Real Estate WEALTH Magazine featuring Sensei Gilliland

7/16/2019 Real Estate WEALTH Magazine featuring Sensei Gilliland

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Realty411 / reWealthmagazine is published quarterly from Santa Barbara County, Calif.Copyright 2013. All Rights Reserved. Reproducon without permission is strictly prohib-ited. The opinions expressed by writers/columnists are not endorsed by the publishers.IMPORTANT DISCLOSURE: Publishers and adversing sta are not responsible for per -forming due diligence on the opportunies oered by magazine adversers and/or spon-sors. Before invesng in real estate seek the advisement of a trusted nancial advisor, at-torney or tax consultant. Real estate invesng can be risky and may result in loss of capital.

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FOUNDER/CEO

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PRESIDENT

Nikolaos K. Pliagas

EDITORIAL STAFFBonnie Laslo

Robb Magley

Isaac Newark III

Stephanie Mojica

COPY EDITOR

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John DeCindis

COLUMNISTS

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Our franchisees have purchased over 50,000 houses since 1996.

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07 Publishers note

08 Insurance myths

11 Meet im Herriage

13 Its a sellers market

14 What are tax liens?

16 Photo tips or investors

18 Mikes mobile home parks

19 ips or snail mail success

20 Sound advice on leverage

22 A&Es Flipping Boston

24 Notes with Scott Carson

25 ips on rental management

27 Questioning convention

31 Prole o Equity rust

35 Insights by ony Martinez36 Senseis entrepreneurial lie

40 Te 401(K) sinking hole

42 Coast to Coast REIA

44 A secure investment?

46 Nick Vertucci always wins

48 Market selection advice

50 Q&A with IPX/AZ

52 Te power o direction

54 Benets or investors

56 Find your partners

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Why I click, notdrive, for dollars

sellers. Personally, I think the public

Multiple Listing Service is the most

under utilized and under valued inves-

tor tool that exists today and its

free! Most investors simply dont use

or dont even know how to gain access

to their local MLS. Think of the MLS

as our industrys library of knowledge

that holds valuable treasures, much

like the real thing. (Our own public

libraries are also greatly under uti-

lized coincidence?) The MLS in LosAngeles, www.themls.com, not only

provides guests with a listing of cur-

rent properties, but it also has access to

what is pending, on backup, and what

just sold. Its an invaluable resource!

Some investors mistakenly think that

by Linda Pliagas, publisher, investor, agent

Continued on pg. 62

Over the years, I have purchased

and sold many properties around

the country, from single family

homes to multifamily complexes, the loca-

tion and type of property may vary, but

one thing that they all have in common is

that they were found on the MLS (Mul-

tiple Listing Service).

Most investors are taken aback when I

tell them that I nd my deals on the MLS.

What about writing yellow

letters? Dont you use bandit

signs or do any cold calls? Myreply is always: Who has time

for that?!

Why should I spend money and pre-

cious time on techniques like that when

all I have to do is a quick MLS search

to see todays hot pickings. Driving for

dollars? Have you seen the price of gas

lately? No thanks, Id rather comfortably

kick back at home and click for my deals.

Do you think distressed properties

and motivated sellers do not exist on the

MLS? Wrong! I found my three recent

rehab deals on the MLS. Thats three

single-family properties in distress with

nearly $100,000 in equity in each one.

Ive also found my properties out of

state on the MLS boards of their respec-

tive cities. Ive purchased rentals in

ve states, all found on the MLSat no cost to me. The MLS has

all sorts of distressed deals:

REOs, short sales, pro-

bates, trustee sales,

corporate-owned

properties, as

well as motivated

Realty411Guide.com PAGE 7 2013 reWEALTHmag.co


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DEBUNKEDby Stephanie B. MojicaPeople tend to focus more onmaking fast cash with real estateinvestments and as a result oftendo not properly insure their assets.

Beginning investors are especially

prone to treating insurance as an op-

tion rather than an essential part oftheir business plan, says Tim Norris,

President of the National Real Estate

Insurance Group (NREIG), which is

headquartered in Kansas City, Missouri.

Most of us consider insurance as a

purchasing endeavor. That is, we either

buy it, or it is sold to us. Therein, in

my opinion, is the foundational fault

of the process. The misconception is still

prevalentinsurance is mysterious, dif-

cult to understand, and, at best we hope

we can trust the person that is selling it to

us, Norris says.

Norris, who is also a board member of

the non-prot National Real Estate Inves-

tors Association, has garnered plenty of re-

spect for his authorship of the PowerPointpresentation 13 Myths for the Real Estate

Investor. To create the document, Norris

utilized more than 20 years of experience

working closely with real estate investors

to properly insure their assets. Even if

people do not ultimately purchase a policy

through his company, Norris hopes his

advice will still help them protect their

investments.

Norris 13 myths are as follows:

1. Insurance is exclusive of estate, tax,

and nancial planning.

2. Being named as an additional

insured on the existing homeowner

policy will sufciently protect my inter-

ests in a subject-to and/or lease-option

deal3. Buying a property in your personal

name and using your homeowners

policy liability is ne

4. The personal dwelling re policy

is sufcient to cover my non-owner oc-

cupied rental

5. I have a personal umbrella policy

(PUL), so I dont need commercial

insurance

13 Insurance Myths for RE Investors

Continued on pg. 55

ImagebybyDjtaylor



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by Stephanie B. Mojica

Real estate entrepreneur Tim

Herriage has become so

well-versed in the ins and

outs of the business that he

can buy a house from an owner just

as easily as he can buy milk from a

grocery store.

Herriage, a native of the Dallas-Fort

Worth metroplex, spent the rst ve

years of his professional career as

an intelligence analyst in the United

States Marine Corps.

In 2001, he decided to return to his

Texas roots and become a real estate

investor. Herriage has purchased more

than 1,000 single-family houses in

Dallas, Fort Worth, Houston and San

Antonio and is involved in numerous

aspects of the real estate investment

eld.

In 2011, Herriage founded the REI

Expo. The 2012 expo, held in the

Dallas-Fort Worth area, offered at-

tendees the chance to learn from Texas

experts in 66 classes over a two-day

period. Herriage requires speakers at

REI Expo to offer good content and

not turn their talks into those more

characteristic of a pitch fest.

People attend events like this

because they want to learn how to get

into that industry or get better at what

they do, Herriage said.

The last thing they want to do is sit

through a weekend of sales pitches.

Flip This House A&E star David

Montelongo was just one of the speakers

at the 2012 REI Expo. When asked about

his impressions of the expo Montelongo

said, This group was more on the experi-

enced side. They had good ow, com-

munication

and energy.

I did some

good busi-

ness and

will be

back.

Model

My Home President Jana Uselton spoke

on staging homes to attract buyers. She

and her team wrote up thousands of dol-

lars in orders at the expo itself and said

many more investors committed to work

with her.

We didnt have to do any selling. Once

they saw the hard numbers of the results

sellers are getting by staging homes it be-

came a no-brainer for them, Uselton said.

Out of all the seminars, trade shows and

expos we have attended, sponsored or

exhibited, this was the absolute best event

we have ever done.

