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 Realty411
N
ow is the best time in U.S. I recommend going by the property or
history to take advantage of properties you plan on purchasing during
published for investors by investors the bank-owned property the day on a weekday and again at night
real estate market, get some or on the weekends to really get a feel for
FOUNDER & EDITOR
Linda Pliagas
great built-in equity, cash the neighborhood. In addition, the tenants
realty411guide@msn.com flow and, most importantly, build long- you are going to rent to in these bad
EDITORIAL STAFF term wealth. However, most investors do neighborhoods are going to miss
Carla Fischer not do the right due diligence when payments more, cause more damages to
Lori Peebles purchasing properties or even know how your units, and have a higher likelihood
PHOTO EDITOR to for that matter. So, how does an investor of moving out in the middle of the night
John DeCindis do the right due diligence? Do you need and having their friends steal your water
COLUMNISTS to be an attorney, CPA or other financial heater, AC unit and all of the copper
Dave Lindahl
professional? Well it helps, but it is not piping. What do you do if you have
Charles Salisbury
necessary. If you do not feel you are already purchased in one of these
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DUE DILIGENCE
A Step-by-Step Guide by Mathew Owens, CPA & Investor
experienced enough to do your homework
the right way, hire someone who is. The
extra cost of hiring a professional now will
save you major headaches and possible
losses down the road. OK, so your saying:
“What if I want to do it myself because I
do not trust even the most seasoned
professional with my money?” Well get
prepared because I am about to take you
through a step-by-step guide to do the
right due diligence on every property
purchase.
NEIGHBORHOOD ANALYSIS
One of the biggest mistakes you can make
when purchasing property is buying in a
bad neighborhood. What is a bad area?
When you are walking through the
neighborhoods look for crack heads, 30"
rims up and down the street, un-kept
houses and major foot traffic. These
would all be pretty good signs you may
not want to buy there. Many investors
just starting out (including myself) have
made the mistake of buying in the wrong
neighborhoods and trusted the seller when
they say that it’s a “quite family-owned
neighborhood” only to find out that during
the day the place looks great, but at night
it’s an entire different ball game.
neighborhoods unknowingly? One way
to go is to get a section 8 tenant. They are
required to take better care of your unit
and you get guaranteed rents. Another
way to go is to sell as fast as possible and
even possibly take a loss on it to get out
of the property. It’s better than losing
money over your mortgage payment
month after month because of the
extensive vacancies, bad debt and repairs!
MARKET VALUE ANALYSIS
Let me start off by saying one really
important factor you need to consider
when buying property today: You are in a
declining market! What does this mean?
It means you need to pay very close
attention to what the market value of the
property is TODAY. Not three years ago.
Many wholesalers, sellers and real estate
agents will try to sell you on the highest
appraised value ever received for that
property. However, you should be buying
property based on what the current
financeable value is IF you plan to sell or
refinance. If you are buying a property
with cash and holding for long-term cash
flow, it is less important if the property
Continued on next page >
Vol 2 Issue 4 2009 | 5
has the right comparables for financing,
but it still is a signification of the current
value of the property. Good wholesalers
and real estate professionals know how
to find properties with these requirements
and many times you as the investor do not
know the difference or will never check.
In order to get a property financed in
today’s lending market, banks require
appraisers to use three comparable
property sales within the last six months
and within one mile. Banks can differ on
these requirements and personally if a
property does not have a minimum of six
comparables within three months, I would
not buy it if I am going to sell or refinance.
If it takes three months to purchase,
renovate and sell the property (sometimes
it can take a month just to close escrow)
then you want to still be able to use the
comparables you pulled when you sell.
Keep in mind there are many professional
real estate investors that wholesale
properties, but do not assume you will be
able to find a buyer before you have to
close escrow. You should have the funds
ready to close escrow if need be. You
definitely do not want the reputation of
not closing your deals with the local real
estate agents and asset managers. We also
take it one step further and get an appraisal
on every property before we close escrow
as well as pull the property tax assessor’s
tax appraisal as a secondary check-on
value. As a side note, there are many
properties that are un-financeable and
look like they have great cash flow on
paper. However, when you get down to it
the vacancies, repairs and bad debts make
your cash flow significantly under
expectation if not non-existent. All of
these factors need to be considered when
looking at the market value of your
property and which investments to chose
from.
CASH FLOW & RENTAL ANALYSIS
First things first: How do you compute
cash flow? Most sellers will tell you, rent
minus property management, property
taxes and insurance equals cash flow. You
as an investor need to watch out. Do not
be fooled. Always, always, always include
a monthly vacancy allowance and monthly
repairs allowance when doing your cash
flow analysis. If you do not include these
items on a monthly basis you are going to
find that the return on your money you
thought you were getting was not what
you expected at year end. Many sellers
rely on this downright lie to trick less
educated or experienced investors into
thinking their return on investment is
higher.
In addition to the cash flow calculation,
you always want to take into consideration
the tax benefits which can easily increase
your cash flow return on your money with
extra tax breaks. You can even get really
creative and do a cost segregation analysis
or build green for extra tax breaks, which
is a great way to inch up that return a little
on each investment. Also when you are
computing your return on investment
there are a couple of different factors to
consider. First, you have your return due
to the cash flow, which is basically your
NET rent after all expenses and the
mortgage payment if you have one. Next
you have your tax breaks. Then you have
your principal reduction on the loan every
year and lastly you have the built in equity
when you purchase the property. All of
these items should be considered when
you are looking at your return on
investment and total increase in
Continued on pg. 13
I
n the perplexing gious financial institutions including Wells Fargo Bank and
world of residential AmSouth. Green also served as an investment banker working
investments, two closely on retirement ac-
Ryan Hinricher, Chief Marketing Officer
Memphis-based counts at Fidelity Invest-
entrepreneurs, Ryan Hin- ments prior to embarking
richer and Stephen Green, on the launch of earlier
decided to lead the pack start-up companies includ-
and offer a concierge ap- ing Green Financial. He
proach as investment then started renovating
home advisors. This homes for out-of-state in-
“white glove” advisor role vestors looking to own in
concept is unique and the Memphis area.
Hinricher and Green agree While its headquarters
that it’s the future of in- Stephen Green, President are in Memphis, Investor
vestment realty. Nation also has satellite of-
This year, these two ambitious executives launched Investor fices strategically located
Nation, focused on providing investors with a turn-key solution in Orlando, Florida, and
by allowing them to build a diversified investment home port- Portland, Oregon, where

White-Glove Approach Positions

Investor Nation Ahead of the Pack by Carla Fischer and Marie Domingo

folio in the best real estate markets in America. In doing so, each many of their investors live. The company currently employs
investor learns how to make savvy decisions when purchasing, ten people.
renovating and renting investment property. The company’s ob- Hinricher and Green believe that Investor Nation’s unique
jectives are to help the investor maximize the benefits of real “white glove” concept is the future of investment realty. “We’ve
estate investing by offering tailored investment strategies to meet taken the approach of ‘radical transparency,’ meaning we offer
each investor’s individual an incredible amount of due
Investor Nation offers out-of-state investors choice properties.
goals. diligence, from inspections,
To date, Hinricher and appraisals and renovation
Green have sold more than bids,” said Hinricher. “We
400 properties in the last make this process seamless
36 months. As Investor and easily accessible to all
Nation launched, its focus of our investors from our
was on Memphis, but the website.”
company has since ex- Hinricher explains that
panded to Charlotte, North once the investor purchases
Carolina, and Atlanta, a home, the company offers
Georgia, and future re- pre-screened licensed third-
gions will be added. party general contractors
Prior to forming Inves- and management companies
tor Nation with Green, as resources to collaborate
Hinricher held senior man- with the investor, making
agement posts at presti- Continued on next page >

www.realty411guide.com Vol 2 Issue 4 2009 | 7

the process pain-free. time. We’ll guide you the whole
Both Hinricher and Green way. Before you even purchase
own investment homes and the home, you will know what
spent years establishing solid needs to be done, how much it
resources and consider clients’ will cost, how you will finance
access to their contacts from the renovations, and who will
their personal Rolodexes is part perform them for you.”
of the white glove service. “Our key focus is working
“Our team becomes your se- for investors who are seeking se-
nior advisor to help guide the cure assets to diversify their en-
investor, locate and screen tire investment portfolio and buy
property as well as help com- two to three investment homes to
plete the transaction,” Green Jim Williams, Charlotte Branch Manager supplement their 401(K) and
said. “It’s an ideal solution for other retirement vehicles,”
anyone currently interested or already involved with investments explained Green.
and who needs a senior advisor to handle time-consuming but Hinricher and Green plan to change the world of real estate as
deadline-oriented projects.” they’re doing their share to revitalize the economy. “The invest-
Investor Na- ment homes we purchase are primarily distressed and foreclosed,
tion identifies so we are revitalizing those homes at a rapid pace and delivering
and introduces a positive impact to local neighborhoods and the economy on a
investors to l a r g e r
third-party scale,”
finance lender Hinricher
specialists said. “The
who are famil- houses we
iar with the in- target are
vestor homes usually
in the desig- three-bed-
nated area. room, two-
Tailored programs for investors, who perhaps don’t always bath homes
qualify within the normal Fannie Mae guidelines, are also of- built after
fered as an alternative method of financing. 1978.”
Terrance Hill, Marketing
“Stephen and I focus primarily on cash flow, based on how Investor
well the economy is doing,” said Hinricher. “Our services are Nation purchases vacant and distressed properties in all the com-
perfect for someone seeking an investment property for the first munities it serves. Investors eventually restore the properties to
some of the best homes in these neighbor-
hoods. This attracts new tenants and posi-

