es not covered by the owner’s policies. A tenant who is covered for losses is less likely to pursue you for damages.
Fourth, evaluate the pros and cons of using a LLC for your in-vestment property. A properly established and maintained LLC provides a degree of “asset protec-tion” against claims by creditors, and may help facilitate account-ing issues, but you need to con-sider both the real costs and tax consequences. Also, some Cali-fornia investors fail to realize that a foreign (i.e., Nevada, Delaware or other out-of-state) corpora-tion may be subject to California laws, registration and reporting requirements. (Corp Code §2115). In the long run, it may not be ad-vantageous or less expensive for a California resident to set up a foreign LLC.
Fifth, do it right. Nothing makes a creditor’s job easier to “pierce the corporate veil” and go after personal assets than sloppy records, suspended cor-porate status, or inadequate capitalization. If you’re going to set up a corporate entity for “asset protection,” treat it as a business, not a hobby. Consult with professional legal and tax advisors. Remember, it’s your asset – protect it!
Contact Jeffrey B. Hare at 408-�79-�[email protected]
Jeffrey B. Hare, Attorney at Law, pro-vides out-come-oriented legal services to real estate investors, commercial and residen-tial property owners, and real estate developers. As an land-use attorney and real estate investor, Mr. Hare provides clients with a pragmatic but thorough approach to due diligence, contract review, and negotiations.
ADVICE
�8 REI VOICE Nov. 2010
Nov. 2010 REI VOICE �9
BASICS
By Nancy Chillag
As real estate investors we spend years researching the best markets, buying the ideal proper-ties, screening for proper tenants and making improvements to increase value. Some of us carry around pictures of our properties much like we do our children and grandchildren. We talk about our investments as though they were part of our very being.
Why do we do this? Well, obvi-ously to provide ourselves with a nice income, a means of comfort-able retirement, and a legacy to pass on to our family. But who will receive your legacy? You probably assume that when you die your spouse will take over managing the properties and receive the benefits, and when your spouse dies, your children will reap the benefits. While your assumption is generally correct, the time and cost to make that happen can be extensive, leaving a fraction of your legacy for your children and
future generations.Depending upon how you title
your real estate and other invest-ments, it may be necessary to Probate your assets to pass them to your spouse at your death. But even if you avoid Probate at your death, you won’t avoid it at your spouse’s death.
What is probate? Probate is the legal process by which the court orders the title of property to be transferred from you to your ben-eficiaries. If you have a Will, the court will review it and pass the property accordingly. If you don’t have a Will, the court will trans-fer the property in accordance with the state’s rules. Properties in multiple locations will require that a Probate will be opened in each state.
How much does probate cost? Probate costs include appraisal fees, Personal Representative fees, court costs, Probate Referee fees, surety bonds, and legal and accounting fees. You can plan on easily spending 5- 7% of the
gross estate. So a $2,000,000 estate could cost $100,000 - $140,000 to transfer the assets to your spouse, and after the ultimate transfer to your children, your total lost es-tate could reach $280,000!
How long does probate take? In California, the average estate takes 7–9 months to get through Probate, if all goes well. If there is a Will contest or some other lawsuit or complication, all bets are off – it could take years. Even the sale of real estate can delay the process by months. Many states have summary procedures for small estates that are faster and less expensive, but that probably won’t be available for your estate.
Does anyone else get a part of your legacy? – Probably. If you failed to properly plan, the IRS will be standing right there with their hand out. You probably won’t pay any estate taxes when your prop-erty passes to your spouse, but you won’t be so lucky when your property ultimately passes to your
children. How much are estate taxes?
Starting in 2011, you can give away $1,000,000 at your death without estate tax. Anything over that is subject to a tax rate of 55%. So how much of your $2,000,000 legacy will actually pass to your children? After Pro-bate and estate taxes, you’ll be lucky if they get $1,300,000!
Failure to plan means your legacy will be shared with the IRS, the courts, and others that you did not intend. With proper estate planning, your children could actually inherit everything you have. This involves work-ing with an attorney, setting up trusts and perhaps other entities in order to avoid probate fees and estate taxes. This process will cost you money now, but it will cost you far, far less than what your current plan will cost you in the future.
Contact Nancy Chillag at650-���-9796
WHO WILL RECEIVE YOUR REAL ESTATE LEGACY?
Nancy Chillag is an attorney with
over �5 years of experience.
