CashFlow Express - Why Wait for Wealth! It's Here... Featuring Randy Reiff, CEO of FirstKey Lending

CashFlow Express Page 9

by Hannah Ash

I ts tempting to think of millennial Andrew Cordle as something of a comeback kid - but thats only one part of the story. I caught Andrew in the middle of what was for him, a normal workweek. We talked from his front porch at home in Georgia: hed just flown in from a speaking engagement in Colorado and was preparing to fly out to Chicago the next day. Though his story does involve losing it all followed by winning it back and then some, its also about dedication, work ethic and a commit-ment to success.

Recently back from a twelve day cruise through French Polynesia with his new wife, Andrew is a self made man. He comes from a middle-class background: his mother is a school teacher with over 23 years of teaching experience and his fa-ther is a union worker. Andrew shared with me that when you look at the stories of the most success-ful and wealthy families, its always one person in that family that goes outside the norm and changes things for generations to come. The week before we chatted, Andrew had dinner with the vice presi-dent of one of the worlds leading retailers, Home Depot. Clearly, Andrew wants to be that person to permanently alter the course of his familys future.

Before we go into what hes up to now, lets take a step back. I mentioned Andrew lost it all. Like many of us, he was a victim of the economy. During his first round at the bat, Andrew was ex-clusively a flipper. He was 25 years old, had a staff of over 20 and a small fortune to his name when the bottom of the market fell out in 2007. Andrew found himself with a lot of houses he couldnt liq-uidate. It changed his life. It changed his approach to investing.

It does no good to have 20 cars in your ga-rage if you dont have any gas for them, Andrew reflected. The problem in 2007 was that Andrew had put all of eggs in one basket: flipping. Like so many millennials facing a lean economy, Andrew ended up living in his parents basement. Unlike so many in his generation, Andrew did not stay there for long. Through the power of education, he trans-formed himself into a success again. This time, his success is different. He took the lessons hed learned from his previous successes (and failures) to build a sustainable career as an investor that now takes him around the country and the world to share his wisdom with others.

What was, and is, Andrews secret weapon for success? What is his vehicle for being that person in his family who steps outside of the norm and creates lasting success? Education. As the son of a dedicated school teacher, its not surprising. Edu-cation can save you 100s of thousands of dollars

and time. One caveat though: the right educa-tion, Andrew tells me.

Andrews approach makes sense. If you want to be a doctor, dont get a degree in event planning, the successful investor declares. Though his approach to education is simple, its refreshing. With so many real estate gurus selling a one-size-all-approach to success in investing, Andrew does not. He offers specialized academies that focus on the strengths and interests investors have coming into the game.

He offers a four day course for investors to learn about his approach to investing - and to the different techniques available for suc-cess. Theres a wide variety of tactics to be successful in investing. You need to choose your tactic and go for it, Andrew says. His four day workshop helps investors to bring a great sense of focus to their efforts.

When it comes to finding education as an investor, Andrew takes a firm stance. Many real estate gurus are teaching techniques they learned fifteen years ago. That doesnt work. As markets change, tactics change. For his part, Andrew participated in over 100 deals in the last twelve months; over the course of his career, hes participated in over 1,000. His investor academies arent taught by guest gu-rus who want to sell their products; Andrew personally teaches them with the help of his wife and staff.

To be successful as an investor, Andrew says that investors first need to decide what they want to achieve. Some people want boats, some people want to quit their day jobs, some people want to establish trusts. As an inves-tor, Andrew says, you must know what you want to achieve. Once you know what you want, you can then pick a tactic that will best help you accomplish your goals. Different types of investors want different tactics. In addition to Andrews four day investing acad-emy, he offers four highly focused programs: marketing, rehabbing, flipping and rental. His marketing academy is geared toward creative types who want to find creative ways to net deals. Attendees leave with real world indus-try marketing know-how, blogs that are setup for them and turnkey social media accounts.

The flipping academy is for inves-tors who love the art of the deal or need to strengthen their cash flow before branching out into other tactics.

Rehabbing is geared toward those inves-tors who want to turn up the volume by do-ing more deals and treat investing as more of a business than an individual skill. The

3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URW3URWRental Academy, Andrew says, is for all investors. No strings attached cash-flow is the goal for all investors, regardless of your tactic. Rental properties do just that Aside from educating others, creating true cashflow is Andrews greatest motivation as an investor. Aside from resilience and determination, that cash-flow is king was the greatest lesson Andrew learned from the economic downturn.

One of the top skills that Andrew Cordle advo-cates investors have? Aside from focusing and choos-ing a tactic, its knowing your market. Andrew shared with me how just last week he closed on a Victorian in Atlanta. The wholesaler from whom he purchased the property didnt know that the Victorian was located in a top choice district for a new charter school, making the property a significantly more lucrative buy. Andrew said that just by knowing his market, he stands to make many thousands of dollars off the deal. Theres no get rich quick way to make it in investing, Andrew says. Educa-tion. Strategy. Tactics. The ability to bounce back. An-drew says real estate investing is unique, and investors must be too, Investing is not a 9 to 5. Work hard. Play hard. Be determined. Be resilient. Make a decision.

No strings attached cash-flow is the goal for all investors, regardless of your tactic.