Facts about Investor Nation
Established to deliver to each in-
vestor a turn-key solution, Investor
Nation empowers its clients to
build a diversified investment home
portfolio in the best real estate mar-
kets in America. In doing so, each
investor learns how to make savvy
decisions when purchasing, reno-
vating and renting investment prop-
erty.
The company’s objective is to
help the investor maximize the ben-
efits of real estate investing by of-
fering tailored investment strate-
gies to meet each investor’s indi-
vidual goals. Ryan Hinricher and
Stephen Green have sold more
than 400 properties in the last 36
months. As Investor Nation
launched, its focus was on Mem-
phis, but it has since expanded to
Charlotte, N.C., and Atlanta, Ga.,
and other regions will be added
soon. While its headquarters are
in Memphis, Investor Nation also
has a satellite office strategically
located in Portland, Ore., where
many of their investors reside.
tively impacts the value of the area.”
While Investor Nation realizes that
the revitalization of homes benefits neigh-
borhoods, members of the company go a
step further by donating time and money
to local organizations such as Habitat for
Humanity.
“We don’t see ourselves as a sales
organization, we see ourselves as a ser-
vice organization serving both the com-
munities and investors,” Hinricher said.
For more information or to learn more
about investing with Investor Nation,
please visit: www.InvestorNation.com
Private Money:
The Biggest Power Tool An Investor Can Have
T
hese days, most real estate
investors are sitting on the
sidelines. The daily media
drumbeat scares them into
inaction. If they’re not hearing about
higher unemployment, they’re told how
many more banks failed and how much
more housing prices have plunged.
I’d have to say it’s one of the best times
to be an investor. You read that right: The
biggest profits are made when everyone
else is running for the door. Competition
is much lower and so are prices. Investors
who are smart right now will be extremely
rich in just a few short years.
I know what you’re thinking: “Yeah,
sure. And how am I supposed to finance
my deals? At all those failed banks? They
were bad enough in the good old days,
and now they’re not even lending to each
other.”
You’re right. Banks are a lousy place
to get financing now. The superior
alternative is “private money.”
That’s where you arrange a true
“win/win”:
* You have a property that needs
financing. You’re willing to offer
an attractive interest rate (or even
equity) to people who finance
it.
* Those people are sick
and tired of
earning close to
zero on their
money, but they
also don’t want
to take much
risk. Private
money is the
way both par-
ties win. You
get your deal
done, and your
private inves-
tors make a
10 | www.realty411guide.com
by Dave Lindahl
great rate of return. Stop and think of the
kind of negotiating power you’ll have
when you find a deal and know that you
can get financing for it. You can drive a
very hard bargain when, in effect, you’re
the only exit with a gas station for the next
100 miles for a seller who needs to get
out of a property.
You can ethically drive a very hard
bargain with sellers because you need to
buy the property at an excellent price in
order to get financing. After all, your
private lenders have two key
requirements:
Key #1: Private lenders want a high
likelihood that they’ll get their money
back. When you buy a deal at a great
price, that’s another way of giving
insurance to your lenders that they’ll get
their money back. In other words, if they
finance you and later the deal runs
into trouble, they want to know
that the liquidation value of
that property will more than
cover their investment.
That’s easy if you bought
at a great price.
Key #2: Private lenders
want a great return on
their money. Again,
when you buy right, you
can afford to give
lenders an ex-
cellent return.
At the right
price, your
property
m i g h t
generate a
10 percent
return or
m o r e .
T h e s e
days, your
lenders
might be
delighted with an eight percent return and
plenty of collateral. That would certainly
be a far better deal than they’re getting in
other investments.
Where do you find these private
lenders? They’re all around you. Kate,
one of my students, discovered from me
how to do a quick, informal pitch to just
about everyone she meets. Not pushy, but
just matter-of-fact style. Her car mechanic
had money to lend her! With all the
potholes in New England where Kate
lives, it’s no wonder that mechanic’s a rich
guy.
Another great source for private money
is true “self-directed” IRAs. Warning:
Most people think they’re in a self-
directed IRA when in reality, they’ve been
fed a pack of lies by their securities firm.
Here’s the scam: The Big Boys on Wall
Street think we’re all idiots. They are also
greedy. So this is how the discussion goes
at one of the “Acme Financial Services”
off-site planning meetings:
“Hey, let’s tell our idiots — um,
customers — that we’re putting them into
the ‘Acme Retirement Security Self-
Directed IRA,’ when in fact we’ll just
allow them to invest from among stocks
we sell them, bonds we sell them, mutual
funds we make commissions on, and
money market accounts we gouge them
with. We’ll get our lawyers to put in
really, really small print whatever we need
to, in order to make it legal. The idiots
will never know the difference!”
Meanwhile, smart investors would
never dream of establishing an IRA with
one of these big Wall Street firms.
Instead, they establish a truly self-directed
IRA. To do that, they go with a company
whose only business is establishing IRAs.
Contact me if you can’t find such
companies on your own. To summarize
about IRAs: In the course of your normal
conversations with people, just ask if they
Continued on next page 38
Vol 2 Issue 4 2009
Expand Your Options:
Invest in Alternative Assets with Your IRA
by Hugh Bromma
CEO of The Entrust Group
O
ver the past decade, more
and more people are
including alternative assets
in their IRAs as a means to
diversify. Alternative assets
include anything that is not a certificate
of deposit (CD) or publicly traded
security, such as stocks and bonds. Typical
alternative investments include real estate,
private placements, equipment, leases,
and notes. If you are looking into adding
alternative investments to your IRA, take
a moment to consider these tips.
Time and Money
You have a variety of asset types to choose
from—some are excellent for the short
term, others might take decades to reap
true benefits. So first, you need to
determine your goals and objectives in
terms of when you plan to retire or take
distributions from your IRA.
Your present age is an essential
determinant of what you are looking for
in growth and income of an asset. A real
property asset might have more growth
potential if you have at least 10 or 20 years
for the asset to appreciate. The big-picture
view would be to also consider whether
it provides a positive cash flow to your
IRA while waiting for it to appreciate. Of
course, time can also cause physical
depreciation, so proper maintenance is a
cost to the IRA.
If you have a traditional IRA—earnings
are taxable at distribution as compared to
a Roth IRA in which distributions are tax
free and not mandatory—you must take
distributions when you reach age 70½. So
depending how many more years you have
until you are required to take distributions,
you might tailor your investments
accordingly or choose to convert your
traditional IRA to a Roth. Before making
this type of decision, consult with your
tax advisor on what works best for your
situation.
The minimum distribution requirement
12 | www.realty411guide.com
rules allow you to take the actual real
property as an in-kind distribution. You
can also liquidate all or part of the real
property.
Rules to Live By
Another thing to consider is the applicable
laws and rules for the particular asset type.
For example, a private placement is
covered by securities laws and requires
certain disclosures to the buyer. A note is
a security in many states. Offshore
investments require certain reporting
requirements and, in many cases, the
transactions cannot be made in the same
way as you would for a similar type of
alternative investment in the United
States. There are even limitations for
buying assets within U.S. territories,
commonwealths, and possessions.
You want to make sure that the person
or company selling those assets is
completely aware of the rules and laws
that apply. So you need to be able to ask
the right questions so that you know that
you are getting informed answers. If you
have any doubts, seek a professional who
can help you understand the rules and laws
for that asset type. Sellers and brokers
should be competent in the area of
specialty for the asset that they are selling.
They should be able to provide you with
any information or source to address your
questions and concerns.
In addition to the specific regulations
regarding the asset type, you should be
aware of the rules concerning prohibited
transactions and the responsibilities
involved in self-directing your IRA
purchases. Your custodian and
administrator should provide you with the
types of permissible investments with
your IRA adoption agreement.
Due Diligence
The questions you ask of a seller are part
of you doing your due diligence for your
IRA purchase. You should never make
assumptions about an asset or neglect this
essential step. Some things to ask are:
Does the asset exist? Does the purported
Photograph by John DeCindis
owner really own it? Is the private
placement really a security and what are
the disclosures to be made? If the private
placement consists of real property, who
owns the property? Is there equipment or
personal property being sold in a
commercial building that generates
operating income? How is the security
interest in personal property perfected?
Making the Purchase
After you’ve taken your goals into
account, you know the rule and
regulations involved, and you’ve done
your due diligence, you’re ready to buy
the asset with your IRA.
The process of acquisition is simple:
You order the administrator for the
custodian of your self-directed IRA to buy
the asset for your IRA. You do this in
writing by fully describing the asset and
the terms and conditions of the purchase.
The administrator follows your orders
completely, provided that you have not
engaged in an obvious prohibited
transaction, which should be outlined in
your IRA adoption agreement. Your IRA
is a legal entity and owns the asset until it
is distributed to you or your heirs.
Your administrator does not give any
advice about your investment choices.
The role of your administrator is to
purchase the asset on behalf of your IRA,
maintain the records for it, and report the
results to you and the IRS. What your IRA
invests in is up to you, but certainly you
should consult with your advisors,
attorneys, or accountants to help you
Vol 2 Issue 4 2009
develop your financial plan,
select your asset type, and
perform the necessary due
diligence.
Self-direction
For many people, having a
self-directed IRA means
opportunity: opportunity to
diversify IRA funds into a
variety of assets, reduce risk
Due Diligence, pg. 6
WEALTH. Next, you have
your rental analysis. When
doing this you want to ask
property managers that
manage properties in your
specific areas; there are
numerous sites you can go to
in order to also get an
assessment. Be conservative
on the rental amounts as it
affects your return on
investment significantly.
RENOVATION ANALYSIS
When doing your renovation
it is VERY, VERY important
you have good team members
in place that know how to
renovate property and know
how to cut costs. I recommend
having more than one
renovation team. If you only
have one team they typically
get a little sloppier and the
price slowly rises over time. If
you have more than one team
you can switch back and forth
to pressure them not to
increase the price and take
better care when doing the
renovation, or you can go to
someone else. There are a
million and one ways a
contractor can gouge you, but
if you do your homework, you
can significantly reduce that
risk. First thing you can do is
get a renovation bid, go
through it with a fine tooth
comb, and find out what
materials they are going to
and increase growth, and
choose what to invest in while
becoming knowledgeable
about the choices.
So if you are interested in
investing in real property,
precious metals, or private
loans, to name just a few
opportunities, consider estab-
lishing a self-directed IRA.
purchase and request that you
pay for the materials cost
directly. This takes a huge
amount of risk off of you
because the contactor then
cannot hide costs in materials.
Take a look at the large ticket
items as well. Does the
property need a new roof,
electrical, plumbing, foun-
dation, AC and heating unit?
Look at those major items and
any additional items and
compare them item by item
with the inspection report. If
there is anything on the
inspection report that is not on
the renovation bid, make sure
the contractor is aware of it
and is planning on getting it
fixed. Most people tell me not
to over renovate. I actually do
a little extra on every
renovation to put it above the
rest. What does that do? It
helps you sell the property
faster and/or rent the property
faster as well, which both
makes you a more successful
investor. Also, I have found
that when you do a better job
on your renovations, your
tenants tend to take better care
of the unit and do not cause as
many damages.
CLOSING
So who has ever been charged
extra fees, costs, points or
insurance while closing
escrow on a property? If you
have purchased one property
Continued on pg. 22
 by Greg Boots
Manager of TKO Properties and