At press time, the date for the 2013 REI

Expo in Chicago was imminent. Herriage

hopes to duplicate the educational value

at not only the 2013 event, but also future

REI conferences.

Herriage, often lauded as one of the

most successful investors and wholesal-

ers in the real estate market, is president

of Herriage Homes as well as a National

Development Agent for HomeVestors.

HomeVestors, also known as We

Buy Ugly Houses, has purchased more

than 50,000 American houses since the

companys birth in 1989. Herriage, who

is married and has two sons, regularly

gives public talks about his experience

as a successful real estate entrepreneur

who also has a happy family life.

I enjoy meeting new people and trav-

eling, Herriage said. I got my quickstart in this business by meeting people

who were willing to help me, and I try to

do the same.

Whether Herriage is speaking to a

roomful of people or an individual, he

hopes the one message they take away

from their time together is that Herriage

has a mission to tell only the truth.

I love buying houses, but hate the

Dallas Wholesaler& Industry Leader

Tim Herriage

From local wholesaling to cross country travels for

HomeVestors and the REI Expo, this former Marine

represents a few, a proud select group of investors.

Continued on pg. 30

I got my quick start in this business bymeeting people that were willing to helpme, and I try to do the same.



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Your Default Property Acquisition Specialist

Visit PIP-West this July at the REI Expo in Chicago or in California this October.

Please call PIP-West for more information: 877-335-2529

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13/64

by Kathy Fettke

From 2007 to 2012,

the United States

experienced one of the

greatest housing reces-

sions in history. Prices

dropped over 50% in many areas,

building came to a near complete

stop, and foreclosures made daily

headline news.

There was a glut of available

homes to buy, but few people had

the guts to pick them up at rock

bottom prices. It was a perfect buyers market.

The irony is, most people are afraid to buy in a buyers mar-

ket, even though its the BEST time to buy! You can name your

price, negotiate terms, and pick out the best value for bargain

prices. But it takes contrarian thinking, and requires a sophisti-

cated understanding of market cycles.

Market cycles can change on a

dime. Here we are in the second

quarter of 2013, and todays

news is all about the terrible

LACK of housing inventory,

multiple offers over asking price,

and people waiting in lines when

a property is released to the

public. We are back in a sellers

market.

A sellers market is good for

sellers because theres a lot of

buyers competing for limitedinventory. High demand and low supply allows the seller to ne-

gotiate, so prices tend to go up. We are seeing price increases

as much as 1-3% per month in markets like Sacramento and

Phoenix. What is happening? Where did all those foreclosures

and short sales go?Continued on pg. 61



14/64

Charles Sells

Taking the

Hypeout of

Tax Lien Sales

C

harles Sells doesn't like

talking about acquiring

real estate for "pennies

on the dollar," because it

sounds too much like a

carnival-barker, late-

night-TV, shady-character

pitch.

But Sells, director of

acquisitions for Platinum

Investment Properties

West, often nds him-

self in the position of

offering clients just that

although he'd prefer a

more sober accounting ofthings.

"We try to take all the hype out of the

water," said Sells. "We offer a conserva-

tive, high-yield opportunity that is backed

by government regulations."

Sells and partner Don Fullman have

carved out a respectable corner of this

niche market, and they help investors

navigate the seemingly endless rolls of red

tape that surround property taxes and

what happens when property owners don't

pay them. In their effort, they've discov-

ered a surprisingly safe investment within

a shaky market: acquiring tax liens and,

often, deeds.

Here's how it works, focusing on Sells'

favorite markets at the moment, Illinois

and Georgia: in both states, the process

begins when at a tax lien auction.

"In Illinois, what we buy is a tax lien

to the property," said Sells. "In 2013, we

would be buying 2012 delinquent taxes."

Illinois has a redemption period,

two and a half years, during which the

property owner can "redeem" their tax

lien by paying off the

back taxes plus inter-

est; the bid rate starts at

18%, and it can be bid

down to as low as zero.

But, according to Sells,

whatever your bid rate

is, in Illinois it doubles

every six months.

"So if you bought it

at 15%, you're actuallygaining a net annualized

return on a paid-off certicate of 30%,"

said Sells. After the redemption period

ends, if the lien is not paid off, the holder

of the lien you, the investor can

initiate foreclosure on the property.

That process can take as much as a year

according to Sells, and of course there are

The reason we continue

to have our success is

because our clients

are successful.


by Robb Magley


15/64

going to be attorney and court fees, plus

any additional back taxes will need to

be paid but at the end of the process,

you've acquired clean, clear, quiet title to

that property.

"Now, the way Georgia works, it's

what we call a premium bid state, where

the penalty is set at 20%," said Sells. "So

say we go to a tax sale in Georgia, and

say there's a lien being offered for sale

for $5,000. We could spend as much as

$50,000 on that tax lien, and the underly-

ing property could be worth as much as

$200,000. The homeowner then has to pay

us back 20% on top of the $50,000."

That pencils out to a $10,000 penalty on

top of their $5,000 tax bill that they have

to come up with."The net payback to our investor would

be $60,000 on the redemption," said Sells.

"So you're getting a high return, either on

the redemption of the lien

itself, or in acquiring title

to the property."

Holding the tax lien

is an enviable position;

you're in line even before

the mortgage company;

in fact, according to Sells,

more often than not his

clients nd themselves

being redeemed by

the banks themselves,

because taxes are escrowed as part of

most mortgages. When owners fall behind

on the mortgage, the taxes might not get

covered.

"The banks have to redeem us out just

like the homeowner would," said Sells.

"We have rights to foreclose on the mort-

gage companies just as we do the home-

owner; it's a pretty safe spot to be in."

Clearly it's a strategy Platinum Invest-

ment Properties West has seen suc-

cess with; according to Sells, despite

a lot of talk of declining inventories

of delinquent properties, they're

busier than ever.

"Our company has doubled in

size every year for the last six

years," said Sells. "This year we

performed higher than we ever

have in past years. There's still

plenty of inventory out there for

us, because I think there's a lot

that still hasn't come to market

yet. There are more investment

opportunities than there is cash

to put into them."

Sells said his clients are look-ing for longer-term investments

with high yields -- he estimates

40% of their investors are self-

directed IRA clients and they know that

these are not particularly liquid invest-

ments to get into.

"Now, with an agent like us, do we have

more opportunity to make it liquid than

someone who just shows up and buys

these tax liens?" asked Sells. "Sure, of

course. But we still push on all our clients

that this is a long-term hold; you'll get

redemption checks

immediately upon

investment, but don't

expect that you're go-

ing to ip all this stuf

out in a year's time

and do it again."Sells admits it's a

challenging market,

and that there's a lot

of road between the

initial investment

and the return. "And there certainly was a

learning curve when I got started in '96,"

he laughed. "But I think we're the best in

the business that offers this type of oppor-

tunity now. And the reason we continue to

have our success is because our clients are

successful."

Contact PIP-West at: 877-335-2529 or

visit online @ www.PIPWest.com

There are more investment

opportunities than there is

cash to put into them.