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by Lori Peebles

Funding is the foundation for every real estate transaction. As an investor, private lender and CEO of Zinc Financial, Todd Pigott knows exactly just how important fund-ing is. The Central California-based firm lends on deals throughout the Golden State as well as neighboring Arizona and Nevada. To give our readers insight on the private money industry, we recently interviewed Pigott so he could give us his perspective.

Question: Hello, Todd, can you tell us about a recent deal you lent on? ZINC: Recently, we funded two rental buy & hold properties in the Sacramento region. Both were 3 bed / 2 bath, in solid urban settings. They were constructed in the late 80s early 90s, with about 1500 square feet of living space. Each was move in ready with rental quality amenities. The inves-tor purchased them for $147,500 and $169,500 respectively; rental income was solid with a DCR ratio above 1.25. The real estate investor put down approximately 22% against the purchase price. ZINC funded both of these in less than 30 days with a 7.99% 5 year term. The real estate in-vestor expects to make between $10-15,000 per year in net cash flow. Question: What are some of your favorite ar-eas to lend on and why? ZINC: We just funded another great fix-and-flip in the San Rafael area, up in Northern Califor-

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nia. A very dated property built in the late 60s, with virtually no updating since. The ARV for the SFR came in at 1,100,000, and the bor-rower purchased the property for $750,000, and put down 20%. The borrower expects to spend about $70,000 on rehab for which ZINC is paying 70% of the cost. The Investor expects to have the work completed in less than 6 weeks, and have it sold in less than 60 days. ZINC funded this transaction with complete ease and in less than 10 days. Question: Can you tell us a bit about Zinc Financial and what type of transactions you prefer to lend on? ZINC: We are a California lender. We focus on Fix and Flip loans and Rental quality buy & hold loans. We lend on primarily SFR 1-4 units, but will consider multifamily on a case by case basis. We lend in any area of the state, so long as the property resides in a well-known urban setting. We call it our curbs & gutters criteria, meaning if it has curbs and gutters there is a high degree of certainty we will lend on it. We stay away from land, cabins, extreme rural properties or proper-ties in highly undesirable areas. We are very ag-gressive on our rates with our California Inves-tors, and we are able to close our loans in 7-10 days because we are a direct lender with our own capital; we are not a broker. Question: In your opinion, how is the Califor-nia market doing? ZINC: It is a great time to purchase and fix-and-

flip in California. Property values have stabilized, inventory is low creating a favorable resale for your finished product. Most of our real estate in-vestors are reporting record profits of between $40,000-100,000 per fix and flip. Whats critical is buying the right property in the right location. ZINC prefers lending on properties below the me-

Continued on pg.,19


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F I N A N C I A L , L L C

As someone who has attracted hundreds of private lenders to my real estate and lending practice since the real estate crash, I learned that one of the keys to finding private lenders is to always make it about them, and not you. Most people pro-mote themselves. Promotion is about you. Attraction, on the other hand, is when you make your pitch about the other person. Key to forming a successful business relationship is a sincere focus on what is in the best interest of your prospective partner. This is especially true in attracting private money. When you demon-strate that you have the best interest of your prospec-tive money partner at heart, and that your sincere goal is to help your prospective private lender make a great return on their money without taking unnecessary risk, you become extremely attractive. By focusing on the needs, goals and concerns of your prospective money partner you will create a loyal client for life, and one who will refer you to others who might also benefit from your good work.

There are five basic questions that every prospec-tive private lender is going to want to know. Your pre-sentationyour credibility and opportunity packageshould clearly answer all five of these with clarity and completeness. Here they are:

1. What is the opportunity? 2. How much money do you need? 3. How much can I make? 4. When do I get my money back? 5. What happens if you get hit by a bus?

1. WHAT IS THE OPPORTUNITY?

Im in contract to purchase a 3-bedroom 2-bath single family home in a popular middle-class neighborhood. The property hasnt been remodeled in years, and were getting it at a great discount. Well remodeled homes in this neighborhood are selling on average for $300 per square foot, and the average days-on-market is less than 30 days. That is an example of a well-articulated and simple description of an opportunity that could be delivered like a 30-second elevator pitch at a networking event attended by people with money. Its short and to the point, and it demonstrates your knowledge of the mar-ket. But answering this question in the mind of your prospective private lender goes far beyond the specific deal. In developing your answer to this first question, your lender is going to want to know things such as:

Who are you?What is your background?What is your real estate experience?Can I see examples of your previous work?How well did it go before? Providing your background, history and experience lays the foundation of your credibility, and answers the silent question, Why should I listen to you?

2. HOW MUCH MONEY DO YOU NEED?

Answering this question involves your detailed budget for the opportunity. You also might present more than one scenario for how your prospective money partner can be involved. There are many ways to structure the way they might participate. Is it a loan? Is it an equity investment? Will you be using other capital in addi-tion to your private lender? Are you putting some of your own money in? Will you be using leverage (hard money)? While you dont want to over-complicate or overwhelm a prospective lender with too many choices, understanding that there are many ways to structure a deal will help you to adjust your parameters based on a specific lenders preferences and comfort level.

3. HOW MUCH CAN I MAKE? How much you offer to pay your private lender will normally depend on a number of variables, including whether you offer collateral in the form of a mortgage or deed of trust on the subject property or if you offer an equity membership in an LLC formed to acquire the property. Will you be offering payment in the form of a loan (interest) or will you be sharing the profit (or both)? If you are sharing the profit, what is the split?