A
Anderson Business Advisors, PLLC
s an investor in long-
term holds, I know the
importance of making
sure that I am pro-
tected from any
liability exposure associated with my
investment property. The question then
becomes should I use a Limited
Liability Company or a Limited
Partnership for asset protection
purposes with my rental properties?

Having consulted and educated

thousands of investors across the
country, I have seen both LLCs and LPs

LLC or LP?
What Entity is Best to Protect My Rentals?
used to hold rental properties. Both entities are extremely
well situated to protect properties from unrelated liability
exposure (called outside liability). However, there are two
distinctions that make LLCs better suited to hold rentals
and lease options.
The first benefit deals with inside liability exposure. This
type of harm occurs within the entity itself and is associated
with the property. In a Limited Partnership, two classes of
partners can exist: General Partners and Limited Partners.
Limited Partners are able to contain their risk exposure to
what they have invested in the business because they are
completely passive investors. As passive investors, the
Limited Partners are not able to participate in the
management or running of the business. The General
Partner is in total control of how the business is to be run.
In exchange for the control, the General Partner is subject
to unlimited liability exposure. Therefore, if a tenant is
injured not only can the General Partner lose his or her
investment in the business, but the General Partner can have
all of his or her personal assets at risk as well. The way to
avoid personal unlimited liability is to use an entity such
as a corporation to serve as the General Partner.
Conversely, an LLC has Members and Managers who are
both protected from unlimited liability exposure if an injury
occurs within the LLC.
The next distinction is directly related to our tax benefits
of holding long-term properties. As investors, we are able
to capture the depreciation of our long-term holds on our
1040 returns (subject to income thresholds). In order to
be eligible to capture the depreciation, we must have some
participation in the operation of the investment property.
Unfortunately, I encounter many people who have gone to
their local attorneys and those attorneys completely ignored
tax consequences and placed the rental properties in LPs
for asset protection. If you place your rental property in a
LP and you are the Limited Partner, you lose your ability
to capture your depreciation on an annual basis because a
Limited Partner cannot participate in the operation of the
business. This is a huge mistake when it comes to tax
planning. However, if you use an LLC for your investment,
you do not lose the ability to capture your annual
depreciation because even a passive Member within the
LLC can participate in the operation to an extent that would
allow for the full capture of the annual depreciation.
When it comes to proper planning for asset protection, be
diligent to ensure that you will not only receive the best
level of protection but that your plan does not hinder proper
tax planning. In almost all circumstances LLCs are the
preferred entity to provide not only asset protection for
your investments, but also solid tax planning.

14 | www.realty411guide.com Vol 2 Issue 4 2009

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 Five Minutes with Kansas City
Missouri’s Foremost Real Estate Expert

I
nvestors looking for high returns Reedy: Our key is volume. We make a returns can be as high as 63 percent. Our
with a low entry point should smaller profit on multiple deals and leave average flip generates net profits after all
consider investing in the Kansas the lion’s share for our clients. That fees, closing costs and commissions of 20
City marketplace. The area boasts combined with our hands-on approach percent to the investor. We actually have
a stable and diversified economy and attention to detail makes it very easy one client who has made in excess of
and affordable properties with a strong for us to provide the investor with a turn- $100,000 this year alone just on flip
ROI (return on investment). Realty411 key flip or rental property with great properties we have done for him. Now
spoke with Dan Reedy, owner of Missouri returns. keep in mind, this is on value-priced
Real Estate Ex- properties in Kansas

What they’re saying...

