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If the Roth IRA is the Corvette of real estate investing vehicles, then the Roth Solo 401k is the Ferrari.
Ok, so I know nothing about fancy cars. But I do know a thing or two about Solo 401ks. After setting up my own Solo 401k awhile back, I realized that there was very little out there where we as real estate investors could learn more about this unique retirement plan. After months of research and hours of consulting with some of the nation’s top custodians and lawyers, I enlisted the help of my father who has invested in real estate for over 35 years. Together, we compiled a book that I hope will serve as a valuable resource for real estate investors who are interested in strengthening their retirement accounts.
Never heard of a Solo 401k? It’s not surprising. Recent changes in the tax law have made this investment vehicle even more powerful. The Solo 401k is basically your average 401k without the huge company and all the extra employees so many of the ERISA rules do not apply. You may have heard it referred to as the Individual 401k or the Self-Employed 401k.
The Solo 401k is similar to an IRA in that you can self-direct the account into alternative investments such as real estate. There is also a Roth component of the Solo 401k where your after-tax contribution can grow tax-free. The contribution limits for the Solo 401k are much higher than those for the IRA. You may make an elective deferral of up to $18,000 ($24,000 if you are age 50 or older) per year. Your company that provides the plan can also contribute tax-deferred funds to the traditional portion of the Solo-401k for a maximum total contribution of $53,000 ($59,000 for those investors age 50 or older). Read More >>
Let’s say you’re behind on your mortgage and the bank has filed foreclosure. You look into it a little bit and you see that your loan was securitized and sold as part of a big bundle and has been traded around the banking industry for the last 5 years like almost every other mortgage out there. You decide you’re going to take action and, using the rules established in the Truth in Lending Act (TILA), you send a notice of rescission to the bank and anyone who might try to claim ownership of your loan. The 20 days have passed and all the bank has done is sent you a letter saying they’re not going to honor the rescission. If you’ve been reading my previous articles you know that holds no water, and that by operation of law your note and mortgage are void. You can now be expecting the bank to return your canceled note, remove it from the property records, and return all of the money you ever paid on the loan, right? Wrong. You still have more work to do.
While the Supreme Court has given homeowners some power back against the banks with the January’s Jesinoski ruling, the chances are you will still need to take the bank to court to enforce the rescission. You’re going to want to move quickly because after one year from the rescission, you lose all right to the money that you paid the bank for the loan. The mortgage is still void, but you’re never going to get your money back. On the flip side, after a year the bank can no longer collect any of the money that you received with the loan. Read More >>
Last month we began talking about commercial properties. This month we will continue talking about opportunities you can find with small apartments, self-storage, large apartments, shopping centers, office buildings and industrial.
I think of my friend, Lance Edwards, who specializes in small apartments. Small apartments meaning anything from 4 to 100 units. In fact, Lance will be at our upcoming boot camp in August, and he will be at the summit in February. Lance is very successful in that small apartment niche.
And there’s self-storage. My friend, Scott Myers, is the king of self-storage, he has hundreds of units starting from scratch with no money or credit and has built an empire by buying and redeveloping or by buying land and building self-storage units on it, which has always been a hot commercial component in the market because even when people use their homes, they still need a place to store their Junk. Did you know that self-storage is the only type that you can literally get 100% financing on? That’s how much the banks think of self-storage. Scott will also be at my commercial boot camp, and he is a wealth of information when it comes to the self-storage business. Read More >>
Many people want to invest in real estate “if I could only find the cash for the down payment on a property or two.” But for many would be investors – the answer to getting started in direct real estate investment is right under their nose: You can use a self-directed 401(k) to invest in real estate.
If you don’t own your own company (so you can become the sponsor of your own 401(k) plan, you have a couple of options:
Borrow. If your plan allows, you may be able to borrow up to $50,000 or 50% of your account value (whichever is less) to invest in real estate in a taxable account. If you go this route, understand you only have five years to repay the loan. Otherwise it’s considered a taxable distribution and if you are under age 59½, may generate penalties to boot. Read More >>
I’m writing this on Friday, October 9, 2015. It’s a heavy day for me. Today is the sixth anniversary of Jack Miller’s passing, and for the past few days he has been frequently on my mind.