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In answering this question completely, you should in-clude both a best case and worst case scenario.

4. WHEN DO I GET MY MONEY BACK?

If you are planning to buy, fix and flip a property, then your exit strategy how you will repay your private lender is fairly straightforward. You will pay him back at close of escrow when the property is sold. What if you want to propose that your partner invests in more than one project at a time, or re-invest his profits from one project into another? What if your plan is to acquire rental property to hold long term?

Part of your budget should include a time table that, like above, has a best case and worst case scenario. Showing that you have considered that the unexpected might happen makes you look more professional. Also, keep in mind that its always better to under-promise and over-deliver and the other way around.

5. WHAT HAPPENS IF YOU GET HIT BY A BUS?

While you want to have a plan in place in the event that you do in fact get hit by a bus, the bigger point of this question is to address the concern about what happens if things go wrong. What are the risks? What safety and security features have you built in to your business model? What protections are you proposing to prevent or to reduce the prospect of a loss to your investors principal? This is the area that many real estate in-vestors either skip or downplay. Addressing up front these issues actually makes you look professional and shows that you have considered all possibilities and have planned for them. Optimism is important, but ap-pearing to have blind optimism can work against your goals. These five basic questions present a foundation of an effective presentation that will weave together your story, the opportunity, and your promise in a way that impresses, creates confidence and that will attract capi-tal to you in a big way.

Mark Hanf is president of Pacific Private Money Inc., a California-based hard money lender who has raised over $150 million in private capital since 2009. His eBook, Insiders Guide to Attracting Private Money, is available at www.AttractingPrivateMoney.com.

Attract Private Funds for DealsTHE 5 INVESTOR QUESTIONS


by Mark Hanf


Texas Land Is Ideal For Investment Purposes or Simply Building Your Dream Cabin or RV Site

affordable the land is here, the possibilities are endless: any-thing from tent camping to set-ting up an RV site to building the cabin of your dreams can be easily accomplished, and at a fraction of the cost of doing so anywhere else. What could

be more satisfying than having a log cabin built to your exact specifications, on a piece of property straight out of a classic Western movie? In Texas, this isnt just a daydream, its a way of life. Buying and developing land in Texas can mean returning to a simpler way of life, a laid-back life-style far removed from the modern rat race, but it can also be a great investment in of itself. Loca-tions this gorgeous and affordable never last very long, and picking up a plot before they are all gone is about as sensible an investment as you can make there is a good reason professional real estate speculators love Texas land, and try to snap it up as soon as it becomes available. For anyone looking to buy property, there is obviously no bet-ter choice than a plot of prime Texas real estate, and if you want prime Texas real estate, there is no better choice than Blue Quail, offered exclu-sively by Texas Ranch Deals. The Blue Quail lo-cation is only 30 minutes from Interstate 10 and is very close to schools, food, fuel, a post office, and anything else you might want. Whether youre interested in a simple piece of investment land or if you want to build that log cabin youve always wanted, Blue Quail is the perfect choice. Property taxes in Blue Quail are an unbelievably affordable $100.00 per year on each 20-acres plot. Call 1-800-843-7537 or visit online at: www.TexasLandBuys.com, and well tell you why Blue Quail is a great place to own property in Texas.

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H ave you always dreamed about own-ing your own piece of paradise, a place where you could hike, hunt, ranch, camp, horseback ride, or just relax to your hearts content in the middle of beautiful, isolated scenery? Or are you interested in making a sound, safe, and affordable real estate investment in a prime location? What about both at the same time, in a place where the folks are friendly and the landscape is postcard perfect? Property in Texas offers all of this at once, and so much more. Texas is the perfect getaway location, with something for everyone. The wide-open countryside offers dramatic views the likes of which you cannot find anywhere else, with stunning landscapes and a sky so big and blue you have to see it to believe it. Locations this scenic and pristine are usually only found in state and national parks, but here in Texas you have the chance of a lifetime to actually own a part of the panorama.

F or the outdoorsman, owning land in Texas offers a rare oppor-tunity to go hiking or riding on your own private property, and if you are a hunter or nature watcher, then get ready for a range of excit-ing game: deer, elk, wild sheep and pigs, and a variety of birds call Texas home, among other wildlife. What could be better than waking up every morning with the knowledge that the game youve always wanted a shot at might be just outside your door? Of course, if youd rather just sit back and enjoy the view, theres nothing quite like a Texas sunset from the back porch of your very own cabin, or stargazing from your own private campground after a hearty meal. Considering how