She is also a certified public accountant and real estate bro-ker. She works
closely with real estate investors and small busi-ness owners to
protect their assets and fami-
lies through estate and busi-
ness planning.
�0 REI VOICE Nov. 2010
branding. marketing. traditional & digital.
SusanHareMarketing.com 408-391-8068 [email protected]
Pebble Beach REIA B O U T I Q U E B R O K E R A G E F I R M
As the Executive Director and Co-Founder of the SJREI Association,let Stuart Baeriswyl be your all-purpose Real Estate Broker.
Stuart BaeriswylREAL ESTATE BROKERDRE#: 01807909
» Help Property Owners Liquidate or Transfer their Real Estate Holdings
» Private Money Loans
» Full Service Real Estate Brokerage for the Home Buyer and Seller
P H O N E : 4 0 8 . 3 7 3 . 676 6 W E B : w w w. Pe b b l e B e a c h R E I . c o m
By Richard Smith
�. Prepay California income tax to increase federal itemized deduc-tions
�. Prepay January house payments for residence and rental properties
�. Prepay income tax preparation fees4. Use your automobile for charitable
organizations (�4 cents/mile)5. Sell stock for losses this year
(Maximum deductible loss is $�,000)
6. Charitable donations-cash and non-cash
7. Prepay for travel expenses for busi-ness purposes
8. Prepay property taxes due next April for both residence and rentals
9. Invest in T-Bills or Cd’s: interest is taxed next year
�0. Open and fund your personal retire-ment plans: IRA, 40�k, SEP-IRA
��. Start your part-time business this year to deduct start-up costs
��. Prepay childcare expenses (Maximum $�,000/child)
��. Establish proof of bad debts to claim bad debt deduction
�4. Accelerate payment of miscellaneous deductions if more than �% AGI
�5. Increase medical expenses if you can exceed the 7.5% AGI
�6. deduct job-hunting expenses, even if you don’t change jobs
�7. Prepay expenses such as profes-sional organization dues & trade publications
�8. defer income until next year from bonuses, commissions and salary
�9. Consider tax impact of delaying or speeding up marriage or divorce
�0. Tuition deduction is $4,000 max or $�,500 max tax credit
��. Gifts of $��,000, shift interest income to children
��. Tax-free exchange to defer gains on sale of rentals
��. Energy credit for home improve-ments is $�,500 max
�4. On stock sales, long-term capital gains incur tax rate of �0-�5%
�5. Adoption credit is $��,�50 max�6. Purchase business equipment &
deduct up to $�50,000�7. Plan to file early & use refund to
fund SEP & IRA�8. Prepay estimated taxes to avoid
underpayment penalties�9. Increase withholdings to avoid
under payment penalty�0. Pay for rental property expendi-
tures & repairs��. Pay for year-end entertainment &
gifts for business clients��. Purchase business & office sup-
plies, stamps, & envelopes��. Purchase a passive income invest-
ment to offset passive losses�4. Prepay January office rent
�5. Pay for business auto expenses (repairs, tires, battery, insurance, & motor club dues)
�6. defer december rental income until January
�7. Enroll in employer provided tax-deferred programs
�8. Invest in tax-exempt bonds or tax-free mutual funds
�9. Preserve exemptions for depen-dents (deduction is $�650)
40. Pay your children & spouse for time spent working for your business or investments
4�. Sell your passive loss activities to deduct suspended passive losses
4�. determine if you own worthless stocks that you might deduct
4�. Buy a real estate investment that can provide depreciation & tax-sheltered income
44. you may be able to claim parents as dependents, if you help support one or both
45. Prepay educational expenses to maintain or improve job skills
46. Pay for investment expenses for advisory & management fees & safety deposit box
47. Start and fund a Health Savings Account.
Contact Richard Smith at408-446-555�
YEAR-END TAX PLANNINGYear-end tax planning opportunities have increased this year because
of all of the new tax laws that have been signed by the President. I recommend a basic strategy that says defer income to next year and accelerate
deductions that will benefit you this year. Another recommendation is that you review the following tax strategies to determine if any would help reduce your 2010 tax liability.
Richard Smith, who is an
Enrolled Agent and licensed by the IRS, and his team have pre-pared taxes for individuals and
corporations for more than
�0 years.Richard is an
active real estate investor who has more
than �00 hous-es in his portfo-lio plus a large
multi-family building.