Many of you have never heard of Jack Miller; even fewer took the opportunity to learn from this great man. Jack, hands down, was the best all-around real estate investor I’ve ever met. He was the definition of original. There was no boundary he wouldn’t push.
Put simply: Many of the creative deal-structuring and funding techniques investors use today were born in Jack’s wonderful imagination. There has never been, or will ever be, another Jack Miller.
I wish I had a do over. Although I attended most of Jack’s seminars, there were more than a handful that I missed. If I could get that do-over, I’d be front and center at each one of the meetings – taking notes like crazy!
Kim asked what I’d pay to attend just one more of Jack’s seminars. I said one hundred thousand dollars wouldn’t be too much. God, to hear Jack ring his big bell that let folks know that class was back in session...yep, one hundred thousand dollars would be well-spent money!
When Jack passed, he was nearly eighty years old and at the top of his game. Here are some of Jack’s quotes I wrote down at his February 2009 Money Matters seminar…which turned out to be the last seminar he taught!
Read More >>
I have spoken with several Realtors and Investors who say that they don’t like short sales and I always ask them “WHY?” They tell me that the Short Sale Lenders never come back with a value that matches the offer that they have on the property. I always ask them did they go out and meet the real estate agent or the appraiser who was sent from Short Sale Lender to provide the value back to the Lender? Their answer is always “NO.” In fact, many Realtors who list short sales will list high because they are paid on commission thinking that the house should sell at list price. However, they never take into account all the repairs needed or the updates that are required to allow the house to obtain an appraisal at list price. Therefore, their short sale sits for months and ends up going to foreclosure sale. In fact, because they said they didn’t go meet the BPO Agent and just gave them the lockbox code or they have an electronic lock box on the house, the BPO Agent is able to get into the house and only spends about 5 minutes at the house.
As a Real Estate Broker who gets commission on short sales, I would always like to get as much as I can, however, not meeting the BPO Agent can cost me big time and big money. Read More >>
Over the past six months I have discussed excuses on why people are failing in the real estate business. I had discussed the excuse of lack of money, the excuse of lack of time, the excuse of lack of leads, the excuse of lack of a system, and last month I did a piece on accountability partners. Each one of these segments has been designed to eliminate the distractions and excuses for individuals that are desiring to get involved in real estate and are not accomplishing anything. This month I want to discuss how persistence and consistency will get you to your financial goals faster.
I go to the gym on a regular basis. There are individuals in the gym every time I am there, and I typically go 5 times a week. I have noticed that those individuals who are dedicated to their weight training and eating right have absolutely incredible bodies. The individuals, who come inconsistently, do not have the same success. For example take the individual who comes in on Monday and because it's a Monday decides that they are only going to do a short exercise routine. That same individual on Friday decides that “hey it's Friday and I will just do a light day”. That same individual comes in and spends 20 min. talking to everybody and socializing. That individual is not making head way on their exercise routine, maintaining their weight, and eating right. There are individuals who say that they are doing all of the right things, however their actions speak louder than words. These “quasi health nuts” are consumed by distractions and excuses. Read More >>
“Measuring and laying out a room in advance can save you a lot of headaches.” ~ David Bromstad
Design for iPad By Black Mana Studios is one of my favorite apps. I usually don’t bother with apps if they exceed $3, but I heard good things about this. I think it’s worth every penny to be honest. I’m not colorblind, but I do struggle sometimes with how to pair materials and textures together. This app doesn’t build a lush virtual world, but it gives me a base to plan interiors that don’t disappoint.
It is a drag and drop interface, which is great since you can change things around in an instant. I find that the color and materials palette has great variety, so I can find that same wood finish or paint color (or something close to it) when I get to the big box store or wholesale warehouse.