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Real estate investing, more often than not, is a solo activity. That being said, you just cant learn it all from books and you cant do it all without help from others. Co-workers, or people to provide support, a listening ear and to help with some of the workshare, can be hard to fi nd in this industry. Without online, print and com-munity resources, many of us investors would be on our own as we try to navigate through the industrys somewhat choppy waters. Those who are new to investment often fi nd themselves with too many books and too few human interactions. Joint ventures are, therefore, common in the real estate industry and are a natural way for serious investors to fi nd co-workers, support and greater successes. We found two business partners who. though they live far apart, are breaking the mold; their combined experiences and investment talent bridge the distance, making it possible for them to craft success deal after successful deal. Partners Anthony Patrick and Duncan Wierman believe that when it comes to creating wealth, distance is just distance - nothing more. They each bring a different set of top skills to the investment table (or, in their case, bus), combining their talents to lead others safely through a very profi table (and, on the fl ipside, very risky) world of real estate investments. Their joint education venture is the Flipping Houses Tour Bus, and it stands apart as a truly creative way to get new investors to close the books and enter the investment lab where they can really start applying some of the principles theyve learned. When the rare opportunity to meet up with these two very busy investors popped up, I had to bite. I wanted to learn fi rst-hand about their latest venture and, of course, to get an inside look at how these tycoons land deal after deal in one of the most competitive markets in the world: Southern California. We explored their innovative approach to taking investing concepts out of the books and theory and into real-world applications: Flipping Houses Bus Tours. Its a time to close the books and hit the streets. On the tour, Anthony and Duncan are expert hosts that break down just what they do and why- their methods, their reasons, the key strate-gies they employ to get the impressive results they continue to yield.

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FSBOs (for sale by owner) and out-of-state owned homes in which vacancies and repairs are starting to cause real hassles for owners who are likely considering a way out. Anthony also adds, Probate is our niche. What, exactly, do these two savvy investors do? Where do they fi sh for their amazing deals? Is it foreclosures, short sales, auctions, or what? Anthony explains, REOs, Short Sales, FSBOs, deals on the MLS and internet leads. What, I want to know, do Anthony and Duncans students walk away with after completing a training program? Are they experts in everything - or is it more of a survey course? Duncan shakes his head and explains, this is a true, Hands on and step-by-step experience. There is no better way to learn than having us and our power team there to hold your hand every step of the way. Students in Duncan and Anthonys workshops preview deals, are introduced to projects the two have already run the numbers on, and then are taught those little tricks all of us, in any profession, know that can make or break our success. Students learn how to fi nd coveted hidden deals on the web and how to fi nd motivated seller leads with internet marketing methodolo-gies. I asked Anthony to give us a run-down and overview

Because Anthony and Dun-can realize that action learning is longtime learning, they have you participate in the process while they watch alongside you and guide you toward a decision making strategy you can use time and time again. Anthony commented, We are confi dent that when you leave us at the end of the workshop that you can duplicate what we taught you to do, so you can create fi nancial success in your life. Its an ex-clusive opportunity for investors who have been there, done there and are tired of reading the same books and listening to the same CDS over and over again; its for, Duncan says, those who are ready to fi nally take action and learn hands on from people who do this every day. What were the driving forces that brought Anthony and Duncan to the same literal, and metaphorical, bus? Ac-cording to Anthony, between the both of us, Duncan and I have over 25 years of experience in the art of investing. From marketing, deal evaluation, rehabbing, and most of all, giving the most value and knowledge for our stu-dents. There isnt anything these two guys havent done - and well. As Duncan succinctly put it, because of our success in this business, we have decided to join forces to teach people hands-on instead of theory. What do Duncan and Anthonys students learn from Duncan and Anthony? Simple strategies that yield big ROIs. For example, Anthony says, we look for below market homes on the MLS because if we dont, we could miss out on a gem homes with opportunities to create their highest and best use. Most investors arent doing this simple search! They know where to fi nd motivated sellers: they teach students to target those much coveted

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Continued on pg. 19

by Hannah Ash


INCORPORATING: ENTITY SELECTION

If you decide to incorporate, an important decision youll need to make is which entity to select for your business. Generally, your choices are C-Corporation, S-Corporation, or LLC. Each entity has its upsides and downsides. The selection of the entity is determined based upon the business activity and the individuals goals. An understanding of the key differences between the three typical entities should help in this decision making process.

C-Corporations are unique in that they are taxed on the corporate level. This means, if any net profit is reflected on the corporate level,

tax will be assessed based upon the taxable income. Furthermore, no self-employment tax is reflected on the corporate level. Additionally, C-Corporations can adopt a fiscal year end that allows the corporation to operate on a 12 month cycle that does not end in December, which is typi-cal for most entities. C-Corporations also have the ability to deduct medical expenses as a line-item deduction.

S-Corporations differ from C-Cor-porations in that they are consid-ered flow-through entities. This means, the profit or loss generated on the corporate level is passed back to the Shareholders of the corporation, based upon their percentage of owner-ship, where the profit or loss is re-flected on the shareholders personal tax return. Secondly, S-Corporations are exempt from self-employment tax. The caveat is, Officers of S-Corpora-

Take the Next Step in Growing Your Venture by Making It O cial Nothing says you mean business more than the right entity structure,

it may also help to reduce income taxes & shield personal assets.

BUSINESSBUSINESSBUSINESS INC.INC.INC.tions must be reasonably compen-sated as employee of the company. Therefore, a W2, subject to payroll tax, must be issued from the corpora-tion to its officers to remain in com-pliance. Reasonable compensation has been established through court cases as approximately 40% of the net revenue generated by the corporation.

LLCs (Limited Liability Company) are similar to S-Corporations in that they are flow-through enti-ties. Where they differ is treatment of net profit. Shareholders of LLCs that are considered general partners are subject to self-employment tax on 100% of the ordinary income gener-ated by the business. Additionally, in order to file a separate tax return as a partnership, an LLC must have 2 or more members. If this require-ment is not met, the LLC is consid-ered a disregarded entity, meaning,

its business activity would be filed on the shareholders personal tax return as a Schedule C, like a sole-proprietorship. That said, the single-member LLC is a glorified Schedule C, with the addition of limited liability.