16/64

investortools

by Tom Wilson

Inever cease to be amazed at the poor quality of many

real estate photographs. Are you aware that the picture

for many properties for sale is literally taken from the

drivers seat of a car!? For only an extra 30 min. of your

time, or $100 paid to a professional photographer, one of the

most expensive products you will ever market can go from an

also available to schedule a showing today!As a serious

amateur photographer for 50 years, Ive learned a few things

that make a big difference. Lets take a look at some common

mistakes that are made and how to easily rectify them.

EquIpMENT

For starters I recommend a DSLR (digital sigle reex ca-era), such as an entry-level Canon Rebel ($300 used to $900

new). A point and shoot can take very ne every day shots,

but this is not an every day sale. A DSLR

allows for better lenses, lter attachments,

an external ash, and what you see is

what you get because you view the scene

through the same lens and lter that shoots

the picture. You can still set the camera

to a point and shoot automatic mood and

dont have to know anything complicated.

A Wide Anle Zoom Lens. (can be pur-

chased with the camera or alone for about$200). The lens should be at least 18mm

minimum (or 28mm equivalent to the old

35mm lm cameras). Wider is even better

but 18mm is acceptable. It should zoom

to at least 50mm. Most starter DSLRs come with

this lens as the defacto standard, so they are readily

available.

Ninety ve percent of point and shoots simply do

not have a sufciently wide a lens to show all of a

room. Period. Wide angle is the only substitute for

when it is impossible or not practical to get farther

back. I am abbergasted at the number of ad photos

that only show the toilet and a corner of the tub, orthe nice family room with replace but dont let you see that

it is attached to the kitchen for a wonderful Great Room. A

wide angle lens solves this problem.

polarizer ($20-$50 at any camera store; the cheap one is

just ne). A polarizing lter attaches to the front of the lens

and is used to cut glare and reections. I rarely take a picture

that includes sky, water or through a window without a polar-

izer. The front element rotates until you see that the picture

has the least glare, and best contrast and saturation of color. It

works best when you are perpendicular to the angle of the sun orrays. The improvement in the picture is dramatic.

Exteral Flash ($50-$200). The built in ash is minimally

acceptable, however, an external ash (attaches to the metal piec

on top of the DSLR called a hot shoe) helps to ll in the shadow

at the side of the scene taken with a wide angle, can ll a deeper

great room with light more fully and evenly, and can be aimed up

so that you dont get harsh reections from the bathroom mirror

and other reective surfaces.

COMpOSITION

Views. First of all, pretend you are the buyer. What would you

want to see in addition to the typical pictures? The neighborshomes, the street, the back yard, the local park, the development

entrance, etc? Then include them in your portfolio of pictures!

Consider framing some

shots with a tree or door-

way, use a step ladder for

an elevated view, shoot the

living room from the stairs

and include artistic detail

features such as a nice car-

riage light, owers, garden

arch, or replace.

No Dirt Landr.Put away or shoot around

the trash cans, close the

toilet seat, cut the grass,

request or pay the resident

to straighten up before you

arrive, angle your shot to

exclude the power pole, the

dead bush, etc.

Litin. Time your exte

rior pictures with the sun

and weather. Dont shoot

an East facing home in theafternoon; go in the morning on a nice day when the front view

is lit up. On the interior, go in the daytime, open the windows,

turn on all of the lights, use your external ash and angle it to ge

more diffusion. You want the scene to look warm and lived in.

Stain. If the house is occupied get a stager to recommend

what to change and remove. If the house it empty, get it staged a

least with accessories if not furniture. As a minimum, take along

a bag of small accessories to stage the kitchen and baths just for

the shots. I stage almost all of my homes for owner occupant

Stamp Out Drive By Shootings!The importance of having a skilled photographer on your team

EquIpMENT LIST

DSLR $300-900

Wide Anle Zoom Lens $200

polarizer $20-50

Exteral Flash $50-200

Total Investment: ~$700-1,000

Amortized over 50 oses: $20/ose



17/64

sales. Some agents tell me not to do it be-

cause most others in that market do not.

Perfect. I always want my product to look

and be better that my competition.

Using these techniques, you can take

better marketing pictures than your com-

petition that will make a big difference

in your advertising to entice a prospect

to take the next step. If you elect to farm

it out to a professional you now know

what to look for and what questions to

ask. May your next pictures look like you could sell a thousand

homes.

Tom Wilson is a thirty-seven year real estate veteran who has

executed over $100M and 1,800 units of real estate investments.

After thirty years of managing some of the Silicon Valleys

pioneering technology companies, Mr. Wilson put his business

and management experience toward full time investing. One of

his companies,

Wilson Invest-

ment Properties,

offers high-quality, high-cash ow, fully rehabbed, and leased

properties to other investors. Mr. Wilson is also a weekly host

of the Real Estate 360 Radio program on KDOW 1220 am

every Wednesday at 3 pm. Catch the podcasts on iTunes or on

his website, www.tomwilsonproperties.com

Some people believe Photoshop isthe solution to poor photography.This notion was tested with the poorexterior shot. However, it is impos-sible to digitally reframe a poorlycomposed photograph, and there isno way to recapture the saturated

natural looking sky and lawn with-out having used a polarized flter inthe frst place. Conclusion: start witha good photograph and use digitaltools for very minor touch ups only.

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18/64

Making $100K Per Yearwih Mobl H CmuniesMany real estate investors I meettell me they have one goal how

to make $100,000 per year in pas-

sive income. The $100K will pro-

vide them nancial freedom, i.e.

the ability to do what they want

when they want. As I explain in

my new book Unconventional

Wealth, the lack of loyalty from

the vast majority of corporations

to their employees, especially

those over the age of 50, makes

it imperative that you start on a path to

nancial freedom as soon as possible be-

cause you are going to be forced out on

your own sooner or later. Ive owned and

explored numerous businesses through the

years and I strongly believe cash ow real

estate is the best path to achieving the goalof $100K in passive income.

I have chosen the real estate niche of

investing in mobile home communities

(MHCs) because the cash ow is so much

greater than other areas of real estate. As

I have discussed in previous articles, even

by Mike Conlonin this low interest

rate environment that

has pushed cap rates

back down to historic

lows for many real

estate investments,

I have bought seven

d i s t re s sed MHCs

(1,000+ spaces) in the

last six months all at

10+ cap rates. I am

condent I will have

them at 15 - 20 caps within 18 months by

adding some homes to vacant sites and

increasing rents. I know of three primary

ways to get to $100K in annual income in-

vesting in mobile home parks:

1) If you have $750,000 to invest and dontwant to do any work and take minimal risk,

you can get a 12-14% annual distribution

(plus a 3% to 5% additional annual return

through debt pay down and appreciation)

investing with a larger operator like my-

self who works with investors.

2) If you have $375,000 to invest and

have access to $700,000 $1,000,000

in bank or seller nancing, you can buy a

distressed 100-space park that is 50-65%

occupied, make the necessary repairsadd 10-20 repo homes to ll empty sites

raise rents to market levels, and manage

it yourself. Owning one 100-space park

and operating it yourself is all you need to

make $100k/year!