change, to get the City. Our average buy
inside scoop on and hold property is
opportunities in about $50,000 and our
America’s “I have had the chance to work with Dan and see how he operates his business. finished flip property
heartland. I have seen several of the projects Dan has done in rehabbing homes for is in the $70,000 to
investors. His work is incredible. I was amazed at the lengths he goes to provide $100,000 range.
Realty411: What the highest quality service at the best price. I would highly recommend Dan to Realty411: What’s the
makes you so anybody who would like to find quality properties for investing.” best way for investors to
informative ~Adam Cazier, Provo, Utah, April 1, 2009 begin the process and
about the real start making money?
estate market in Kansas City? Realty411: Explain your “hands-on” Dan Reedy: They can visit our website
Dan Reedy: First of all, I have lived in approach. at www.morekc.com and look at our
this area my entire life and am very Reedy: Simply put, we handle everything current inventory, see rehab videos, and
familiar with all of the positives and from beginning to end. We find the then call me direct at (816) 564-5265.
negatives of almost every neighborhood property, rehab it, place the tenant and I will walk them thru the process and help
in the Kansas City area. Secondly, we manage on a rental or resell to the end them to determine the best option based
have done close to 1,000 real estate buyer on a flip. The key is having one on what they are trying to accomplish,
transactions since our inception in 2005. point of contact for everything. budget and risk tolerance.
We have also rehabbed hundreds of Realty411: What kind of returns are your
properties for retail and rental and also investors seeing?
mange over 300 properties in Kansas City Reedy: On buy-and-hold properties, our If you are looking for turn-key cash flow
for investors nationally. There isn’t very average ROI is 40 percent. We have a few and flip profits, visit www.morekc.com
much we haven’t seen. very safe, great neighborhood properties or call Dan Reedy direct on his cell
Realty411: That’s a lot of deals! What do that will dip to 35 percent. And, we also phone at (816) 564-5265.
you attribute your success to? work in some higher risk areas, but the
16 | www.realty411guide.com Vol 2 Issue 4 2009
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www.realty411guide.com Vol 2 Issue 4 2009 | 17
A
few years back, when real
estate was doubling and
tripling in price in
neighborhoods all across the
country, flipping houses was all the rage.
In fact, there was even a TV show or two
devoted to the practice, and it featured
people making money hand over fist by
buying properties, fixing them up, and
then selling them for huge profits.
The Truth About
House Flipping
The concept is nothing new, it’s been
around for years and has always been an
option for making money in real estate,
especially for those who are handy. The
idea is that you locate a
distressed piece of
property in a decent
or at least
average neigh-
borhood,
buy it, fix it
up so that it
m e e t s
community
or neigh-
borhood
standards,
and sell it.
Even in
these tough economic times, adver-
tisements abound for seminars that teach
the secret to house flipping and help you
make your own fortune through the
process. It sounds great, but I’m here to
tell you that more often than not, a novice
investor can put a lot of time and hard
To paraphrase Forrest Gump, a fixer-
upper is like a box of chocolates —
you never know what you’re going to get.
www.realty411guide.com
labor into a fix-and-flip and have nothing
to show for it except a loss on their books.
How could this be? Simply put, when
it comes to fixing and flipping, time is
money. Starry-eyed newcomers to real
estate typically underestimate the amount
of time and money it will take to fix up a
property. They also underestimate the
holding period. At the same time, they
overstate the amount of money they’re
by Charles Salisbury, MBA
going to earn when they finally sell the
property.
While they’re busy underestimating and
over-estimating, the bank is busy
collecting interest, because as I
said, time is money. The longer
it takes to sell a property, the
smaller the profit and the
greater the amount of
money the fix-and-flipper
will pay to the bank.
And then you need to
consider the risk factor.
What if you buy a house
today and the real estate
market turns even lower, so
that you can’t even recoup
your initial investment
when you come to sell the
house? Or what if you knock out a wall
in the house and discover, to your horror,
additional repair problems that are both
expensive and time-consuming? To
paraphrase Forrest Gump, a fixer-upper
is like a box of chocolates — you never
know what you’re going to get. But the
one thing you are not likely to get, I’m
sad to say, is a profit. There are too many
variables, too many uncertainties, and
overall, too much market risk.
Fixing and
flipping, un-
fortunately, is
not the path to
real estate
wealth for the
novice. It’s a risky endeavor that involves
a lot of work, a lot of time, and more than
a good share of luck.
The bottom line is that real estate is still
the very best investment out there. But
house flipping, buying foreclosed
properties or property in probate is not a
secret, fast path to wealth.
So how can investors make money in
real estate without having to paint walls
and replace tile on weekends? By using a
turn-key approach that is disciplined yet
very effective. If you are interested in
learning more about how my team and I
invest in real estate, I encourage you to
visit my website to read more information
and articles about my investment
philosophy.
Chuck Salisbury outlines the safest, most
conservative way to invest in real estate
in “The Incredible Investment Book.”
For a free newsletter, please visit:
www.TenPercent Down.com or contact
the author at: (949) 910-6028
Vol 2 Issue 4 2009 | 19
Top10 by Scott Meyers, CSSM©
Reasons to Invest
in Self Storage
Like many of you, I be-
gan my career by build-
ing a large portfolio of
single family and multi-
family properties. I
spent the first 10 years
in real estate investment
fighting with tenants
and toilets, and it al-
most drove me into the insane asylum and
bankruptcy court! Chasing tenants that
wouldn’t pay, trying to stay ahead of ris-
ing taxes, insurance, utility bills, and the
ongoing, unexpected maintenance calls,
almost forced me out of the business. So
I began to ask myself, what area of real
estate could I invest in that could utilize
the talents and experience I have gained,
without all the hassles of tenants and toi-
lets? Well, after weighing all options, and
after speaking with many of my mentors
in the industry, I ultimately chose Self Stor-
age as the area I wanted to pour my ef-
forts into and secure my future.
So after 13 years of amassing a large
portfolio of single family and multi-fam-
ily apartment complexes, I began to sell
them all off and begin investing in self stor-
age facilities. And as most people say once
they have found their true calling, I wish I
would have done it sooner! The Self Stor-
age business isn’t without its fair share of
challenges, however, and I certainly
wouldn’t call it easy. But my life has
changed dramatically the day I sold my
20 | www.realty411guide.com
last apartment complex with all those ten-
ants and toilets and traded them for self
storage units filled with nothing but...
STUFF!
My passion, and my company, Self Stor-
age Profits, Inc., www.SelfStorage
Investing.com, is designed to share my
experience with you so that you may find
the joy of running your own real estate
business without all the hassles that the
traditional real estate investment pos-
sesses.
Now, I will share with you the top 10
reasons why I decided to sell all my houses
and apartments and say goodbye to all the
tenants, toilets and trash to invest in self
storage:
10. Endless Opportunities – Contrary to
popular belief, the large, public operators
in the industry only account for about 25
percent of the estimated 51,000 facilities
in this country worth $22 billion in 2007.
That means there is a huge opportunity to
pursue roughly 37,000 facilities that are
available. Many of these are “mom and
pop” facilities that are already established
and cash flowing, and were developed spe-
cifically to sell off to investors once they
were stabilized.
9. Demand Projections are on the rise –
Over 23,000 facilities have been added
since 2000. But probably the most excit-
ing prospect for the industry is the aging
of the baby boomers. There are roughly
77 million baby boomers in this country
as of 2007, and they account for approxi-
mately $2 trillion in spending power. A
recent poll by
the Self Stor-
age Associa-
tion of a sam-
pling of Baby
Boomers re-
vealed that
upon retire-
ment, 50 per-
cent planned
to travel, 40
p e r c e n t
planned to
move, and 10
NOW
percent planned to start a new job. What
do people do when they move? That’s
right, they store stuff. Downsizing, buy-
ing a second home, or even a like swap in
houses necessitates a need for storage.
One economist recently compared the
opportunity in this industry to sitting on
the oil industry in the 1950s or sitting on
Silicon Valley in the 1990s!
8. Multiple Ways to Increase Value –
There’s only so much you can do to a
house or with apartments that truly adds
value, or commands a higher rent. But with
Self Storage, you can take a vanilla facil-
ity and create multiple additional income
streams such as:
a. Retail centers that sell locks, boxes,
moving supplies
b. A truck rental service through a 3rd
party, or in-house
c. A business center that charges for com-
puter usage, copies, and fax
d. Ebay® Add-it centers where customers
can pay you to sell their “stuff”
e. A pack and ship business
These additional services can contribute
as much as five to seven percent of the
total income a facility brings in monthly.
7. Low Operating Costs – With my
apartments, I was responsible for paying
the utility costs for many of the common
areas and vacant units, and in some prop-
erties, the gas and water was on one meter,
and was included in the rent. I was forced
to pay for my tenants’ wasteful use of gas
and water. With Self Storage, however, the
expenses are minimal to begin with. You
will pay for lights in the parking lot, and
utilities for the office, but those can be
monitored, and increases can be easily ab-
sorbed. This makes budgeting for utili-
ties and other variable costs a breeze com-
pared to properties with tenants and toi-
lets.
6. Minimal Collection Losses – Forty-
seven of the 50 states have a lien law with
regard to self storage collections proce-
dures, and the other three provide for steps
that an owner can take to collect past due
Continued on pg. 30
Vol 2 Issue 4 2009
 Due Diligence, pg. 13
in your lifetime you probably have been
charged extra. Did you really think it cost
$200 to pull your credit report? Well, do
not feel too badly about it. The fact is
that pretty much every single fee, point
or cost on the closing statement is
negotiable. So negotiate! Review the
HUD closing statement in detail for fees.
Some of them hide themselves as “lender
fees, broker fees, loan charge fees,
processing fees, broker origination fees,
settlement or closing fees, document
Never forget: Your investment needs to be
analyzed on a quarterly and annual basis...
preparation fees, notary fees, shipping and
handling fees,” just to name a few. You
also want to make sure on every closing
that your closing statements are correct
and reflect the entire transaction and have
FULL disclosure with the lender and
seller/buyer. This will get you out of any
problems down the line and make sure you
do not cross those legal bear traps. For
the closing make sure you have had the
time to complete your entire due diligence
22 | www.realty411guide.com
package before purchasing. Get the
appraisal, before pictures and video,
inspection report, renovation estimate,
cash flow and profit analysis, assessors
report and do your neighborhood analysis
all before closing. These things are key
and you do not want to slack off on them
or you will find yourself losing money on
your investments very quickly.
MANAGEMENT
Property management is the single most
important factor in owning property. If
you do not
have good
property
manage-
ment in
place, you will have major problems down
the road. Make sure you find a
management company that has the right
incentives in place. No mark ups on
repairs and man-agement fees only when
the property is rented are two major must-
haves in the contract. I also write in every
management contract, “If ever I feel that
the manager is not acting in my best
interest at any time, I have the right to
cancel the property management
agreement, void the contract without
notice and take over the management of
the property im-mediately.” This little
wording saved me a few times and is a
great clause to add. Now we have our
own in-house property management
company, which is, in my opinion, the
only way to go once you have enough
properties in your portfolio.
CONTINUED ANALYSIS
Never forget: Your investment needs to
be analyzed on a quarterly and annual
basis to determine if you are getting the
return on your money that you are
expecting. Review those statements on a
monthly basis and contact the
management company with any questions
as well. This helps with decision making
down the line and helps mitigate any