When coming to the decision of which entity fits best, it is highly recommended to consult a tax pro-fessional to assist in this decision. If the proper entity is selected from the beginning, the transi-tion from sole-proprietorship is a smooth and easy one. One key component each entity has in com-mon are filing fees. California will assess a filing fee of $800 per year until the entity is dissolved. It is therefore, advisable to set up an entity when one intends to use it. This can otherwise become a very costly thing, unnecessarily.

LIMITED LIABILITY CO. LIMITED PARTNERSHIP S CORPORATION C CORPORATIONAll managers and members (owners) of a limited liability company have lim-ited liability (up to amount invested).

Decisions in a limited-liability company may be made either by the managers, members, or both, depending upon the provisions outlined in the Operating Agreement.

LLCs are not required to pay income taxes. The members must report their pro rata share of income, whether it is distributed or not. However, an LLC may elect to be taxes as a corporation.

Stockholders have limited li-ability; officers and directors can be held personally liable for some corporation obliga-tions.

Management decisions in an S Corporation are usu-ally made by the officers and directors of the corporation.

S Corporations are not re-quired to pay income taxes.Each shareholder must re-port their pro rata share ofincome, whether distributed or not.

Stockholders have limited li-ability; officers and directors can be held personally liable for some corporation obliga-tions.

Management decisions in a C Corporation are usually made by the officers and directors of the corporation.

C corporations must pay income taxes on any gainor profit. If money is distrib-uted in the form ofdividends, the shareholder must pay a second tax.

All managers and members (own-ers) of a limited liability company have limited liability (up to amount invested).

All management decisions involv-ing limited partnerships are made by the general partners. Limitedpartners who become engaged in management could become personally liable for partnership obligations.

Limited partnerships are not re-quired to pay income taxes. Each member must report their pro rata share of income, whether distrib-uted or not.

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vacancy rates and values poised to appreciate over time. Factors such as transportation, schools with great academics or sports (a consideration in Texas) programs, and higher than average monthly incomes are part of what Pams team looks for. An excellent property manager has your best interests in mind and will be able to guide you toward great buys that help you grow your portfolio over time.

Your Property Manager Saves You MoneyProperty managers can keep money in your wallet. Property managers are in the position to find small problems before they - literally - explode. For ex-ample, a highly-trained management team like Pams can drive up to a property and spot a duct issue before it backs up and causes a more expensive problem to develop. When work is needed, fantastic property managers work with fantastic vendors who do great work for great prices.

Your Property Manager: Your Eyes & Ears Texas, Pam notes, has a great market and is very land-lord friendly: as a result, she has a lot of out-of-state investors under her fold. Long-distance investors sim-ply cant walk their properties and perform interior inspections; your property manager needs to be your eyes and ears. Pams team walks each property on a monthly basis and performs an exterior inspection; interior inspections are conducted twice a year.

Your Property Manager Communicates Well Great property managers know how to keep their clients in the loop. Pams team prepares and sends clients monthly reports that include detailed finan-cials, relevant photos, market reports and expenses to keep them on top of the latest with their property or properties. Investors deserve to know whats going on with their investments, Pam says.

Your Property Manager Keeps Your Property RentedProperty managers know how to find credit-worthy tenants - and they have a process for doing so. Be-yond finding credit-worthy tenants, property manag-ers should begin marketing an apartment as soon as they find out it will be available - not once its empty. Reducing vacancy rates is a key part of the job, Pam says - and her team works hard to make sure their properties are rented. Beyond ensuring a property is rented, property managers need to keep abreast of the current market changes and make recommendations for rent increases when appropriate.

An investor herself (Pam is currently working toward building her childrens trust), Pam knows what investors need and deserve from their property management team. Her company, Professional Asset Management and Sales, offers investors a full-service experience. Pam Blanco doesnt want to put her name behind managing a property she doesnt think is a good value - so she has a team of researchers on the case. The research arm of Professional Asset Manage-ment and Sales scouts out the best properties in neighborhoods that offer tenants the amenities they want (i.e: schools, transportation) and gives investors the stability they crave. Pams proactive manage-ment team walks every single property they care for every single month. A quick glimpse at her companys website reveals a multi-channel approach to property management: PamTexas.com has everything from featured listings and utility info to online rent pay-ment processing. Systems for management are what sets a great property manager apart from a good one. Systems should be in place, Pam implies, for every-thing from finding new properties for her investors to finding new tenants. Clearly, Pam Blanco has systems in place that are blazing a new path for other property managers to follow.

Property Management Tips from TexasPam.com, pg. 6


Attracting PRIVATE MONEY

LendersJust a few short years ago, many real estate investors were unaware of private money. More recently, private money has become fa-miliar in almost all real estate investor circles. Private lenders can be a great source of busi-ness growth. Unfortunately, there is currently a lack of good quality information about private lending, which is why I wrote a book about it.

Lets first clarify what I refer to as private money. Private money is monies that you ac-quire from any private individual. Private mon-ey is not institutional money, hard money, or money from a lender that is in the business of lending money. Private money lenders (PMLs) are individuals that have the funds available to invest in any vehicle they see fit, and they often find that vehicle to be you and your real estate portfolio.