3) If you dont have any funds yourself

you can start on what I call the 3-Step

Plan. Step One is to raise $100K from

people you know and buy a distressed

(50-65% occupancy) 25-space park for

$250,000 or less with 20% down andseller nancing. Try to get interest only

for the rst 12 months. Use the remaining

funds after the down payment to spruce

up the park (mostly cosmetic repairs) and

Continued on pg. 3



19/64

Savvy investors utilize

many creative ways in

their search for suit-

able properties. One of

our preferred methods

at Whiterock Capital

includes direct mail campaigns to

landlords who own single family units,

including condominiums and detachedsingle family homes.

The mail campaign includes a

personalized letter directed to the non-

occupant owners. Our strategy includes

simple letters stating our interest in

buying homes in the neighborhood for

cash. Sellers are often looking for a

quick close and fast cash, or they are

tired of being landlords, or they may

be moving into retirement out of state.

Our game plan includes sending letters

about every three or four months to

our target areas. Many potential sellersbecome familiar with our letters and

save them for later reference.

For example, in a recent transaction,

the owner seeking an offer called us

from a recent letter. This owner

is now a potential seller, be-

ginning the acquisition

phase. Acquisition

includes a eld re-

view of the property

and pulling comps,

including other

transactions we

have com-

pleted in

the area.

By

tracking our

sales and the

sales of others, we have a

realistic basis for estimat-

ing property values. Based

upon neighborhood values

WealthVol. 2No. 12012

RICHARD EDROSOLAN

WhiteRock Capital, Inc.Discover why this veteranCalifornia investor likes tobuy properties in Arizona

an offer is made to the seller, negotiations

completed to a mutually agreed to price.

A contract is executed placing the sale

in escrow and binding the seller to the

agreed to terms.

With the property under contract, the

next step is to market to our wholesale

and retail buyers list. Many of our cur-

rent investors have placed orders for aparticular type of property. Matching the

property to an investors need reduces

the time required to ip the property

out of inventory. Managing the property

is straight forward as the entire process

from identifying the property, through the

acquisition to a wholesale ip averages

thirty-three days. Many transactions are

completed in about fourteen to twenty-

one calendar days. Select properties are

chosen for rehab at the time of acquisi-

tion. A major rehab that includes a new

kitchen, updated bathrooms, paint insideand out, tile oors and neighborhood

appropriate landscaping

typically takes less than

four weeks. Rehabbed

properties are priced

for a quick sale, usu-

ally 5% to 15% be-

low the value of other

homes in the area.

Exit strategies are

chosen at acquisition

based upon the property

value, to ll an order, or the

potential for a larger safe return.

In this case, a wholesale ip to

meet an investors order was

determined to be the best

course.

In order to provide our

investors solid returns

on their investment, a

high velocity of money

through each deal is re-

Snail Mail SuccessLrs Lu Mvated Slrs

quired. Based upon pipeline volume ofproperties and an approximate 60 to 90

days per turn, the investor can expect

three to ve turns per year on their capi-

tal. Right now, the markets most ripe

for this strategy are Phoenix, Las Vegas

and several California markets.

Because our strategy is so suc-

cessful we, unlike other wholesalers,

have more inventory than we, and our

network of investors, can handle. Also,

unlike most wholesalers, we are true

wholesalers who offer properties to our

investors at prices which are well below

retail, leaving some meat on the table

so that our investors take ownership

with some equity already in place. And

were doing this in rapidly appreciating

markets.

To reach Richard Edrosolan, CEO and

founder of Whiterock Capital, call:

805-766-1130 or email: richard@

whiterockrei.com

by Richard Endrosolan



20/64

Smart real estate investors

are learning to use leverage

wisely and efciently to put

more money in their pockets.

Continued on pg. 58

Real estate investors are being bombarded with

advice today from every direction and it is

sometimes hard to nd two pieces of advice that

are the same. There are so many options and somany opportunities that becoming confused is

a common feeling among investors. Well get ready, because

here comes one more piece of advice that may run contrary

to what many are advising investors to do today. I happen to

have learned my lesson when it comes to leverage and I have a

special place for it in my portfolio. Smart real estate investors

are learning to use leverage wisely and efciently to put more

money in their pockets.

SuRpRISINg INVESTORS WITh SOuND ADVICE

In the 4th Quarter of 2012, I made a presentation to a group

of investors in Northern California and I surprised many in

the room when I made a statement that I did not believe youshould buy real

estate and leverage

it for cash ow.

Given that I am

a partner in two

companies that

specialize in help-

ing investors nd

properties that pro-

vide a positive cash

ow after lever-

age, this statement

caught much of the

audience by surprise. But I followed that sentence with a bit of

a clarication. I told the group that there are many ways inves-

tors can be fooled or even fool themselves today into thinking

that they are making a positive cash ow on their property. I

told the group that often, the biggest mistakes investors make,

is sacricing long-term stability for short-term gains.

ThE BANk WINS EVERy TIME

When I purchased my rst home, I was given one option by

the three different nance companies I visited a 30-year

Surprising Investors

With Sound Adviceon Leverageby Chris Clothier, co-owner

of MemphisInvest.com

mortgage. The 30-year mortgage has become the staple of

real estate investing and even Warren Buffets recent statement

about the 30-year mortgage shook the real estate world.

What many people fail to recall about Warren Buffets as-

sessment of investing in real estate is that he used the phrase

if he could which, is very different than stating this is

what I am doing. This is worthy of an article all by itself as

different

inves-

tors and

investment

companies

have taken

his short

interview

and turned

into the

greatest

marketingpiece they have ever had. His ve minute interview has been

used thousands of times already to convince investors that

they need to mortgage to the hilt all because Warren Buffet

mentioned it in his interview. But they all forget two impor-

tant points.

1. he is one of te wealtiest men on te eart and can af-

ford as mc leverae as e is comfortable tain on.

2. he never sas tat e is bin sinle-famil omes.



21/64


22/64


Dave Seymour and Peter

Souhleris o the Boston area

loved ipping commercial

and residential properties long

beore they were ofered the

A&E television show Flipping

Boston, which both entertains

and educates audiences about

the hard work and great

nancial rewards o real estate

investing.

Seymour and Souhleris, owners oCityLight Homes in Peabody, Mass.in the North Shore area o Boston,have ipped houses and taught othershow to ip properties or more than18 years. Unlike some real estateentrepreneurs, the duo places a specialocus on reurbishing the properties in which theychoose to invest.

From conventional real estate brokerage servicesthrough to our innovative, creative and efective outo the box home buying and selling solutions, werededicated to one thing making the sale, Souhlerissaid.

In Souhleris and Seymours book Te Flipping

Formula, their innovative approach to monetizingresidential and commercial properties is spelled out interms even newcomers can grasp.

Every day especially in Boston people drive by whatcould become tens or even hundreds o thousands odollars in their pockets, Seymour said.

Ignorance o the basics o selecting, purchasing,reurbishing, and reselling a home or quality commercialproperty is all too common among even otherwise well-educated people, the pair noted.

FLIPPING BOSTON

Continued on pg. 62

a chat ith Dave & Pete fom A&Es TOP Sho



23/64

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is about the self-reliance and rugged

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24/64

Realty411Guide.com PAGE 24 2011 reWEALHmagcom

Scott Carson

has a mes-

sage for

anyone

whos on the fence

about investing

in bank notes: If

youre not in notes,youre going to

wish you were 6

to 12 months from

now.