BASICS
Nov. 2010 REI VOICE ��
�� REI VOICE Nov. 2010
As an investor himself, Stuart Baeriswyl, of Pebble Beach REI makes good use of his understanding of the various mar-
kets in Northern California to help other investors locate and purchase solid cash flowing rental properties. Stuart has been providing his profes-sional services for many types of buy-ers and sellers, translating his unique real estate investing skill-sets into helping regular home buyers and sell-ers complete their personal residen-tial property transactions.
THE ENTRy LEvEL
INvESTOR:Top four reasons to
consider buying now
BASICS
Thrasher Termite & Pest Control, Inc. has been serving theSanta Clara Valley and the neighboring communities since 1979.
We work closely with local Realtors, Property Managers and Homeowners to solve your termite and pest control problems. Our prices are competitive and reasonable. We are proud to say we perform all repair work and all termite treatments with our own in-house state licensed technicians.
Serving Northern & Southern California
408-354-9944www.ThrasherTermite.com
If the bugs come back … so do we
Nov. 2010 REI VOICE ��
By Stuart Baeriswyl
What are you waiting for? If you haven’t yet pulled the trigger on investing in real
estate, you’ll never find a better time to enter the market. Prices are low, properties are available, interest is below 5%, and with the internet, all the information you could ever need is immediately available. Best yet, this is the California market we are talking about.
�. Low Prices. Whether you are buying an investment property or a home to live in, prices for all types of residential and commercial property are now at 2001 levels for Northern California. Specifically, investment grade residential income property has stayed down in many California Counties and many units are avail-able for half of what they sold for 4 years ago. What this means for the real estate investor is that there is a large pool of right-priced units that can work as rental income property in many of the nicer areas of California, areas that were once too expensive to make it work.
�. Available Inventory. At start
of 2009 there was a significant decrease of investment grade in-ventory and the problem persists. However, decrease does not mean zero. Between people who just want to move, investors who want to sell,
spec properties sitting vacant, and foreclosures, there are still real es-tate deals to be made. One has to be patient and persistent in locating and winning a purchase. It takes a little more effort now, but at these prices, it’s worth it.
�. Low Interest. Whether you are trying to flip rehabs for a quick profit or interested in buying to hold for income and appreciation – the cost of money is very low. To get the best rate, plan on putting down 20% or 25% in cash. It’s worth it to get a nice residential property to rent. The rental cash flow will cover your loan payments as your renters build your equity. This conservative approach is a sound way for new investors to get started.
4. Resources at your Fingertips. Of-ten times new real estate investors are younger and very comfortable around a computer. It may surprise you that as little as 6 or 7 years ago, the inter-net usefulness for real estate data was quite limited. Now, however, the new investor has a tremendous amount of power at his or her disposal. Not only is the volume of data amazing, but it is now presented in easy to un-derstand and helpful ways. Be careful though 1) don’t get so overloaded with data that you fail to act, 2) don’t trust everything you come across. Vet your information with other, trusted inves-tors and professionals.
BEST OF THE WEBRealestate.yahoo.comForeclosureradar.comFinestexpert.comRealtor.com
It really does come back to the basics. Do your research, pencil the numbers, and take the plunge. Many new investors want property within driving distance of their homes, but the cost of California real estate has been prohibitive. Not any-more. If you can’t find something now in your budget and with the right upside, you never will. So get going!
Contact Stuart Baeriswyl at408-�7�[email protected]
3.00
3.50
4.00
4.50
5.00
5.50
6.00
FEB MAR APR MAY JUN JUL
APR
BASICS
�0-yEAR FIxEd NATIONAL MORTGAGE RATE TRENdS ANd AvERAGES provided by Information Research Services, Inc. Updated Monday, July 12, 2010
�4 REI VOICE Nov. 2010
ACCOUNTINg
michael gray, CPA408-918-3162
www.realestateinvestingtax.
com
richard smith & Associatesrichard smith 408-446-5551
www.richardsmithtax.com
BROkERAgE/AgENTS
Pebble beach reistuart baeriswyl 408-373-6766
www.pebblebeachrei.com
howard bloom 650-605-3928
www.howardbloom.com
silicon valley reoJason Chan lee408-998-1300
www.svreo.com
Chuck mcCay 408-836-1091
www.chuckmccay.com
FINANCIAL ADVISORS
bay Area Plannersdavid beck408-725-7135
info@
retirementplannersonline.com
www.retirementplanner
online.com
INSURANCE
brighton financial groupvernon Williams
408-931-6582
www.farmersagent.com/
vwilliams
INVESTmENT PROPERTIES
the norris group Aaron norris
951-780-5856
www.thenorrisgroup.com
stonecrest investments llCsteve freeman408-557-0700
www.reo4sale.net
summit solutions team Corp.lori greymont408-891-2983
lori@summitsolutionsteam.