This app is really useful with placing furniture too. It has a lot of different options to offer with sofas and tables. You can find items that you already purchased and arrange them before you move them. Or you can play with shapes and placement before you commit to buying anything. I found the dimensions to be very accurate. Read More >>
Almost two thousand years ago, the Roman leader Julius Caesar used three bold words to describe a quick victory he accomplished in a war: "Veni. Vidi. Vici," meaning "I came. I saw. I conquered."
The fact that we, as a species: 1. Still know who Caesar was, 2. Still know what he said that long ago, and 3. Still hold him in high regard - is a testament that he did some great things in his time.
So how the heck does that apply to you as a real estate investor? Or anything else, for that matter?
It actually applies in many ways. You see, Caesar was the kind of guy that didn't really mess around. He went to work and handled his business.
If Julius Caesar was a real estate investor in today's times, he'd probably be someone like a Donald Trump. Wait...Did I just compare Caesar to Trump? Yeah, I guess I did.
In fact, I can pretty much assure that any time anybody did anything worthwhile, they were acting in a BOLD way.
Want to run for President? (on any level, even Grade School) You've got to be BOLD. Read More >>
Over the past two months I have written about using “Paper” assets as income for your financial future. But did you know you are already using “Paper” for debts you personally owe. I am sure most of you have some type of consumer debt you pay every month. Every one of those individual consumer debts is also a form of “Paper” owed someone else. Your creditor’s hold a form of “paper” you signed and agreed to pay. Consumer debts are a drain on your monthly cash-flow and the sooner you get those debts paid off the sooner you will be able to use the money you no longer have to pay out every month for a better lifestyle or to invest and grow your financial future.
If you have never thought about your consumer debts as another form of “Paper” but as paper you owe I believe it’s time. I’ve decided to give you a very important lesson how you can use the “paper” or debt you owe for your own personal debts that are working negatively for you and show you a simple strategy that can help you become free of those high interest debts you owe in the shortest possible period of time. If you understand this simple strategy, it will make a huge difference in the quality of life you are seeking once you become debt free from the debts you personally owe. I believe this is a good place to really learn how “paper” works sitting at your own kitchen table so you better understand how to quickly eliminate the debts you owe. Read More >>
Preserve your relationships with customers, vendors, and others by setting up reminders in QuickBooks.
How many calendars do you maintain? Many business people have more than one. Maybe you use a web-based or desktop application like Google Calendar or Outlook for meetings, task deadlines, travel dates, etc. Your Customer Relationship Manager (CRM) might have another. Perhaps you still have a paper calendar as backup.
But where do you keep track of bills that need to be paid, invoices that have to be sent, materials for jobs that must be ordered, etc.? Do you include that information in your general business calendar(s) and hope they don’t get lost in the shuffle?
QuickBooks has a better solution. The software contains a dedicated set of tools that automates the process of setting up and displaying reminders. Once you’ve created them, they can be the first thing you see when you open QuickBooks in the morning. Read More >>
In these days of the real estate sites like Zillow and Trulia, the marketing and lead generation tools on these sites draw millions of page views every month. What you shouldn't be doing as an investor, home buyer or seller is using the value estimates on these sites to make decisions.
Truly good real estate investors know the valuation of their deals is key to insuring success and protecting projected profits. To effectively determine if a deal is a rental building wealth or flip to make some much needed cash, you have to analyze a deal fully. All the market areas covered by REIAComps, insure you easily know which way an investor should go.
Even Zillow will tell you that they aren't always on the money. They have a chart of median error percentages in estimates in major cities, and they run mostly between around 7% and 9%. That's around $16,000 on a $200,000 house, so you don't want that kind of number in your research for a wholesale or flip deal for sure. Feel free to use a Zestimate for a quick idea of approximate value, but what you want to do to arrive at an accurate market value is what real estate agents do; develop a CMA, Comparative Market Analysis. Read More >>
In many past articles I have stressed the importance of knowing the current real estate market. You should take note when property prices are rising, falling or plateauing. If you are a flipper, is your inventory selling faster or sitting on the market longer? If you are a wholesaler, are you having to work harder to find deals or have you suddenly found an abundance of deals? Are the deals you are finding getting easier or harder to sell? If you are a real estate agent or work closely with one, is his/her listing receiving multiple offers and flying off the board? Or are they sitting on the MLS with a few showings here and there? These are questions you should always be asking as a real estate investor.