Buying and sell-

ing those mortgag-

es, either indi-

vidually or in pools, is the bread and

butter of Carsons Inverse Investments

a company Carson founded in the

middle of the rst round of post-boom

bank failures.

When a lot of banks started goingunder, I saw an opportunity there,

said Carson. I launched my own rm

six years ago, when the banks were

closing like crazy.

The early days were a fever-pitched

one-man show, according to Carson,

calling 40-50 banks every day, search-

ing the nooks and crannies of the

mortgage industry for sub-performing

(or non-performing) loans the holders

would be willing to sell for less than

the market value of the property.

But it paid off; Inverse Investmentsis one of the best-positioned boutique

rms in the secondary note market,

with a reputation and record thats hard

to match.

Those days helped us build up our

database from then going forward,

said Carson. We had success buying

one-offs and small pools, doing what

others were talking about doing but not

too many were actually doing at that

point. And over time, we

built a name for ourselves as

the people who were closing

deals.

That reputation has grown

exponentially since Inverse

Investments rst dipped its

toes in the water; Carsonand his team have garnered

mention in print giants like

Investors Business Daily and

the Wall Street Journal, and

Carson himself was asked

to speak at the National

Association of Realtors con-

ference in 2010. After that, things really

took off; Carson said its in no small part

because the entire business is predicated

on nding an upside in a down market

one thats appealing to every party

involved.The banks are look-

ing at their loans;

said Carson. Thats

where they make

their money. So

imagine theyve

made a half-million-

dollar loan, and

the propertys only

worth $200,000

now. Theyre on

the hook for that

$300,000.Obviously, the

banks have the option

to foreclose; but in markets like Florida,

New York, or New Jersey, where fore-

closure times are measured in years, not

months, many are realizing theyd rather

clear out their books and get a guaranteed

payout instead even if its smaller.

If they know they might not get paid

for years, theyre realizing theyd rather

take a fraction of whats owed right now,

and get that, versus waiting for years

and then having to sell it as an REO as

well, said Carson. So theyd let this

property go for $100,000 to an investor.

Thats a phenomenal deal.

So the bank wins, the investor gets a

great deal, and the mortgagee suddenlyhas a note holder who can work more

creatively than any bank ever could.

The investor can do either a loan modi-

cation, said Carson, or get a deed-

in-lieu from the homeowner and let the

homeowner walk.

All this, Carson points out, potentially

without a deciency judgment, bank-

ruptcy, foreclosure or even any late pay-

ments on the homeowners credit. Its an

attractive solution to a lot of players.

You have HUD and FHA announc-

ing they expect to sell more notesover the next year than REOs

because theres such a glut

of inventory, said Car-

son. And theyve cre-

ated an investor match

program, because they

know investors have

much more oppor-

tunity for creative

solutions for bor-

rowers than they

can offer.

Carson calls itthe perfect storm

for investors in the note

business. The banks that were saying

no just a few years ago are now say-

ing yes today, said Carson. I hear

it every day, Can you give us a bid?

or Can you give us an idea what you

might buy this for? Theyve denitely

Continued on pg. 49


by Robb Magley

Hitting the High Noteswith Scott Carson


25/64

Take control of your properties

with these 10 tips written by

Matt Theriault. This veteran

California investor is an author

and host of the most popular

real estate investing podcast,

Epic Real Estate Investing, on

iTunes. He also shows people

how to invest in real estate at

EpicProAcademy.com, or his

team does it for them at:

CashowSavvy.com.

1Seek multiple referrals from other successful real estateinvestors. Success leaves clues, and a referral froma trusted and prosperous source is more than a clue, its

evidence.

2Adopt the mindset of Slow-To-Hire-Quick-To-Fire.Regardless of how many positive answers you get froma property manager during the interview process,

sometimes the only way to nd a good one is to give

them a trial run. If you notice a pattern of actions

that conict with their promises during the inter-view, cut em loose. This is your livelihood, you

are not obligated to someone who doesnt t your

needs.

3Interview more than one. No matter howmuch you like the rst property manageryou meet, keep interviewing. Not only do

multiple interviews increase the likelihood of

nding a great property manager, you will learn

a ton about the projected performance of your

properties and the market.

4Test their customer service. Intentionally endyour interviews with a few unanswered questions.Call back after hours and leave a message. Note how andwhen your call is returned. When they (if they) return your

call, use the unanswered interview questions as a basis for

your conversation. Ideally, you want your call returned within

24 hours in a professional and courteous way. Placing a call

during business hours can also give you an indication of the

companys professionalism and accessibility.

5Hire investors. This tip applies to your entire team as wellas your property manager. Although its is not essentialthat your property manager be an investor, I have found the

communication and understanding of each other is MUCH

better when they are an investor too.

6Read the Management Agreement. It seems obviousenough, but it is so important that I must make mention ofit. As you read the agreement, remember that EVERYTHING

is negotiable. Ask for more concessions than you need in

order to get what you really want. Having said that, do not

over-negotiate and remove the property managers ability to

support his business and earn a living. Resentment is the last

thing you want in this relationship.

7

Drive by. Ask for a list of properties, as many as possible,

that the property manager currently manages. Unkempt

properties and loitering tell a lot about how much attention

their properties are receiving and what type of activities are

going on in the neighborhood. Dirt, debris, and rough char-

acters are red ags as they make nding quality tenants much

more difcult.

8Trust your gut. You know so much more than you thinkyou do. If something doesnt feel right, investigate.Youll nd that your hunches are not only correct most

of the time, but that theyre often rather conservative.

As lucrative as rental real estate can be, it has its dark

side as well. Frequently refer to tip #2.

9

Be direct in your communication and docu-

ment everything. Set an example and maintain astandard of clear and honest communication with

your property managers. Leave nothing open to

interpretation or debate.

10Divide up your portfolio. Once youveacquired more than two or three proper-ties in a specic region, and you intend to

continue purchasing there, its a good idea to

look for a second property manager for future

acquisitions. You want to eliminate any single

points of failure in your business, and by main-

taining a balance of your portfolio between at least two

property managers you help cover your assets. Also, keep

no secrets about working with a second or third propertymanager. When your property managers are aware they have

competition, you will nd that your expenses have a tendency

to drop and performance improves.

Watching investors place limitations on their investing due

to a few bad long-distance experiences saddens me because

it is unnecessary. So, from this point forward, know that the

secret to cash ow real estate investing is not shortening

the distance you live from your investments. The secret lies

in selecting great property management, and now you have

some real world tips to help you do it successfully.

10 Tips for SelectingGREAT Property Managers

>> Straight From Te School of Hard Knocks



26/64

NORADAReal Estate Investments


27/64

Anyone whos ever even

considered investing in rental

properties knows one thing is

never guaranteed: having a paying ten-

ant. One real estate entrepreneur asked

himself, WHY?

Its a question Norada Real Estate

Investments Marco Santarelli loves to

ask, and its served him well.Its the most important question for

so many things, said Santarelli. Why

is this property a good investment?