inefficiencies early to increase your
returns.
OCG Properties, LLC, helps clients do
all of the right due diligence on every
investment. If you would like to talk real
estate, call (424) 757-4680 or visit online:
www.ocgproperties.com. Or, feel free to
email: invest@owenscg.com
Vol 2 Issue 4 2009
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www.realty411guide.com Vol 2 Issue 4 2009 | 25
RE Club Founder Ponders Meaning of LIFE
A few months ago,
Bruce Norris was a
guest speaker at my
club in Los Angeles. I
call him Nostradamus
because he predicts
future events based on
past performances.
He did a fabulous job
of predicting the fu-
ture of real estate in
California and the na-
tion, but I simply
couldn’t help but re-
mind myself that the
Life I know is highly
unpredictable. His predictions were rather
scientific, based on numbers, graphs and
stats, but I am not ready to give up my
notion that nothing is written in stone. The
nature of Life is not all scientific, you see.
Life is non-linear and follows the Chaos
Theory. This means that although num-
bers do play an important part in shaping
our decisions, no one knows for sure
what’s in store for us in the coming months
or years. Chaos Theory, which is popu-
larly referred to as the Butterfly Effect (a
butterfly flaps its wings in the Amazon,
and two years later there’s rainfall in Kan-
sas) simply states: The only prediction you
can make about anything is that it’s un-
predictable!
In essence, things are not directly caused
by other things. Life is not boring and
translucent; instead, it’s marvelous and
mysterious. The mysterious nature of Life
is what allows the future to be wide open
regardless of what the past looked like or
what the stats tell us. My approach to
Life’s events is this: “Maybe and who
knows.” It reminds me of an old story of
a peasant whose only horse ran away and
left him without any means to make a liv-
ing. His neighbors called this event very
unfortunate. The wise old peasant’s re-
sponse was a simple, “Maybe and who
knows.” A few days later, the horse re-
turned with another ten wild horses in tow.
His neighbors flocked to his place and
called him the luckiest man on earth. His
usual response was, “Maybe and who
knows.” A few days later, the peasant’s
son broke his leg while riding one of the
24 | www.realty411guide.com
wild horses. Again
neighbors gathered
around him, offered
their sympathy and
told him how unfortu-
nate he was. His
usual reply was,
“Maybe and who
knows.” A week later,
the soldiers came and
drafted every able
male body for an im-
minent war with an-
other country but
spared the peasant’s
son. Once again, his
neighbors called him very lucky. The mes-
sage here is loud and clear: Every event
that happens in our life is not to be judged
as good or bad because we simply do not
know what’s coming next. There are no
direct correlations between events and no
one really knows what the future holds.
It’s the same thing with Life. Past does
not equal the future. You can make all the
predictions you want but Life remains
mysterious and people are unpredictable.
Who’s to say California real estate won’t
make a full recovery in one to two years.
I know stats state otherwise, but no one
knows what Life will bring tomorrow. It’s
entirely possible that lower home values
in our state could bring in thousands of
people from all over the country and the
globe to miraculously turn things around
for us. After all, Life is a field of all pos-
sibilities. This is what Werner Heisenberg,
a renowned German quantum physicist,
called the Uncertainty Principal. My point
is that you can very possibly shape your
future based on your decisions today.
Likewise, I know our country is in a lot of
trouble now and many feel that our sys-
tem might eventually collapse because of
corruption in the government and our mon-
etary system, but we could very possibly
change the course of future events by our
thoughts and deeds today.
Life has a mission of its own. Life is
non-linear. Life is mysterious and unpre-
dictable. Life doesn’t follow our limited
human perspective. Need I say more?
So, I highly encourage you to come to
grips with this facet of our human exist-
ence: unpredictability, uncertainty, and in-
security. Worrying about future events is
unproductive. Thinking that we are in
charge is futile. Believing we can predict
the future events based on series of num-
bers and stats can be detrimental to our
mental health. What we need to do is to
surrender instead of worry. Go on out
there and do what you do best everyday,
then surrender to Life for the final out-
come. Welcome Life’s challenges, as they
are part of your continual growth. Your
only certainty is uncertainty. And, if you
really wish to have security then seek in-
security! One more thing, no matter how
“bad” your life is now or has been so far,
it can turn on a dime and be completely
different tomorrow. As a matter of fact,
things are never as “good” or as “bad” as
they appear to be. They’re usually closer
to the middle, but our judgmental minds
cannot understand the concept of balance.
The only catalyst to a better, more fulfilled
life is your knowing that you’re protected.
The more you come to peace with your-
self, the more you look at Life as a play-
ground, the more you project positive
thoughts, the more you realize your seren-
Hundreds of members visit monthly.
ity is in your surrendering and not fight-
ing with Life, the quicker you’ll succeed
in all areas of your life. So, play the game
like a child and you will enter the King-
dom of God, Universe, Nature, Life, or
whatever else you wish to call it.
Best regards,
Sam Sadat
Founder and president of the National
Club of Real Estate Investors and the Los
Angeles Real Estate Investors Club, visit:
www.ncrei.com and www.lareic.org
Email directly: sam@samsadat.com
Vol 2 Issue 4 2009
Bank on Land by Bonnie MacKinnon
A
s a long-time reader of
Realty411, it is a thrill
to contribute some-
thing to this publication. Just
like most readers, I am an
investor. I have several parcels
in Palmdale and Lancaster,
which are growing areas
outside of Los Angeles, Calif.
I’ve seen my parcels grow
tremendously in value in the
boom years and hold steady in
more recessive times. I have
tried other investment ve-
hicles, like the stock market
and rentals, but I always come
back to land as being the best
and most hassle-free way to
make my money grow. There’s
a common saying: “Sometimes
it’s easier to make money than
it is to keep it.”
Boy, have we all learned this
lesson over the last six months!
As the stock market dropped
to levels not seen since 1990,
I stood by comfortable in the
fact that my money — both
cash and IRA funds — were
safely secured in land.
My stock market invest-
ments have taught me a lesson:
It’s one thing to make money,
but you have to hold on to it
and, even smarter, to make it
grow.
Another thing that I appre-
ciate about investing in land is
the fact that it earns its value
based on truly organic
elements: population expan-
sion and time passing.
How many times have we
made an investment in which
the results were dependant on
some person or set of persons
making the right decision?
MONEY FOR LIFE
Invest in stocks, and you’re
investing in the principals of
the company and their finan-
cial savvy and common sense.
If they make the wrong
decision, your money gets hit.
Invest in a rental property,
and you’re relying that a set of
people from property
managers to cleaners to rental
personnel are all communi-
cating and coordinating
effectively among themselves
to make sure the renters are
taken care of.
Nope, give me something I
can understand and control,
and I’m a happy camper. Give
me Los Angeles County with
a population of 18 million
people. Give me an economy
that’s the 11th strongest in the
world. Let me stand back and
watch people migrate to Los
Angeles because of its
financial opportunities and
then migrate to Antelope
Valley for its space and
affordability. Give me land.
Lastly, I was talking to a
long-time resident of Palm-
dale. He’s seen the effects of
the growth and popularity of
the area with retailers and
businesses over the past 40
years. I mentioned to him that
I had a nice 10 acre parcel on
the east side of Lancaster at
35th St. East and Avenue F.
“Just wait,” he said, “In 10
years, you’ll be downtown.
You’ll be sitting on a gold-
mine.”
That type of care-free
investing sounds good to me.
 Live Where You Want,
Invest Where it Makes Sense
by Kathy Fettke
The old adage, "Invest in
your own back yard" is still
true. But in today’s informa-
tion age, our back yards have
become much larger.
Through Google
maps, we can
visit any location in the world at the click of a but-
ton. We can research MLS listings nationwide. And
with direct flights, we can be in another state in
just a few hours.
I live near San Francisco, where the median
home price is $656,700. Median rents are $2,234
for a typical 3/2 home. Median income is $63,393.
In a city like this, it clearly makes a lot more sense
to rent than to own. And the only reason an inves-
tor would buy in this city would be for the poten-
tial appreciation — not for cash flow.
Let’s compare rentals in San Francisco to Dal-
las. In Dallas, you can expect to get at least 1.2
percent of the purchase price in rents: a $100,000
property would bring in $1,200 in rent. You could
buy six and a half of these for one home in San
Francisco. The rental income in Dallas would be over $7,300
per month, compared to the $2,234 you’d get in San Fran-
cisco. That’s a $60,792 difference in annual income! After 10
years, the difference is $607,920. Many people will hold out
for the possibility of the San Francisco property doubling in
value over 10 years and worry that Texas properties never
appreciate. What they fail to see is that income can be just as
lucrative as appreciation, but it’s less speculative.
In today’s economy, investors are looking for the “sure
26 | www.realty411guide.com
thing.” While that’s a tall order, most people are finding that
cash flow today is better than the hope of appreciation in the
future. The economic crisis we face today is different than
other downturns. An asset bubble collapse can last much longer.
The Great Depression in the U.S. and the asset collapse in
Japan in 1989 are examples of this. It has been 20 years, and
Japan has still not recovered. Ask investors there if they would
have taken cash flow over appreciation. The appreciation never
happened.
The biggest hurdle investors need to overcome when in-
vesting in cash-flow markets is the worry that their property is
so far away, and “out there on it’s own.” While this would be
tragic, it does not have to be the case. Good property manag-
ers are the key. Real estate is a business and must be treated as
such. All good businesses rely on delegation. Real estate in-
vestors are no different. They hire teams to help them suc-
ceed, and a good property manager is one of the team mem-
bers.
Therefore, live where you want (even if it means renting)
and invest where it makes sense, in areas with affordable mar-
kets with high job and population growth as well as landlord-
friendly laws.
For more information about Kathy Fettke, please log on to:
www.RealWealthNetwork.com.
Real Wealth Network helps investors build their teams. As
the network grows with investors sharing information, our
list of tried and true real estate professionals also grows. Mem-
bership is free and access to this list is available to those who
ask and includes CPAs, 1031 exchange companies, asset pro-
tection specialists, property managers,wholesale property sell-
ers, and turn-key property networks.
Vol 2 Issue 4 2009
 Birmingham
Market411
Affordablity and High Returns
Make this Southern City Shine
Thinking about heading South to expand your portfolio? Regionally speaking,
the South is leading the nation in economic stability and growth. This booming
and stable region provides investors with a low entry point (Investors can buy
with as little as $1,500 down.) and outstanding returns. How does a cash on
cash return of 400 percent sound? Here are some other reasons why Birming-
ham, Alabama, is attacting investors from across the nation. —Realty411 Staff
Inside Scoop on Birmingham
* An Old City Embraces a New Economy * This vibrant city is gaining attention
as being a key market for investors.
* Birmingham's economy 40 banks in deposits and • CNN/MONEY named Birming-
was transformed by invest- assets.
ham, Ala., the 10th best overall real
ments in bio-technology * Telecommunications pro-
estate market in the nation. 
and medical research at the vider AT&T, formerly
• Birmingham is the third best cash
University of Alabama at BellSouth, has a major pres-
ence with several large
flow market in the United States,
Birmingham (UAB) and
offices in the metropolitan area. according to Nuwire Investor.
its adjacent hospital. UAB is now the
area's largest employer and the largest * Major insurance providers (Protec- • Relative to all metro areas exceed-
in Alabama with a workforce of about tive Life, Infinity Property & Casu- ing one million persons, Birmingham
20,000. alty and ProAssurance, among others) has the lowest unemployment rate.
* After Charlotte, NC, Birmingham is are headquartered in Birmingham and • Birmingham is the third fastest
the South’s leading financial center with employ a large number of people in growing real estate market in the na-
headquarters to three of the nation’s top greater Birmingham. tion, according to CNN/MONEY.