One can always pick up an article or see a news report about what is going on in real estate but it is usually a report of real estate as a nation not just your market place. Most realtor associations have monthly reports that are helpful but they are not out until the middle of the following month. As an investor, even these reports may be too late in providing the information. If you are in real estate or plan on being in real estate you must keep your finger on the pulse. If you are doing plenty of business you will feel the change in the market and can begin to prepare for it immediately. However, if you only dabble in real estate, you might not know what is coming around the bend. If you dabble or are just getting started make sure to network with people that are full-timers. If you find a deal you plan on flipping or holding on to for a rental, discuss it with a veteran investor. They can mentor you on the best option and possibly keep you from making a mistake. Read More >>
Finding ways to attract motivated sellers to your Real Estate Investing business is probably the most important element in your business, since without the motivated sellers, there are no deals to be made.
There are several different ways to find motivated sellers for your real estate investing business using a shot gun type of approach to locate as many sellers as you can. A shot gun approach is where you “blast” your message out to your market and hope that there are motivated sellers among the bunch. Some of these techniques include yard or vehicle signage, business cards, t-shirts and hats, door hangers, pens, buttons, business card magnets, flyers and auto shades. What I really want to focus on today though, is using business cards to locate motivated sellers.
When having business cards printed, there are a couple of things you want to keep in mind. One is that your business card needs to have a grabber headline and it needs to catch people’s attention by looking different from every other business card out there.
Use bright colors and a benefit driven message on your business cards. List the reasons on your card why that seller should work with you and how you can help them. Remember business cards are a highly effective inexpensive lead generating tool for your business. On your business card, you want to provide your potential seller with a couple of different ways to contact you so they can contact you in the way that is most comfortable for them. So for example your card might include your phone number, your email address and a website for them to check out. The more ways you give a potential seller to contact you, the more of them will. Read More >>
We’ve all been there. We go through and estimate repairs on a property and miss something. Sometimes, that something may be minor however it could be quite significant. This tends to happen when the rehabs are larger in scope or have a structural or foundation issue that needs addressing. I don’t usually see wholesale courses that teach how to address these sorts of things when dealing with these points beyond generalities. However, generalities is usually not going to get this done right and does little to build confidence in Buyers.
While Buyers of course are expected to do their own due diligence, it has more than frustrated countless Buyers when wholesaler numbers end up being way off due to this common ignorance. I thought I would take some time to outline some common figures for our market for a variety of these often overlooked items. Take this and adapt it to your area and this will give you a solid starting point. Read More >>
The October 2015 Edition of The Profit Newsletter is available for download. There are46 pages of valuable information this month for your real estate investing success. Download it and check it out! The Profit is Atlanta REIA's digital, interactive newsletter for serious real estate investors delivered as an Adobe PDF file to read on your PC, Mac, Smart Phone, iPad or other mobile ready devices. Many of the articles and ads in The Profit contain many hyperlinks you can click to get more information online! The high res version of The Profit is "print ready" for those who want to print the newsletter on their home or business printer. Be sure to Subscribe to The Profit by Email or Subscribe to The Profit by Text so you don't miss a single issue.Read More >>
What will you do when things don’t go as planned? Will you flounder, or will you be able to put into motion a clear set of actions? In other words,
Do you have a System for Success?
Recently, a colleague of mine had two contractors burn him on a job. It should have been a quick fix, three days maximum, light work… paint, cleaning, and light bulbs. But neither contractor had a system to get the job done right, and he did not have a system to fire contractors and still come in on budget. The upshot is that, without a system, you risk losing time and money.
Often, when things don’t go as planned (and this can be often!), we have fear. We become paralyzed, perhaps we focus on the negative. To be successful, we need a plan that keeps us from feeling this way because what we want is success.
What does a good system give you? Read More >>
“What size property is right for me to start with?” This is a question I get asked all the time. My answer is usually the same. “Depends on how much of a loan you can qualify for”.