Why does this market have potential?

Or, in this case, why not offer inves-

tors a rent guarantee? So he did.

As far as I know, were the only

multi-market turnkey provider that

offers a rent guarantee on everything

we sell, said Santarelli. If a tenant

for whatever reason never moves in, or

for some reason has to move out, the

investor is covered.

Santarelli said Norada has offered a

90-day rent guarantee for some time.

Weve never had to use it, he laughs.

But still, we said How can you take a

good thing and make it better?

The answer came from additional

talks with insurance underwriters:

Norada Real Estate is rolling out a

jaw-dropping one-year rent guarantee

this year. Santarelli said hes working

with the insurers market-by-market,

and currently about two-thirds of their

offerings are already under the new

one-year policy. Hopefully well be

offering one-year rent guarantees on

every property we sell by the middle

of the year, he said. No one else is

doing that.Continued on next page >

QuEstIonIngConvention

{ Transforming the Way We Invest in Real Estate }

Santarelli has made something of a

name for himself questioning conventional

thinking in the real estate market. For ex-

ample, most agents tend to sell properties

within their local area, or focus on becom-

ing experts in a single market.

Its yet another heres how things

usually work scenario Santarelli asked

why? about. While Norada is basedin California, the company isnt tied to

this region quite the opposite, in fact.

Santarelli says he is market agnostic and

has always viewed real estate in terms of,

live where you want, and invest where

it makes sense. The result, he said, is an

agile and adaptive company.

Were not locked into a specic area,

said Santarelli. We dont care which city

a property is in, as long as it makes sense

from an investment perspective. Accord-

ing to Santarelli, companies that are xed

to a specic market might have a lot of

product, but its all in one basket. If that

market ever turns, theres nothing they can

offer.

Santarellis high level approach to

nding investment properties lets him

focus on the fundamentals, not the fads.

I start with the metro area, he said.

I look at the local economy: unemploy-

ment, job growth, diversity of employ-

ment, population growth. Do we have

a lot of foreclosures? Are there a lot of

distressed properties? Is there a high level

of inventory? Are prices declining, level,

or increasing?

If it looks like a city has growth and

jobs, and that the housing market is stabi-

lized or on the upswing, then before even

looking at a specic property, Santarelli

said youve minimized a lot of the invest-

ing risk.

But I like to look at the forest, not just

the trees, he added. Something can look

like a buyers market, but it could be that

there are underlying problems. If people

dont have jobs, the demand disappears; if

the demand disappears, prices come down

and you have increased vacancies.Santarelli uses Detroit as an example of

scratching a buyers market to uncover

trouble.

A lot of investors look at just the prop-

erty, they say Wow, this is a great prop-

erty! Its in good condition, its got great

cash ow. And Ill say, Oh, by the way,

its in the middle of a war zone in Detroit.

You have to consider the market, and the

neighborhood, not just the property.

When it comes to properties, Norada

is quite specic in what they present to

investors: no commercial property, no

industrial, no apartment buildings or large

complexes. The only segment they offer is

1- to 4-unit residential rental property that

is genuinely turnkey. And they really

mean turnkey.

Turnkey means, in its simplest form,

theres nothing you need to do but close,

said Santarellli. You can just walk in

and start collecting a rent check the next

month.

The properties Norada offers are all ei-

ther new construction or newly rehabbed;

theyre all leased, or are in the process of

being leased (in the case of a property in

the rehab process, where a tenant simply

hasnt moved in yet). And, signicantly,

theyre all cash ow positive. Santarelli


byRobbMagley


28/64

thinks most agents are missing the boat

when they dont emphasize the impor-

tance of positive cash ow as being part

of qualifying a property as turnkey.

We dont want to touch a property

unless it produces a measurable rate of

return for the investor, said Santarelli.We surveyed our investors, and over

52% of them placed cash ow as their

highest priority in what theyre looking

for in an investment property.

In that same poll, according to San-

tarelli, appreciation ranked 5th down

the list. Investors want to make sure

theyre buying a property thats paying

for itself.

Its all part of what he calls the why

of Norada Real Estate: To make wealth

creation as easy as possible. The goal

was to create a place where investors

could shop, invest, and start collecting

cash ow, all under one roof or, in

Noradas case, practically at one website.

Bucking the trend of in-house private

data, Santarellis company makes its

powerful analytics tools available free

online, to anyone whos interested.

The Norada website presents its prop-

erties by market with exhaustive data

and detail about those markets. We put

it all on the website so investors can do

much of their due diligence right there,

said Santarelli. The website software

also does price forecasting based on a

number of economic models, updated

quarterly.

Then, theres a green button that

says analyze, said Santarelli. If you

click on that, it provides a very detailed,

customizable cash ow analyzer. Its a

proprietary program I had developed justfor our website.

Santarelli acknowledged that detailed

analysis can seem overly complex, and

investors eyes can glaze over when pre-

sented too much of it. His goal is present

it all in a simple way, so investors can

get the message of why a particular mar-

ket is a good one and move on with

the decision process.

The exemplication of that is Santar-

ellis proprietary DealGrader algorithm.

Every property on Noradas website has

its own DealGrader score.

Its a score from 0 to 100, measuring

the investment quality of a real estate in-

vestment, said Santarelli. Its a snapshotof protability and investment risk the

higher the score, the better the investment

quality. Its unique, its our algorithm, and

again, no one else has it. Its just one more

tool in the bigger picture to help inves-

tors.

Other tools Santarelli makes free and

available include weekly newsletters,

free membership to Noradas Real Estate

Investment Group, and Noradas Hous-

ing Market Forecast, recently updated for

2013. Thats essentially an appreciation

forecast for the industry, said Santarelli.

It lays out the top 100 markets, with a

focus on the top 15.

If that wasnt enough, Norada offersa free report called Building Wealth in

Real Estate, in it, he talks about a wealth

accumulation plan that focuses on real es-

tate, with enough of the basics to be useful

to a novice and enough detail to appeal

to an advanced investor. Its actually a

system to accumulate property over time

T

he simple answer is that it is the most pow-

erful way to accumulate wealth, and more

people have become millionaires through real

estate than any other means. And despite the obvious

need to save for retirement, a recent Wall Street Jour-

nalarticle indicated that a startling 95% of Ameri-

cans will face nancial difculties by retirement! Of

course, you have several options for building wealth,

but most of these options pale in comparison to real

estate. Consider options like savings accounts, CDs,

bonds, and money market accounts. These are safe

options, but you certainly wont reach a goal of building signicant wealth through

these means.

For the most part, these options barely keep pace with ination. Think about it:

How many millionaires do you know who became wealthy by investing in savings

accounts? The stock market can bring you some interesting returns, but it can also

lead to some big losses. You have very little control over the companies you invest

in, and there are no signicant tax advantages to owning stock. In addition to the

wealth youd create, you would also benet from the growing annual cash ow

being produced by your income properties. The income earned can help supplement

your existing income, provide additional capital towards the purchase of additional

income property, and eventually give you the freedom to quit your job and retire

with passive income!