www.realty411guide.com Vol 2 Issue 4 2009 | 27

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 Those Insurance Villains!
by R. Michael Wrenn, President and CEO of Renovator’s Insurance

L
et’s talk about those Insur- a good friend too in your agent. If you
ance Villains. You know, don’t, you’ll probably always be talkin’
those agents and companies about those Insurance Villains. So, here
that take your money and we go, and pay attention...OK?
then never pay a claim due 1) Find an agent (preferably one with at
to the fine print! I just don’t know how least three years experience) who you like and take as much risk as you can afford to
they get away with it, and if I didn’t need and trust and knows about the issue of take; choose those higher deductibles. But,
that darn stuff, I wouldn’t even buy it! vacancy in the various property insurance do not fail to buy all the liability insur-
Those fast talkin’ no good…scoundrels. policies…and the Insurance 101 issue of ance you can afford as this is where some-
I guess after 35 years in this business, I replacement cost and actual cash value one takes you out if you have none and
have heard it all…even a thank you or two. coverages. Tell him or her exactly what someone is hurt or receives damage to
I developed a program that today insures you do and then tell them exactly what you their property where you might be negli-
over 4,000 locations for investment prop- know about insurance. Next, rely on that gent. (You know, negligent…it’s where
erty owners and rehabbers. We started this agent to educate you on just the basics over you didn’t take out that dead tree and it
with about 32 HomeVestor franchisees in the next say six months. Go to lunch or fell on your neighbor’s car or house…or
1999, and now we have over 600 clients breakfast a few times during this period that hole you failed to fill in, but the
nationwide. I know you investors very well and just talk about YOUR business. They neighbor’s kid found, fell into and broke
after 10 years. Busy, busy, busy, you are will usually buy too! his neck.)
for sure! You’re running around doing 2) If after six months you don’t sense they This is really simple enough, don’t you
deals and taking for granted the insurance know anything or they don’t care about think? And, oh, if you buy based on price
you’ve placed on your prized developing you, then fire them and start the process only, you might want to take all the whin-
assets. I know you almost better than you all over. You have no time to invest on an ing about those Insurance Villains and
know yourself as it relates to your con- agent who doesn’t “get you” or seem to make it into a song! Remember the old
sumption of time and energy and atten- care enough to “get your business” and its adage: You get what you pay for.
tion or focus on insurance policies, and unique needs. The biggest issue of all is finding that
their appropriate coverage on your rental, 3) Explain your risk preference and abil- agent who really cares. If he or she really
renovation or vacant properties. I’ll go ity financially to handle higher deductibles cares then everything else will generally
even further: You don’t know much about in the event of a loss. Then tailor the pro- work out just fine.
your risks. But, one thing you need to gram you buy to your personal risk level,
know is: If you make a
mistake on this, it could
take you out of the game.
So, you’ve had a
claim and it wasn’t cov-
ered, surprise, surprise.
But, you know, maybe I
can help you with that.
Maybe I can give you
some good, sound ad-
vice that can save you
money and may even
lead to a claim being
covered and paid…it
just might even save
your little bottom (line)
sometime!
If you’ll take my ad-
vice you can exit this
business at retirement
with a valued relation-
ship and probably even
www.realty411guide.com Vol 2 Issue 4 2009 | 29