Unless you already have all the cash you need to buy your next apartment deal (and I am assuming you don’t) then you are going to need to get a loan. Understanding what it takes to qualify for a loan is one of the best ways to decide on a property size when you are starting out. If you try and go too big you are limiting the chances that you will complete the project. 80% of your efforts in finding deals should be spent looking at deals that have the highest chance of closing. What has the best chance of closing? Ask your sponsor.
In almost all loans commercial lenders want to see that you have the net worth equal to or greater than the loan amount. For example if you want to borrow $1,000,000 then you need to have a total net worth of at least $1,000,000 or more. Now, the nice thing about this situation is it doesn’t have to be just your net worth, it can include the net worth of your sponsor. A sponsor is a high net worth partner that you get to join you in the deal who brings the balance sheet you need to satisfy your lender. That is the great part of the multifamily business. We can get partners that will help us build our business and there is enough cash flow and equity for us all. Read More >>
I am so excited to tell you about a trend that I am finding on short sales that I am negotiating! You have read in my previous articles and I also mention in my Home Study Course about an interview that went worldwide on 60 Minutes which named Wells Fargo, Chase, Citibank, just to name a few, as Lenders and Banks who were falsifying documentation regarding Notes that Docx Company had destroyed. The interview referenced all of the “Robo Signings” that were occurring. After this was announced to the Public, the Lenders and Banks that were involved in falsifying documentation were fined big time. However, the Lenders and Banks were very smart on helping Homeowners who were taken advantage of. What they did was they looked at 2nd loans on properties that were in default and forgave them. When choosing the loans that were in default, they were able to add all their interest and late fees on top of what was owed, so that when they forgave the debt, they were forgiving a loan that probably would have been put in their collection department and eventually written off anyway. I would recommend that each of you go to www.60minutesovertime.com and type in Robo and find the airing of the show so that you will know all the Lenders and Banks that you should be looking for on 2nd loans. The Lenders and Banks would just file a discharge of lien against the property and as to whether or not they really notified the Homeowners, I am unsure about. The reason I state this is that many Homeowners who aren’t paying their loans on the 2nd mortgage, they probably aren’t paying their loans with the 1st mortgage either. Meaning that the property is probably in foreclosure on most transactions. The Homeowners who are in default have probably moved from their homes and they would ignore all the paperwork that’s coming in their mail and would never even see a notice if their debt was actually forgiven. Read More >>
A common scenario…
You find a deal and the Seller is motivated to sell. You walk through the property and notate everything you think the property needs. You come up with some quick estimates, do some negotiating with the Seller and get the property under contract. Woohoo! Your blood is flowing. It’s time to sell it. You send it to your Buyers list and you have interest. Things are looking good. Buyers check out the house. The excitement then dwindles…
The reason? Repair estimate is too low. In some cases, very low. Before you know it, you are getting few offers and the few you get are simply too low…
Does this sound familiar?
This story plays out several times per week in our office from wholesalers that send us deals. The reality is, it is common for wholesaler repair estimates to be low. The majority of wholesalers I meet have never rehabbed a property. Selling to a rehabber is one of those things where it is best to walk in their shoes before trying to sell to them.
'But wait, I don’t want to be a rehabber!’ you may be thinking. That’s ok, you don’t have to be. The solution is simple yet overlooked by the vast majority of wholesalers… Read More >>
Want an easy, free way to make your business look more professional and polished? Customize your forms. QuickBooks has the tools.
As a Real Estate Investor you may be asking yourself “Why do I need to do this? I don’t send out invoices or statements” – You may, on a very rare occasion, need to do just that for a late paying tenant or invoice them for repairs that they are responsible for. Or you may need to provide financial documents from QuickBooks to a lender/investor.
You probably don't get as many paper forms in the U.S. Mail as you used to. But when you do, do you draw conclusions about the business that sent them based on what their forms look like?
Whether or not you think you do, most people make judgements on businesses based on collateral materials. You might notice that there's no company logo, or that there are unnecessary blank fields. Maybe the print is very light or blurry, and there's no message at the bottom thanking you for your business and your payment.