The book details a very simple plan that will create long-term wealth and cash

ow for you and your family. The plan is very scalable, which means you can do

more or less in order to achieve your wealth and income goals at your own pace.

Remember: Dont wait to invest in real estate, invest in real estate and wait.

Pre-order Building Wealth with Real Estate today on Amazon.com. Download

the rst chapter FREE at www.NoradaRealEstate.com

Why Build Wealth Through Real Estate?

Continued on pg. 30


SPECIAL REPORT


29/64


30/64

uff some put behind it, he said. It is hard work, but it

pays off.

Herriage and his team members can help a distressed

owner get out of virtually any housing situation. Herriage

Homes works with some of the most challenging cases

in the industry, including unwanted rentals, properties in

need of major repairs, quick sales, short sales, divorce

sales, pending foreclosures, and bankruptcy liquidations.

It takes me about 15 to 20 minutes to walk through

your house and make you a cash offer, Herriage said.

My offer is on an as-is basis. This means you do not

have to make any repairs, or even clean out the house

in some cases. I call it, Take what you want, and leave

what you dont. In an average month, Herriage buys

ve to seven houses. He wholesales more than half of

those properties, ips others, and retains some in a

rental portfolio. The dramatic spike in people using the

Internet for all types of matters has not changed Herri-

ages basic process of buying, xing, and selling houses.

It is still a people business. The best way to makemoney in this business is to be behind a steering wheel,

he said.

There are those that teach to sell product, and those

that teach to buy and sell more houses. I teach about real

world actionable information I obtain weekly by being

active in what I teach about. There are few that can claim

that.

To learn more about Herriage Homes, call 972-755-1880

or visit www.timherriage.com

Dallas Wholesaler, Industry Leader, pg. 11

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that can be adopted by anybody, said Santarellli, and

tweaked whether youre buying one property a year, two a

year, or one every two years. You can adjust the pace, but

if you stick to the plan you can create a lot of wealth and

cash ow.

It talks about all the advantages of real estate investing

appreciation, leverage, nancing, tax advantages, and of

course the signicance of ination, which Santarelli thinks

few investors consider.

A lot of people dont think about ination, and how

your monthly mortgage payment is xed in current dol-

lars, said Santarelli, but with ination youre making

those payments with cheaper and cheaper dollars every

year.

All of which paints Norada as a forward-thinking, agile

analytics-based real estate investment company, unbur-

dened by specic markets, that puts every free tool imagin-

able in the hands of its investors.

To learn more call 800-611-3060 or visit online at:

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Questioning Convention, Marco Santarelli, pg. 28



31/64

Learn about the history of Equity Trust on the next page >>

Continued on pg. 59


The executives of Equity Trust, a

self-directed IRA rm in Ohio,

truly believe in investor educa-

tion. For this reason they host a

conference every year to increase aware-

ness of basic investment fundamentals to

investors.

Unfortunately, too many people these

days are investing without understand-

ing the basics, said Jeff Desich, Chief

Executive Ofcer.

Desich and his staff members work

continuously to ensure that each cli-

ent understands not only his ultimate

investment goals, but in which real estate

properties he has invested. Desich holds

multiple licenses with the Financial

Industry Regulatory Authority (FINRA)

and is a registered nancial principal. When

not working closely with clients or giving

workshops across the country about the

exibility and prot potential of self-direct-

ed IRAs, Desich is a guest professor at Ohio

State Universitys prestigious Max Fisher

College of Business.

Assisting clients in achieving their

nancial goals is the greatest value we

provide, Desich said.

Equity Trust is one of the leading rmsin the rapidly growing self-directed IRA

market. Despite the economic downturn that

began in 2008, IRAs around the world are

worth about $5.7 trillion. Equity Trust is the

custodian of about $12 billion of retirement


Jeff Desich, CEO of Equity Trust

photo by David Gaylor


32/64

Richard Desich

Sr. starts Mid-Ohio Securies

on January 1,

1974

The IRS approves

Mid-Ohio Securies

as a non-bank, passive

custodian for IRAs

A Drug Mart

store in Ohio

becomes the

companys rst

non-tradional

asset held

within an IRA

The companys

services expand to

include all 50 states

Equity TrustCompany is

founded

Mid-Ohio Securies

moves its self-

directed accounts

to Equity Trust

Company

Rapidly growing EquityTrust moves into its new

16,000 square-foot facility

in Blyria, Ohio

New Equity Trust

website created,

www.trustetc.com,

receives 1 million

unique visitors

Equity Trust holds

40,000 acve

accounts

Inaugural Equity

University Networking

Conference brings

hundreds of self-

directed investors to

Orlando, Florida for

proven self-directed

investment strategies,

educaon and

networking

Equity Trust

hits the 20,00

account

milestone

1970s

1980s

2000s1990s

EQUITYTrUsT

Company ounde Richard Desich ealized ealy in hi caeethat inveting in eal etate and othe altenative invetmentin an IrA could be a valuable etiement aving tool. In 1974he began Mid-Ohio secuitie (which later transferred its self-directed IRA accounts to Equity Trust) and the company' fteal etate invetment in an IrA took place in 1984.


33/64

Equity Trust Company

hits $3 billion in assets

under administraon

Company acquires

Texas-based Sterling

Trust, bringing Equity

Trusts client to 115,000

Jef Desich is

named CEO of

Equity Trust

Company

Equity Trust

Companys

client base

tops 130,000

Equity Trust

Company opens

Denver oce and

launches Equity

Advisor Soluons

Companys South Dakota

service and operaons center

opens - Equity Trust Company

now operates from 5 facilies in

4 states

Industry rst online client portal,

myEQUITY launches, giving clients access

to 24/7 networking and educaon

Equity Trusts Facebook

fan base surpasses 5,000

Ira the bear becomes Equity Trusts

ocial mascot, takes on the task of

travelling to spread the word about

self-directed IRAs

Equity Trust debuts a new look and

enhanced services

2010s

Almot 40 yea late, the company and demand o el-diect-ed IrA continue to gow. Equity Trust i the nation' leadingpovide o el-diected IrA and 401(k) with ove 130,000client in all 50 tate and $12 Billion o etiement und aetunde cutody.

Company website,

www.TrustETC.com

educates and informs 2

million unique visitors

Equity Trust

Company hits

the milestone

of $12 billionin assets under

administraon


34/64

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Why is now the time to

invest in bank notes?

For Asset Ventures Tony

Martinez, the answer is

as clear as writing on a

wall. Martinez entered

the bank note business through

his earlier experiences buying

and selling real estate in par-

ticular, short sales.

I negotiated more than 300

short sales through the real estate

side, said Martinez, and I was

looking for a better way.And for the past several years,

that better way has been in-

vesting in notes. A mortgage note is a lien against a property,

created where someone has borrowed money against it.

Its basically an IOU, which states the terms by which the

borrower has to pay back the lender, said Martinez. What

we do is buy institutional notes that were created by a bank

or mortgage company.

The real opportunity began in 2007, according to

Martinez, when the market shifted and suddenly those

notes were nearly worthless to banks; the unpaid balance

stayed in place, but when the loans stopped performing,

the banks were in a bind.