com
www.summitsolutionsteam.
com
Wilson investment Propertiestom Wilson408-867-1867
www.tomwilsonproperties.com
IRA
entrust Administration inc.lamarr baxter
916-509-7271
www.entrustcalifornia.com/
oakland
irA services trust Company michael mcnair650-593-2221
LEgAL SERVICES
Chillag & Associates, P.C.nancy A. Chillag650-321-6796
www.chillag.com
earle law offices, APC
408-786-1060
www.earlelaw.com
Jeffrey b. hare, APC408-279-3555
www.jeffreyhare.com
mORTgAgE CONSULTANTS
michael ryan & Associatesmichael ryan
408-986-1798
www.michael-ryan.com
OTHER SERVICES
Chiropractic firstdr. Josh ben408-559-1662
www.chiropracticfirst.com
Certified dream Coach®mary botham650-868-2383
www.GetABiggerDream.com
susan hare marketing
408-391-8068
www.susanharemarketing.com
okubon managementnobuko isomata650-922-1786
thrasher termite & Pest Control inc.,Janet thrasher
408-354-9944
www.thrashertermite.com
RESEARCH
foreclosure radarsean o’toole925-513-7175
www.foreclosureradar.com
SHORT SALES
nick of time results teamnatalie Knowlton831-402-5107
natalie@
NickofTimeresultsteam.com
www.NickofTimeResultsTeam.
com
SOUND OPINION—WISE DECISIONS: VOICE OF THE PROFITABLE REAL ESTATE INVESTOR
HELP REAL ESTATEINVESTORS HEARYOUR VOICE —ADVERTISE IN
REI VOICE MAGAZINETODAY
Contact Nobuko [email protected]
RESOURCES
Nov. 2010 REI VOICE �5
StonecrestI N V E S T M E N T S
DIRECT WHOLESELLERNO MIDDLE MANNO BROKER FEES
Current market conditions present a unique opportunity. Qualifi ed investors can purchase bulk packages of foreclosed properties.
Stonecrest Investments, LLC, purchases REO properties in bulk directly from national banks at a discount and resells them wholesale to qualifi ed investors. We assist our investor group by offerring a well-designed support package that includes direct services, connections to important resources. A step-by-step guide which outlines how to maximize their ROI on their REO Package.
CAPTURE THE REO WINDOW BEFORE IT’S GONE.
CALL US TODAY FOR YOUR FREE CONSULTATION !
1-888-271-7703
ELIZABETH CORTEZAsset [email protected]
‘NEVER BEEN A BETTER TIME TO BUY!’
THERE HAS NEVER BEEN ABETTER TIME TO BUY REAL ESTATE!
Call me to get in now while prices are cheap!
We currently have properties in Salt Lake City, UT. & Orlando Florida. Investment Properties in Jackson,
Mississippi & Coral Beach, Florida are Available.
415-559-9768
Must have decent credit and a down payment • Owner financing available • Conforming to S.A.F.E Act Regulations • Discounts available to the first five buyers
We specialize in single family residences • Turnkey investment opportunity - houses in good condition, rented with good management in place
Ask for Chris and mention this advertisement
Long Term CareTax Saving Strategy
Settlement
Call for Information: 650-922-1786
OKUBON MANAGEMENT
�6 REI VOICE Nov. 2010�6 REI VOICE Nov. 2010
by Geraldine Barry
Top 5 Benefits to Investing in Real Estate:
1INFLATION HEdGE: Real estate is a hedge against inflation. Everyone needs shelter and despite the digital age, there are plenty of businesses that require bricks and mortar. When costs rise, so does rent—your hedge against inflation.
2CASH FLOW: With real estate, you don’t have to wait for a dividend check that may never arrive. After all expenses have been covered (mort-gage, taxes, repairs, property management etc.) smart commercial and residential property owners realize monthly cash flow.
3 TAx BENEFITS: Thank you Federal Government for supporting prop-erty ownership. Real estate property taxes paid for a first home are fully deductible for income tax purposes. On investment properties, opera-tional and selling costs are deductable. And, everyone but dealers in real estate may depreciate their investment properties when filing annual tax returns—a nice shelter for high income individuals.