How you present yourself on paper does matter. There's a lot of competition out there, and you need to use all of the tools available to you to stand out. QuickBooks provides one way to do so with its simple forms customization features. Read More >>
When you know the best pockets or market areas around the U.S. to find discounted real estate, you are half way home. All that is left is evaluating the inventory for maximum profit. For those of you connected to REIAComps , the control and feeling of confidence you have over your deals is priceless. Using REIAComps to investigate the value of “Shadow Inventory” houses as they come to market, against the recent sold comparables, will provide you a solid position to “make your profit when you buy”.
First, let’s define “Shadow Inventory”. The general definition goes like this; the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of properties that are seriously delinquent, in foreclosure or held as REO by mortgage servicers, but not currently listed on multiple listing services MLS’s.
CoreLogic has released its National Foreclosure Report with a supplement featuring quarterly shadow inventory data. According to CoreLogic analysis there were 46,000 completed foreclosures in the United States, down from 64,000, a year-over-year decrease of 29 percent. On a month-over-month basis, completed foreclosures decreased 8.3 percent, from 50,000 in one quarter. Read More >>
I am always excited by the opportunity to share as many ideas as I can with regard to locating motivated sellers for your real estate investing business. After all, without the sellers, there are no deals. I also like having the opportunity to share ideas for both the beginner investor and the seasoned investor alike within a variety of budget constraints. One of my favorite techniques is using flyers to get the message out there that I buy houses.
Flyers are a great way to target and locate motivated sellers. They can be used to target specific neighborhoods and subdivisions where you want to buy houses. You can either hire a company to hang them door to door for you, or hire older children to hang these flyers for you.
Do follow up by driving by the area to make sure the work got done. When using a company to lay flyers for you, make sure you get references from satisfied customers first. There are some companies out there that will take you money and not get the work done, so you want to check their reputation before hiring them. Flyers are a wonderfully inexpensive way to locate sellers and this technique can be repeated either monthly or quarterly depending on your time and budget. When we used to lay flyers door to door ourselves, we would take one weekend morning to do this. My husband and I would each take one side of the street and lay flyers door to door. We would keep a chart of the neighborhoods we had done so we could track our results. You always want to be tracking where your leads are coming from so you know which of your marketing campaigns are working best. Interested potential sellers will hold on to these flyers until their situation changes and they are ready to sell, so laying flyers door to door becomes one of your long term marketing techniques. Read More >>
Boy was Mike ever excited! He found his first real estate investing deal; a property he planned to keep as a rental. Knowing that Kim and I loaned money to purchase investment homes, he gave me a call.
Mike’s contract was a gem of an opportunity – at least according to him. The seller told Mike that six other buyers were lined up with cash money. If Mike wasn’t able to close within a week, the seller would let another lucky stiff…errrr…I mean investor…have the home.
Mike explained that the house was built in 1955, had three bedrooms and one bath, needed a good bit of work, the neighborhood was okay but not great, and like-kind houses in the area rented for $800 per month. The seller told him the home’s fair market value was $115,000, but he was willing to let Mike steal it for $89,000.
Mike was chomping at the bit with no time to waste. He needed a purchase money loan and he needed it now!
After digging into the guts of this “deal,” here’s what we discovered. Read More >>
I want to take this opportunity to talk to you a little bit about commercial property. I've got a lot of experience in commercial property from developing vacant land to income-producing properties of all kinds. My favorite is development.
But first, let's talk about what is commercial property. And, in the world of residential it's anything over 4 units. So, a 4-plex is not commercial, but a 5-plex is considered commercial. And, some of the properties that I have dealt with actually had income from tenants. I've had office buildings, I've had apartments, I've had retail and two or three other things, heck, I even had a mobile home park at one time, and over the years I've pretty much dabbled in everything.
I've specialized in nothing in the commercial world because I'm more of a generalist than a specialist, and of course we could have this discussion for hours. I think the smartest thing to do is to be a specialist because you can get good at one thing and not have to do so much and go through the learning curve that I had to go through. Read More >>