L.A. Meeting & Event Center is the perfect alternative to
the sterility and expense of a traditional hotel meeting
facility. Our rooms can accommodate from 10 to 250
people for any type of set–up including:
Seminars · Workshops · Corporate Meetings
Trade Shows · Classes & Trainings · Networking
Events · Cocktail Receptions · Wedding Receptions
Parties · Concerts · Bar Mitzvahs · Holiday Parties
Also, introducing our Business Center & Lounge. Do
you have a home office and have to take meetings at a
coffee shop? Our casual business environment allows
you to meet with clients, use wireless internet and
conduct your deals without the interruptions of a coffee
shop environment.
LA Meeting & Event Center is owned by Rosie Nieto,
founder of Naked Real Estate Investors Club, and it is
the intent of the Business Center to create an
environment where fellow real estate professionals can
gather to network, socialize and do deals together!
Business Center Includes:
Wireless Internet
Conference Rooms
4 Relaxing Lounges
Flat Screen TVs
Meet with Clients
Printing, Copying, Faxing
Package & Receiving
Los Angeles Meeting & Event Center
10601 W. Washington Blvd.
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310.280.9196
info@lameetingcenter.com
www.LAMeetingCenter.com
Self Storage, pg. 20
rent. Each state’s law differs
slightly, but most give the self
storage facility owner the abil-
ity to perform the following
steps when a tenant’s rent is
past due:
a. Remove the tenant’s gate
code from the system, lock-
ing them out of both the fa-
cility and their unit.
b.Place another lock on the
unit to keep them from en-
tering it. This is what we call
over locking the unit.
c. Auction their goods if pay-
ment has not been received,
typically within 90 days af-
ter they were given notice.
Each state requires that the ten-
ant be given notice when they
are past due, and most require
proof that notices were sent by
certified mail or some other
traceable format. Each state
also specifies specific timing
for each one of these actions,
and also requires that proper
notice is given to the tenant,
and to the public by way of the
local newspaper that their unit
is being auctioned off. The
laws also specify what an
owner can and can’t do with
regard to the tenant’s belongs,
and most require that the en-
tire unit is auctioned off as a
whole to avoid any liability.
Either way, this is far better
than a landlord’s recourse
when going through the legal
process of evicting and collect-
ing back rent from tenants in
the single family and multi-
family apartment world.
5. Excellent Cash Flow –
Rental rates for self storage
facilities are similar to other
real estate product types; how-
ever, lower development and
operating costs create higher
profits and a greater return for
investors. In addition, leases
are month to month, which pro-
vides the ability to raise rents
in conjunction with market de-
30 | www.realty411guide.com
mand. If you raise rents once
or twice a year by 3 to 5 per-
cent, multiplied by several hun-
dred units, with no increase in
expenses, you begin to see why
industry experts so often refer
to self storage facilities as the
proverbial “Cash Cows”.
4. Low Risk – Self storage
space is rented on a month-to-
month basis to hundreds of dif-
ferent customers, most of
which are individuals and
small businesses. With self
storage, no single move-out is
going to cause a major drop in
rental income. Compare this
with other forms of commer-
cial real estate, where a flag-
ship tenant or multiple high
paying tenants can really spell
disaster. In addition, self stor-
age has the ability to absorb
economic fluctuations better
than other real estate invest-
ments. For example, when the
economy is good, people buy
more; therefore, they need ex-
tra space to store their extra
stuff. And when the economy
is down, individuals and busi-
nesses may downsize their
house or business space, and
therefore turn to self storage as
a cost-effective place to store
their belongings. As a result,
self storage has the lowest fail-
ure rate and subsequently low-
est loan default rate of any real
estate product type.
3. Leverage or Other
People’s Money (OPM) –
Given the fact that self storage
has the lowest loan default rate
of any real estate product type,
lenders are now making 80
percent to 90 percent LTV
loans on established, well-con-
structed, and well managed fa-
cilities with strong track
records. In addition, there are
several private investors that
are funneling millions of dol-
lars into the market to partner
with self storage developers
and investors due to the
industry’s tendency to outper-
Vol 2 Issue 4 2009
form the stock market and other real es-
tate investments.
2. No Tenants – The number of times you
will be in contact with the typical self stor-
age customer is very minimal over the du-
ration of their tenancy. According to the
Self Storage Association, 95 percent of self
storage customers do not return to their
unit until the day they move out of the fa-
cility. Therefore, the industry norm for
hiring a manager is based on a one to 400
ratio, or one manager to manage every 400
units. There are also several owners who
are taking advantage of new technologies
that have become available in the self stor-
age industry, most notably, kiosks. These
machines resemble an ATM and are typi-
cally installed at the front gate and allows
a customer to rent a unit, pay with a credit
card, and even dispense a lock, all with-
out ever coming in contact with the man-
ager. In contrast, the widely accepted rule
of thumb for managing single family and
multi-family properties is a one to 100
ratio, or one manager for every 100 units.
Quite simply, single family and multi-fam-
ily tenant commands a greater amount of
babysitting. You have to chase them for
rent, answer their maintenance calls, re-
spond to complaints about dogs, kids, their
neighbors, broken down cars, noise, bugs,
etc., and spend an incredible amount of
time writing letters and responding to each
one of these issues. By comparison, I have
never taken a phone call from the patio
furniture in unit 105 complaining that the
lawnmowers in unit 106 were playing their
music too loud!
1. No Toilets! – The typical self storage
facility is constructed from steel or con-
crete, has a steel roof, metal doors, gravel
or asphalt drives, and most likely, a stain-
less steel fence. Some may have a small
office on site with a computer, phone, and
one bathroom...that’s it. Steel walls and
roofs last for decades without any main-
tenance. Door springs need to be replaced
from time to time, and every 10 years or
so you may have to add more gravel, or
resurface the lot, but can be easily bud-
geted for, and most fences last 20 to 25
years without the need for any mainte-
nance. And of course, the enemy of all
landlords, toilets, or any other indoor
plumbing for that matter, is nonexistent in
a self storage facility. And unless you have
climate controlled units, there are no fur-
naces, air-conditioners or water heaters to
maintain.
There are many other reasons I prefer
this type of investing to other real estate
product types. For one thing, I can
honestly say that I thoroughly enjoy the
business, and I am thankful for the oppor-
tunity to pass this knowledge on to others
that may be interested in the industry. In
addition, I consider myself a life-long stu-
dent in the business, and I believe in per-
petual improvement. I encourage you to
visit our website and to share your
thoughts on our products and services and
ultimately, share your testimonials of fa-
cilities you have successfully acquired.
Your success is what makes this jour-
ney so much fun!
Dedicated to your Quick
Self Storage Success,
Scott Meyers, CSSM©
Sign up for Scott’s “Secrets of a Self Stor-
age Millionaire” online newsletter at:
www.selfstorageinvesting.com

Nearly $6 Million
SOLD since 2006
I started Realty411 & CashFlowCows.com
because I wanted to develop a national team
of reputable professionals so together we
could bring ACCOUNTABILITY back into
Real Estate. What makes us unique? We
continue to help clients AFTER THE SALE
with advice and referrals. Plus, we work
~ Linda Pliagas
Investor & Sales Advisor
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www.realty411guide.com Vol 2 Issue 4 2009 | 31