No matter your exit strategy - flipping, buy and rent, owner finance private money can help you create lasting wealth. Arrangements can be structured for financing only or equity shares. Sometimes a combination of both can be beneficial. For example, lets say your PML will loan you one million dollars to buy rental properties, but they want some equity. Perhaps you would find it favorable to pay your PML a 7% note rate and give them 50% of the equity above purchase price and make ready costs. In return, you would collect a management fee to manage the properties and also benefit from all the earned equity from principle payments as well as 50% equity above purchase price and make ready costs.

Attracting private money involves much more than telling someone that you can give him or her a certain return on a safe investment in real estate. Its more about you and how you conduct your business, structuring what you do in a way that is inviting to others. PMLs want to do business with someone that they trust, have confidence in, believe in, and enjoy work-ing with.

You do need to be an expert in your business and your field of practice. Whether you plan to flip or buy-and-hold rentals, you need to know the questions to ask about the properties you look at. Property analysis is extremely impor-tant to PMLs, and you should have a way to analyze every deal from multiple exit strategies so that you are comparing each deal as similarly as possible. Its up to you to know the property values in your area and understand how to pull accurate comparable sales and leased proper-ties. Know the rehab costs of projects in differ-ent price ranges and exit strategies. Understand

how to efficiently hire and work with contrac-tors. People and property management skills are important, as is keeping all that you are doing as organized as possible.

Practicing profitable habits is important to at-tracting PMLs and their money. To maintain your business acumen you should be in a constant state of education. The more you know, the better you can communicate, and the better you can com-municate, the more money you can raise. There are plenty of real estate topics to choose from on Amazon, you can go to seminars, attend inves-tor club meetings, and even view webinars from your home office. Take some time to learn about personalities and communication styles. Be the realistic optimist, plan for the worst but hope for the best.

PMLs want to work with someone that is working hard to build their business and willing to do what it takes to succeed, even when it requires a great deal of discipline or restraint. Handle your business professionally and in a timely manner. Do what you said you would do, and do it on time. You should be out beating the trees and shaking the bushes to see what pops out. By doing so you will create activity and get the attention of PMLs.

Producing income will make you attractive to PMLs though it is not a requirement. Whether you have a full time job or income from your cur-rent real estate business, use that to your advan-tage when talking to potential PMLs. Producing income shows the stability of your business and is a testimony to your expertise. When starting out, the quickest way to produce income in your real estate investment business is to start wholesaling. Not only does this provide you with income, but it will help you to become familiar with the market and values, which all makes you more attractive to PMLs.

Targeting high wealth PMLs will be most beneficial. High wealth PMLs are those that you believe have the funds to invest one million dol-lars with you. The fewer PMLs you work with the easier it will be to operate your business. In your pursuit of high wealth PMLs, you will find others with smaller sums that want to invest and you should be happy to oblige. Small sums can come in handy to use as second liens when you are financing your first lien with a bank.

No marketing is required to get all the private money you need, only networking. Start with your sphere of influence and the people you know. Tell them how great real estate is going for you and how you have individuals loaning you money and earning them 10%. Invite one PML prospect to lunch every week, and you will find private money. It may take 6-12 months, but nothing worth having comes easy. Dont expect to get a

firm commitment but if they seem interested begin sending them properties that you plan to acquire. It is a good idea to have a presentation manual that you can show or email to prospec-tive PMLs that discusses you, your business, and how you structure your loans. Include a short video showcasing a few of your best proj-ects in different price ranges. You should also take the time to understand estate planning, tax implications, and finance. High wealth PMLs have a good understanding of those topics as they work to preserve their estate.

Private money lenders are people from all walks of life. They are often humble and conservative, past their years of working long hours, and enjoy putting their money to work for them. PMLs working with real estate inves-tors are a rare instance where two individuals in different stages of life can help each other achieve their goals in an incredible way, bring-ing forth a profitable business and personal relationship.

by John Pribble

John started his real estate career in 1999 at the age of 19. In 2000, John got his real estate license and today is a real es-tate broker. He has practiced many differ-ent strategies in his real estate business depending on market conditions. John has experience in wholesaling, rehabbing, subject-to, owner finance, rentals, short sales, foreclosures, brokerage and cli-ent representation, property management, and working with banks and private money lenders. When his rehabbing business be-gan to grow John found it beneficial to uti-lize private money. As the market changed he shifted to more of a buy-and-hold strate-gy buying rental properties. Private money and local bank financing became a great resource as he accumulated more proper-ties. John has learned many important les-sons from working with private lenders and their funds in his business. A great deal of effort has gone into marketing, lead track-ing, management, and developing systems for a smooth and successful operation. He also works to maintain a balanced life, remaining focused on family, friends, and enjoying life through activities such as net-working with others, climbing mountains, and spiritual growth.