Millions of dollars worth of notes were no longer

of any value to the banks, said Martinez. Remember,

they used the value of those notes in order to borrow

money to lend and make their money, and now they had

nowhere to go with all this collateral.

Imagine youre a bank, said Martinez, and you have

1,000 notes, and every one is performing. Youre sitting

in a pretty good position, he said. If one goes bad, its

not really a big deal, youll just sell it off, or foreclose,or whatever options are available. You might spend the

time and work out something really attractive for the

borrower, because youve got all those other notes working

for you.

But in a major nancial crisis, its another matter. When

theres a huge hit, and all of a sudden youve got 50% of your

Want to Make a Fortune in Notes?We have the Blueprint for Success

entures LLC

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Mentor to the note industry

Continued on pg. 36


by Robb Magley


36/64

inventory becoming worthless, and youve got to gure out a

way to create some liquidity, said Martinez. So youll start

selling off your bad paper at re sale prices.

The need for that liquidity is fundamental, according to

Martinez. If Im a big bank, the government requires me to

freeze some of my good liquid assets to protect my bad debt,

he said. That limits my lending power on the other side.

Thats because a bank is allowed to loan as much as tentimes its liquid assets; for every $100,000 in liquid assets, it

can loan $1 million.

Now, if I have a loan of $100,000 thats not performing, I

have to freeze the equivalent of $1 million in lending, said

Martinez. That really affects my business in a negative way.

Now, he added, imagine if the bank can sell a non-perform-

ing loan thats worth on paper $100,000 to someone for

$20,000.

Suddenly I have $20,000 in liquid assets, and I can loan

$200,000, he said. Theres a huge benet to them to do this;

the benet to us is we can buy these notes for pennies on the

dollar.

Several other factors have come into play that make this a

good time to get into notes, said Martinez. Right now, he said,

most of the notes that are available for investment are ones that

were taken on originally by larger banks and their time is

running out in at least two ways.

Those big banks have until the end of this year to relin-

quish as much of the bad debt as they can, and still receive up

to an 80% reimbursement for their loss, said Martinez. So

thats a huge motivating factor for the banks to get these off

their books.

Also, after the TARP money runs out at the end of this year,

the government is putting increasingly complicated lending

regulations in place for the following year. So the banks want

to put themselves in as much of a liquid position as possible

right now, to continue to be able to borrow from the govern-

ment at a very low rate while there arent as many regulatory

restrictions, said Martinez.Finally, banks are simply tired of the resources they expend

keeping up with non-performing notes.

The maintenance of a bad note costs them so much more

than that of a good performing note, probably 10-15 times

more, said Martinez. They really dont want to deal with

them. You have to think at their scale; while were looking at

10 or 100 of these, theyre dealing with thousands. It makes

more sense to sell it off. Martinez said the note market is

probably going to remain strong for several years, particularly

due to the volume of inventory.

Theres hundreds of thousands of delinquent notes, said

Martinez. Its going to be impossible to move them overnight.

Were probably looking at a year or twos worth of inventory

lagging behind, even if the market changes dramatically.

And, he said, no one he talks to thinks thats less than 3-5

years away.

For more information or to receive a free informational DVD

on the note market, visit: www.assetventuresllc.com

bring in 7-8 older repo homes to in-

crease occupancy and sell them on

a lease-to-own program. Then raise

the lot rents by $10-$25/month (de-

pending on the market).

After 18 months when you have

increased the annual lot rent in-

come by $30,000, sell the park for

$450,000, which would be a 10 cap

for a new buyer (dont be greedy on

the sale leave a nice return for

the buyer). After paying the seller

back and your investors a nice prot

and returning their principal, you

should have at least $125,000 inyour pocket.

Step Two of the plan is to get the original investors to

reinvest their $100K along with your $125K and buy a

distressed 50-space park. Use the exact same formula as

Step One for the 18-month period. You should end of with

$250K in your pocket after that sale.

Step Three is to buy your 100-space park as notated in #2

above. This business is not rocket science. Anyone can do

it. A quick example: A guy I bought a

park from in Raleigh, NC at the end of

2009 had owned the park since 1979. He

never went to college. He raised his fam-

ily in the park and the cash ow allowed

him to send three kids to college. After

I purchased it, he netted out $3 million!

I paved some of the roads, added some

cosmetic repairs, and brought in 15 older

repo homes to ll empty sites. I owned

the park for two years and was able to net

out $1 million in prot after I sold it in

December of 2011.

Mike Conlon is a President/Owner of

Affordable Communities Group, LLC,

(www.acgmhc.com), which investsin distressed mobile home communi-

ties throughout the Southeast and the

Midwest. He is also President/Owner of Carolina Turnkey

Properties, LLC, which buys distressed single-family homes

in the Raleigh and Charlotte markets. He has been a full-

time real estate investor for the last 10 years. He is based

in Cary, NC. He is also an author, speaker, and educator on

real estate investing. His book, Unconventional Wealth: The

New Main Street Millionaires, was released in August 2012.

Mike Conlon can be reached at [email protected]

The New Main$treet Millionaires

M I K E C O N L O N

. .

.

.

.

.

.

.

.

Making $100,000 per year, pg. 18

The State of the Note Market, pg. 35



37/64

Log on to any websites

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Communities and toscore a free copy of

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Creating the NewMainstreet Millionaires

Learn how I made over$500,000 in profit intwo years by buying

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This advertisement is an offer for an educational product is in no wayan offer to solicit or sell any investment or security. All investments

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AFFORDABLE

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3 Thedemandforaordablehousingis

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lowerongoingcapitalexpenses

3 Higherbarrierstoentryasthecoststobuild

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largermetroareasisscarceandexpensive

3 Mucheasiertomanagewhenthemajorityof

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Why afordable communites group?3 10+yearsexperienceinbuying,rehabbingand

sellingover3,000units

3 Havecompleted15fullcycledeals(buy,rehab,

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3 Expertsinthepropertymanagementbusiness

asweself-manageallourproperes-very

hands-on

3 Keepaghtgeographicfocus-diversied,but

nottoospreadout

3 Weputourowncapitalintoeverydeal

Mike Conlon, President/CEO

MIkeConlon,akaMainStreetMillionaire,hastheuniqueabil-

itytoprovidearealisc,nob.s.viewoftheinvestmentworld

todayasheishighlyeducatedbutalsohas15years+ofstreet-

wiseinvestmentsuccessthathasmadehimamul-millionaire.Miketailorshisbusinessstrategyaroundprovidingoutstanding

customerserviceandquality,aordableproductstothefastest

growingconsumersegmentintheU.S.,totheworkingpoor.

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afordablecommunitiesgroup.com

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38/64

by Stephanie Mojica

Sensei Gilliland is a husband, father, real estate inves-

tor and entrepreneur. He has little time to spare. He

runs businesses that are automated to pump out large

sums of cash every day. Sensei is the founder and CEO

for Black Belt Investors, a real estate company that offers

investments, education and consulting. Sensei also owns a

chain of martial arts schools, a marketing company and an

real esta

Real Estate WEALTH Magazine featuring Sensei Gilliland

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Transcript of Real Estate WEALTH Magazine featuring Sensei Gilliland