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Special NEW Book Excerpt
Everything You Need to Know
About Researching Foreclosures
by Matt Malouf, Investor, Author and REALTOR®
W
hether you’re buying pre-
foreclosure, foreclosure or
REO properties, doing re-
search is essential so that you acquire a
good deal. However, it’s especially
important to do extra research if you’re
focusing on foreclosure or pre-foreclosure
properties.
Why? Because these properties are
generally sold “as-is.” That means not
only is the property itself sold
“as-is,” but the title is sold the
same way. So an investor
may encounter plenty of un-
pleasant surprises, such as a
home that requires a lot of
repairs or has liens and
outstanding debts that must
be satisfied before one can
get a clean title. (I can
share with you many
horror stories about
people who didn’t
research liens before
bidding!)
Research Comparable
Sales
The next thing you need to do is find out
what other similar properties in the same
neighborhood have recently sold for —
this is called researching comparable
sales. Doing this will help you estimate
the market value of the property you’re
interested in.
Real estate agents typically run these
sort of reports, and your agent can quickly
create one for you. Indeed, if you get
comparable sales information from an
agent, it will almost certainly be more
accurate and/or detailed than information
you can gather for yourself. However,
technology has made it possible for
investors to be able to get a head start and
do some preliminary research online.
Here are some of the most popular
websites the general public can use to
gather this type of data:
http://www.cyberhomes.com
http://realestate.yahoo.com/Homevalues
http://www.zillow.com
http://www.domania.com/
h t t p : / / w w w. r e a l e s t a t e . c o m / h o m e
pricecheck/
http://www.eppraisal.com
http://www.buyhomeswithmatt.com
The reason I gave seven different websites
is because an investor is going to get
different figures
from each of these
sites. If you use just
one site, you’ll
probably get an
inaccurate picture of
the current market.
That’s why it’s best to
use several different
websites and calculate
an average figure for
similar properties.
Then, simply base your
estimate on that
average.
As mentioned pre-
viously, you’re looking
for similar homes in the
same neighborhood. That means you
should look at things like square footages,
number of bedrooms, number of
bathrooms, size of the lot, which schools
are closest, zoning restrictions, quality of
construction and the like.
INSIDER’S SECRET: Usually, you want
a list of at least 10 or 15 similar properties
that have recently sold in the same
neighborhood. The more recently these
properties were sold, the better (as market
conditions can and do change). If you’re
looking at properties that were sold more
than three or four months ago, make sure
that you also have some knowledge of
market conditions. That way you’ll know
if the properties were sold for a higher or
lower amount than the current market.
Vol 2 Issue 4 2009
Investors Flock to Find Deals in Arizona
by Joseph Calderon, owner of Camelback Wholesale Properties
A
rizona has quickly become a
favorite location for investors
from all over the country. What
makes it such a prime market to take
advantage of? Out-of-state investors see
a great opportunity to get a return on their
investment in several different ways. The
Phoenix market draws in buyers of all
types looking for primary residences,
vacation homes, and cash-flow rental
properties. A lot of great deals exist, but
as with any investment, it is important to
do your research and know what to take
advantage of.
Many people have
already discovered
Arizona’s potential, as
investors currently
account for close to 20
percent of the sales
over the last few
months. If you have the
funds to invest in the
right property, the
strong Phoenix rental
market will turn your
investment into a great
cash-flow opportunity.
Considering the low
interest rates and
deflated prices, the
term “cash-flow
property” is a common
thing in Arizona.
So, in the midst of
this deflated market, what is the best way
to purchase a home in Arizona? It can be
frustrating dealing with bank owned
properties and short sales because of the
bidding wars and response time necessary.
There are certainly deals when purchasing
like this, but it is important to do your
due diligence and have plenty of patience.
Many investors are finding the perfect
way to buy with ease in Arizona is to look
to wholesalers for great deals. You can
usually find better deals than you would
...you will be amazed at the deals available
www.realty411guide.com
with bank-owned properties and
will generally receive a response
within 24 hours. Be prepared to
pay with cash or hard money and
pay your own closing costs and
you will be amazed at the deals
available and the convenience of
dealing with private investors.
Then arises the question of
where to buy? When researching
neighborhoods in Arizona, keep
in mind the city of Phoenix itself is larger
than Los Angeles geographically. That
fact, along with the many growing cities
sprawled around central Phoenix, gives
you a huge area to shop in. When looking
for short-term investments, the areas
closer in towards Phoenix generally
provide a larger return and can be easier
to find renters for. Although the demand
for central area homes might be higher,
the outlying areas also have some
incredible deals on practically new
homes. As these areas continue to grow it
is almost a guarantee you will gain equity
in your property.
The properties in most demand are
currently those under the $350,000 price
tag. The $50,000 to $150,000
range seems to be the most desired,
as people who were previously
renting a property can now
purchase one for the same monthly
cost. This, along with the $8,000
tax credit, has really stimulated the
Phoenix market. Typically, in the
latter part of the year, we see the
market slow down but as
foreclosures still pour into the
market through trustee auctions,
REOs, short sales and pre-
foreclosures, it is still an excellent
opportunity for investors of all
types to capitalize on.
Investing in real estate can be an
extremely profitable venture, but it
is important to work with people
who are experienced in a specific
market.
Camelback Wholesale Properties has
been working with investors in the
Arizona market for many years now. Our
resources can be of great assistance to
anyone looking for an incredible deal.
For information about purchasing
wholesale properties in Arizona, please
contact Joe Calderon at (480) 321-5094
or email: joe@camelbackwholesale.com
Vol 2 Issue 4 2009 | 33
by Lori Peebles
I
nvestors: Do you need some tips to
help you land an REO property? It’s
a competitive marketplace, and if
you want to succeed, it’s time to set
aside your preconceived notions
about real estate and learn from others
who have already developed a proven
system of success.
The owners of Nationwide Property
Investments, Michael Gier and William
Barnard, have been successfully investing
in real estate for many years. Realty411
recently sat down with them to discuss
their careers as national investors and to
learn tips on succeeding in the current
“Insider Tips”
from the Masters of REOs
market. The investors-turned-educators
also gave Realty411 the inside scoop on
their new “Make Me An Investor” eight-
week REO program designed to give
individuals a step-by-step guide to fixing
and flipping REOs for profits.
Q: How long have you been
investing, gentlemen?
Michael: I started back in 2000
and went full time in 2003.
William: For me, I started in-
vesting in 2004 and went full time
in 2006.
Q: Michael, I know you used real estate
investing as a way to make money to
supplement your acting career. How
did it feel when you started being
successful at real estate? And, did that
start taking over your life?
A: It felt great. My first investment
property made me $170,000 net! Then, I
started building speculative homes
making $20,000 per home and eventually
$150,000 per home. It then became an
easy choice: I did real estate full time and
entertainment part time.
Q: William, I know you’re a full time
investor now, but what was your
previous profession?
A: I’ve been self-employed most of my
life. My last business was a printing
business.
Q: Is part-time real estate investing a
good way to go for most people?
Michael: To start yes. Keep your real job
until you have been successful with your
investing for quite a while and you have
plenty of money saved up to live on if
need be.
William: Then, it may be ok to quit your
job and invest full time.
Q: As partners, you’ve
worked on land develop-
ment projects, speculative
buildings, short sales,
you’ve purchased fixer
uppers and flipped them.
What type of investment strategy is
best for this type of market?
‘My first investment property made me $170,000 net.
Then I started building speculative homes making
$20,000 per home and eventually $150,000 per home.’
William: Currently, our focus is on buying
REO properties, rehabbing them, and
selling them to owner occupants. We also
do short sales. The real estate market
locally (and abroad) is ever-changing, and
investors need to adapt to changes and
apply the strategies that are viable to their
current market conditions.
Michael: That’s also why we offer our
eight-week “Make Me An Investor” REO
program, it’s what investors should be
doing in this market.
Q: What makes your REO program
unique from the other educational
REO products on the market?
William: We created our “Make Me an
Investor” program to educate and instruct
the students on exactly how to profit from
the current REO market. We teach them
exactly what we currently do to make
money, and how we do it — every little
detail.
Michael: It’s easy to get excited and see
the possibilities while sitting in a work-
shop, but it’s very different when you are
out in the real world by yourself.
William: That’s why our program works.
Students get the teaching they need and
William Barnard and Michael Gier
also the hands-on training out in the field
that is required to succeed.
Michael: We teach how to get the deal
before the MLS, what team members you
need and how to get them, market and
financial analysis, raising the money
needed, calculating the repair costs, hiring
and working with contractors, and exit
strategies so you can get paid. All of this
isn’t just taught, but it’s experienced out
in the real world.
William: You can’t get better education
than that.
Q: Choice foreclosure properties are
difficult to acquire in today’s
competitive climate. I spoke with one
investor in San Diego the other day who
was simply frustrated because all his
pickings had multiple cash
offers. What advice do you
have for investors trying to
land deals?
Michael: You have to eliminate
the competition.
William: We do this by getting
the property before it hits the
MLS. It’s one of the very
important things we teach our
students. It’s difficult for
investors to get a deal after a
property is already listed.
Q: Do you recommend that
investors form partnerships
to buy properties? What tips
can you offer our readers in
choosing a partner?
William: We’ve been lucky
that our partnership works, but
most partnerships do not work.
Michael: We recommend that
the only partnerships you
create are with money
partners. And, be sure to keep
complete control of your
www.realty411guide.com
business.
Q: What’s the best (and
worst) part of being a full-
time, self-employed real
estate investor?
William: Real estate inves-
ting offers me the freedom
to work when I want, which
is actually all the time
because I love it. I can also
make as much money as I
want to because there are no
limits as there are in a
regular job. Most impor-
tantly, I can be my own boss.
Michael: As for the worst,
it’s still a job, but there’s no
guarantee of a paycheck.
And, sometimes you have to
spend many more hours
working because it is your
business. But, we wouldn’t
change it for anything. We
love what we do.
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Vol 2 Issue 4 2009 | 35
A New Way to Buy in California
by Linda Pliagas opportunity with The Herrera Sindell this is the truest joint venture format any
Real Estate Sales Agent and Investor Group, they do not write a check directly investor could long for.

P
rices have tumbled in the Golden
State. California is in the midst of
the largest foreclosure market ever
experienced. Investors are scouring to
find the best choice properties, and the
frenzy of activity is quickly turning the
gloomy market into a very competitive
one. While everyone wants to profit
from this recessionary cycle, the reality
to the firm, instead funds go straight to
the escrow holder for the property the
investor has chosen. Having dealt with
numerous acquisition companies
throughout the country for years, I
realized this was a refreshing and unique
concept. Also, what really caught my
attention is the fact that the company will
match an investor’s funds, dollar for
dollar. That means if you have $50,000
By participating as an equity or credit
partner, an investor can purchase a local
property (one that they choose), invest
less money, and not have the typical
hassles that automatically go along with
landlordship. In fact, they will take care
of any and all management issues.
The Herrera Sindell Group’s unique
acquisition program enables investors to
choose either a short-term 90-day “Fix

The Herrera Sindell Group’s Joint Venture Program

Enables Smaller-Scale Investors to Profit from
California Pre-Foreclosures at a Fraction of the Cost.
is, very few people actually will. The and you wish to buy a property in and Flip” investment or a long-term “Buy
average smaller-end investor simply California, they will find a pre-foreclosure and Hold” with a three to five year exit
cannot compete with a sophisticated deal property, negotiate with the bank and plan. They offer clients a list of available
maker who has a stash of cash on hand. match your funds to the penny. In essence, properties, so they can choose the
It takes money to buy in investment that best suits their
The Herrera Sindell Group, from left to right:
California, and if you want to buy a Michael Herrera, Richard Sindell, and Juan Herrera. needs.
distressed property right now, you Photographed by John DeCindis for Realty411 Magazine Started in 2003 by Juan Herrera,
need a lot of it. Why? Because the an investor, and Richard Sindell, a
average investor simply cannot broker and attorney, The Herrera
compete in this market. I’m an active Sindell Group specializes in
agent myself in Los Angeles, and do acquiring properties in the pre-
you know what kind of offers my foreclosure stage. Their reputation
clients and I have to compete with? as “closers” attracts distressed
We have to go head-to-head with homebuyers into their office on a
investors who can fund and close a daily basis.
deal in days and who write up offers While smaller-scale investors
with zero contingencies. may not be able to compete with
Many people contact me wanting their seasoned counterparts, The
to buy a foreclosure and have to be Herrera Sindell’s joint venture
turned away because they lack program allows individuals to
access to substantial resources. This acquire prime California real estate
is exactly why I was intrigued when at a fraction of the cost and risk.
a colleague told me about a unique Their company opens the door so
acquisition firm located in Sherman that investors of all levels can also
Oaks, Calif. profit in this down market.
The Herrera Sindell Group
operate a privately held acquisition To schedule an appointment and
company and concentrate only in the discuss a joint venture opportunity,
Southern California market. What please contact Joe Guardado,
makes them unique is the director of real estate investments,
transparency they offer investors. at (877) 949-2772. Or visit their
For example, when a person website: www.herrerasindell.com
invests in a Joint Venture (JV)
36 | www.realty411guide.com Vol 2 Issue 4 2009
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a “truly” self-directed IRA.
They’ll stop and ask what you
mean by “truly”. That’s your
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world really works, and how
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It actually gets better.
There’s a way to get paid by
lenders for the privilege of
financing your deals. I’m dead
serious. You can get an
acquisition fee for being the
glue to put a deal together.
It’s way beyond the scope of
this article to explain the ins
and outs of getting paid to
receive financing, but it’s a
straightforward process.
The mainstream news media
would have us believe that the
longer we’re in this recession,
the more doors to opportunity
are closing. That’s why they’re
journalists who will be lucky
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On the other hand, I want
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38 | www.realty411guide.com Vol 2 Issue 4 2009