For more information, visit: www.johnpribble.com/about-john


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dian cost of housing for the geographical area where the property is located. With the state coming out of its worst recession and values con-tinuing to rise, this is an ab-solutely great time to fix and flip your next deal with ZINC Financial. Question: Can you de-scribe a profile of who your ideal investor client is? ZINC: Most of our borrowers are entry level or moderate level Real Estate investors. Most are knowledgeable in real estate investing, and they are very well informed in the community where they live. Most have at least some exposure to Real Estate or construction and they all have some money to work with. ZINC requires a down payment of at least 15% so having some capital to work with is a must. ZINC typical-ly shies away from the true novice who has not done significant homework on this trade, or their complete ex-posure to this segment is a weekend guru seminar on how to get rich quick. So, if you have some exposure to this field, have some work-ing capital, we at ZINC are ready to partner with you on your next fix and flip or rental property transaction. Question: What are your companys goals for 2014?ZINC: Currently ZINC is con-sidered a boutique lender for fix and flip financing. Our goal is to provide reliable, quick and easy funding for our in-vestors. Reliability is key, as investors rely on this capital to fund their deal when they just placed a non-refundable deposit. Quick funding is im-portant, because owners of distressed properties will not wait months for funding, and finally ease is important, as we do not mandate all of the strict lending guidelines re-quired by most banks. ZINC is the premier lender for fix & flip and rental buy and hold properties located in California or Arizona. We can fund loans with our own capital in less than 10 days. Our service sets us apart; we are reliable, quick and easy for our funding process. Contact us today at 559 326 2509 or visit us on the web at zincfinancial.net. Lastly mention coupon code REALTY411 for $750.00 off you next loan, expires in 30 days.

Q-n-A with Zinc Financial, pg. 3 Hands-On Learning with Anthony and Duncan, pg. 15

on how a typical tour with goes. He explained its run like a lab, chock full of real-world applications. On our tour you can expect to learn how to set up your team, how to find and work with a REAL-TOR. You will discover how to find a deal, how to find comparable properties. We will explain the ARV (After Repair Value) and figure out if a property is a fix and flip or a buy and hold. We will talk about wholesaling as an exit strategy for the deals you pass on. The whole class also visits a local Home Depot store and we go over materials needed for a typical rehab. Its a jam-packed tour because we also visit numerous houses: one under construction, one in the middle of construction, and a finished home in escrow. We also see a couple of deals that we have yet to see ourselves and go over them with our stu-dents. We teach what to look for and whether an offer should be made or not. Lastly, we wrap it all up from start to finish and go over how we can get deals accepted. Duncan and Anthony are clearly more motivated by their love of real estate than of wanting to turn education into a big business - they keep course registration fees refreshingly low - with a three-day tour only costing $197 for everything. As theyre usually busy making deals for

their own portfolios, these workshops dont happen all that often. Duncan comments, We host them only three times a year, and we do limit the number of people who can participate because we want to really give personal attention. The results students take home of working with these two pros at the top of their game? Anthony says the proof is in the pudding. Students, they say, will be ready to do their own rehabs after the tour - or whatever else they want to try. Anthony explains, This is a step-by-step event with a simple road map for each person who wants to learn not just rehabs but every-thing in real estate. Their coaching students can use them, and their power team, for future deals if they choose to. We want our coaching students to use our power team so they can get a deal done fast. Our track record is phenomenal, nearly 80% of students have a deal in their first 60 to 90 days! Duncan and Anthony want to help others find some of the success they have, doing what they love. A love of the craft of investing is what motivates these two proven investors.


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Buy-and-hold investors can use these loans to acquire distressed property, renovate and roll per-forming rentals into attractive long-term permanent financing with only one set of closing documents.

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FirstKey clearly offers some progressive financing solutions, positioning the lender as the vanguard of the new mortgage capital landscape.

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Surely there will be more to come. Want to know what FirstKey can do for you? Check them out online, or, Reiff suggests, Bring us your portfolio, and let us help evaluate your options.

FirstKey Lending Offers Unique Options, pg. 1

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See why industry experts say this is the No. 1 hard money conference in the country!A one day event delivering powerful information on:

Learn how to avoid the most common mistakes made by brokers and investors.

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by Jay Butler

The Equity Recovery Program works for you and not the bankers! Holding real property in your individual name provides no asset protection whatsoever and, upon selling the property, causes you to pay

the maximum amount in capital gains tax and state taxes. Plus, most real estate business deductions are not deductible for an individual filing a 1040 tax return. Your silent partner (the Internal Revenue Service) will love being in business with you as they take 30% to 40% of your hard-earned money from the sale of your property in taxes. Sadly this is the reality for over 50% of all escrows in the United States, but it doesnt have to be that way for you. By employing the Internal Revenue Code (IRC) Section

351-Transfer when selling your property, you can legitimately eliminate state tax and federal capital gains taxes. Our nationally recognized (and patent pending) Equity Recovery Program increases your net earnings from the sale of a property by more than 15% to 20%.

SHORT-TERM CAPITAL GAINS TAXProperties held for 365 days or less are considered short-term and are taxed at your ordinary 1040 income tax rate if the property is owned in your per-sonal name or an entity that is a pass through entity such as an S Corp, LLC (filing a 1065), LP or Sole Proprietorship. Taxes are paid at the 1040 tax rate on those gains of anywhere from 10% to 39.6% for the year 2013.

This could be a real killer should your taxable gain, plus any other 1040 income, push you into the higher tax brackets.