4FLExIBLE OPTIONS: You have a variety of options to maximize your investment. Real estate can be held, sold, rented, exchanged, and bor-rowed against. It can be rebuilt and rezoned. Best yet, you are the archi-tect of your options.
5IT’S TANGIBLE: Real estate is…REAL! You can touch it, visit it, live in or on it, and it is finite. The earth only holds so many square meters of land. It will not evaporate like stock and internet start-ups, and is intrinsically more useful than gold.
Real estate is a wonderful tool to help you achieve your financial goals, particularly retirement with a long-term horizon.If one invests wisely in cash-flow properties or those with long term appreciation potential, the investment is a true wealth-builder. The key is to invest wisely, and that means education from trusted experts is critical to your success.
Geraldine Barry is founder and president of SJREI Association, the premier educational and networking association for real estate investors in Silicon valley. 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. She has interviewed many real estate pros such as Bruce Norris, John Schaub, and Robert Campbell all of whom have been guests of SJREI. In addi-tion to leading SJREI, Geraldine is an active real estate investor, guest host of the radio program, “Going Beyond Real Estate,” a frequent guest on the nation-ally broadcasted NTdTv and Publisher of REI voice Magazine.
Ger’s Top 5
Nov. 2010 REI VOICE �7
THE CREDIT RESTORATION EXPERT HANNAH FLIEGELThe current economy has left investors reeling – Hannah has the expertiseto assist with increasing your credit score.
BEGIN REBUILDING YOUR CREDIT RATING AFTER BANKRUPTCY TODAY!www.HowDoYouScore.com
PRE-PAID CREDIT CARD $29.95Discount for SJREI members $399.00 for credit repair program.Protect your credit profile with LifeLock for $99 per year.
415-999-9348CALL FOR DETAILS
FICO Pro
NEVER BEFOREseen together: BRUCE
NORRISJOHNSCHAUB
Hear two di�erent philosophies from the best – Bruce Flips, John Buys & Holds!
Two Day Event- Friday & SaturdayNovember 5th & 6Wyndham Hotel1350 North 1st Street, San Jose, CA 95112
Nonmembers- $629 per personMembers- $595 per personHotel Rooms available for $79/night (includes breakfast)
For more information and to sign up for this event go to www.sjrei.net or call 408-264-3198
&Ger’s Top 5
�8 REI VOICE Nov. 2010
BE A PART OF SOMETHING AMAZING!BECOME A MEMBER TODAY
(408) 264-3198 or www.SJREI.org
W hether you have yet to purchase your fi rst investment property,
or are working on your hun-dredth deal, you’ve found the bay area’s source for sound, principled advice and network-ing. As investors ourselves, we understand the challenges that investors face, and customize our programs to address real-life situations and scenarios.
MEMBER BENEFITSHear the best speakers, get the best adviceOur educational meetings are delivered by recognized experts in their fi eld. They keep you up to date on issues such as market timing, new legislation, and techniques that may affect or enhance your real estate investing.
NETWORK WITH INVESTORS, BUYERS, SELLERS, AND THE PEOPLE WHO SUPPORT THEMAll successful people rely on a network. Bringing like-minded people together to share information, assistance, and resources is a core goal of our chapter meetings.
STAY MOTIVATED, AVOID PITFALLSWho but another investor understands the doubts, challenges, and successes of real estate investing? SJREI Association fosters a positive climate of mutual support and sound advice. Your questions are respected, your participation is valued.
THREE CHAPTERS• South Bay• East Bay• Mid-PeninsulaMembership entitles you to free admission to your local chapter’s monthly educational and networking programs and much, much more.
THE BAY AREA’S MOST DYNAMIC INVESTORS ASSOCIATION
BENEFITS EXECUTIVE MEMBERSHIP
PREMIUMMEMBERSHIP
Annual Membership Dues $500 $225
Additional Member* $350 $200
Guest passes (use at any chapter meeting) 1 1
Free registration & attendance at local chapter meeting
Network with other investors at each event
Free registration & attendance at all chapter meetings: Mid-Peninsula, San Jose, East Bay
Invitation to annual Leadership roundtable
VIP seating at registered events
Personalized name badge with ex-pedited event check-in
On-line community: member profi le, read and post messages on message boards
Hundreds in discounts for goods and services through National REIA affi liation
Discounts on workshops and special events
Invitation to Quarterly Insider Luncheon
Audio library of past events
New member orientation