LONG-TERM CAPITAL GAINS TAXThe following tax levels are known as long-term capital gains and apply to property that you hold for more than 365 days (more than one year). Long-term capital gains tax rates depend on which ordinary

income tax bracket you fall under.0% ! if in the 10% or 15% tax brackets15% ! if in the 25%, 28%, 33%, or 35%tax brackets20% ! if in the 39.6% tax bracket

In both short-term and long-term capital gains tax cases, there are no allowable deductions that you may take in order to reduce your personal capital gains tax liability other than capital improvements and sell-ing expenses such as commissions, closing costs and inspections. Please note that short and long term capi-tal gains taxes do not apply to any C Corporation orLLC filing an 1120 tax return. The gains from such a sale are considered ordinary business income if the said entity is in the real estate business.

IRC SECTION 351The Internal Revenue Code, Section 351 was insti-tuted in 1921 and can be found under Title 26, Subtitle A, Chapter 1, Subchapter C, Part III, Section 351. It wasnt widely used until Congress provided re-lief rom its previously burdensome provisions in the Miscellaneous Trade and Technical Corrections Act of 1999, which for the first time allowed 351 transfers that included liabilities such as a mortgage. Before that date, 351 transfers could only be undertaken with unencumbered (or fully-paid) properties.

351 TRANSFERSThe government will assist people interested in ven-turing into business for themselves by allowing them to utilize previously owned assets to fund their new business venture. The IRC refers to this as a capital contribution. The IRC further states categorically that in order for a transfer of real estate to a corporation to be tax-free, there must be a verifiable business reason for the transfer. Source of funding, necessary to under-take business, is in large part based upon the entitys business purpose such as the acquisition and selling of real estate.

The Equity Recovery Program is a process whereby a C Corporation is specially drafted for the property owner to exchange the basis of the property for the stock of the corporation. Once transferred, the stock becomes valued at the same basis that the property was valued prior to the transfer. When the corporation sells the property, the code considers the income as

Ordinary income of the corporation and not as a capital gain of the corporation. Thus, the Equity Recovery Program (which utilizes a 351 transfer) eliminates federal capital gains taxes when the prop-erty is sold. And, by having formed the corporation in a tax-free jurisdiction such as Nevada, the property owner can eliminate state taxes as well.

ORDINARY INCOMEOrdinary income is the income generated during the ordinary course of a companys business activities. For example, a new car dealership purchases cars to sell. The Internal Revenue Code considers these cars inventory. When a car is sold, the income de-rived from the sale is commingled with the income derived from servicing the cars and the parts the dealership sells for the cars. This income is never considered capital gains. This is a very important concept to understand as its application is equiva-lent to that of business whose business purpose is the purchasing and selling of real estate. Should the corporation not have enough write-offs to eliminate its taxable income all together,the corporation would be required to pay taxes on the net amount remaining at the end of the tax year, if any. In other words, should the corporation not spend all its income on allowable business expens-es by the end of its fiscal calendar year, the remain-

ing net taxable income would be taxed at the corporate level. It is important to remember that C Corporations invariably pay less in taxes than do individuals filing a 1040, LLCs filing a 1065 or S Corporations filing an 1120-S on incomes up to $250,000.

351 TRANSFER REQUIREMENTSIRS Code Section 351 states that no gain or loss is recognized by either the contribut-ing shareholder or the recipient Corporation

if three conditions are satisfied. Assuming that the transfers having a bona fide business purpose in real estate, the said conditions are:1.) There is a transfer of property (and not ser-vices)2.) Solely in exchange for corporate stock, and3.) After the exchange the contributing shareholder(s) is (are) in control of the corpo-ration (i.e. own at least 80% of the voting and outstanding stock).

Contributions by several shareholders may be ag-gregated in determining if the 80% test is satisfied, provided that all contributions were part of a single integrated transaction to form the business. Note that contributions of cash or property in return for long-term debt (e.g., bonds) do not qualify for a Section 351 transfer treatment.

No gain or loss shall be recognized if property is transferred to a corporation by one or more per-sons solely in exchange for stock in such corpora-tion and immediately after the exchange such person or persons are in control of the corporation.!

IRS Regulation 1.351-1(a)(1)

If all Section 351 conditions are met, the trans-action is treated as though nothing happened in that no gain or loss is recognized. The basis of the shareholders stock equals the basis of the property contributed, and the basis of the property to the cor-poration equals the contributing shareholders basis.

Please contact our offices for more information on the Equity Recovery Program and to schedule a private consultation and learn how to lawfully avoid paying any capital gains tax on the sale of your next property, http://AssetProtectionServices.com

Lawfully AvoidCAPITAL Gains

Before selling a property, be sure to plan ahead to avoid capital gains taxes. Leave more profi t in your pocket with these simple steps.

IRS Code Section 351 states that no gain or loss is recognized by either the contributing shareholder or the recipient Corporation if three conditions are satisfi ed.

Lawfully AvoidCapital Gains Tax

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Damian BartonDamian BartonPresident

Mobile: (702) 425-4143Mobile: (702) 425-4143Skype: RocketFizzSkype: RocketFizz

[email protected]@AssetProtectionServices.com

Jay ButlerJay ButlerManaging Director

Mobile: (702) 997-3260Mobile: (702) 997-3260Skype: AssetProtectionServicesSkype: AssetProtectionServicesSkype: AssetProtectionServices

[email protected]

Dr. Robert HagopianDr. Robert HagopianChief Executive Ofcer

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CashFlow Express - Why Wait for Wealth! It's Here... Featuring Randy Reiff, CEO of FirstKey Lending

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