REI Voice Magazine - June 2012

Dec. - Jan. 2012 REI VOICE 1

J.D. ESAJIAN — CHANGING LIVES • STRUCTURED SALES EXPLAINED • SPOTLIGHT ATLANTA

www.reivoice.com June - Aug. 2012

FINDINGTHE DEAL

LOCATING RICHES IN AN INVENTORY POOR MARKET

FINDINGTHE DEAL


FINDINGTHE DEAL


www.reivoice.com

TOM WILSON, [email protected] TomWilsonProperties.com

Email us for a copy of our new, free, 18-page report on how to select the best market for real estate investing: [email protected]

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Price: $124,000 Rent: $1275Year Built: 1996 3 Bed / 2.5 Bath / 1982sf


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June - August 2012 REI VOICE 3

AnAlysis

6In Intimate Detail: Atlanta, GAREI Voice publisher Geraldine Barry interviews Lori Greymont about the Atlanta market. Ms. Greymont identified Hotlanta as a hot place for rental investments and shares the reasons why.

12Deal or No Deal?When is an opportunity a deal, a steal, or a wipeout? We identified an investment property and then asked three experienced investors to analyze it. While their ultimate conclusions may not surprise you, their thought processes may.

Advice

1012 Ways to Lose Money in Real Estate TodayKathy Fettke, CEO of Real Wealth Network, sets the record straight on the hyperbole of the terrific deal. She frankly discusses the 12 sure fire ways to lose money in real estate.

22When Deals Go SourIn 27 years, no one has ever asked real estate attorney, Jeffrey Hare, for legal advice because they made too much money on a real estate deal. He offers pointed advice for halting the bleed of a bad deal.

15Take Aways from 9 Days of KiyosakiWhen investor and turnkey provider Tom Wilson decided to attend the Robert Kiyosaki wealth builder cruise, he was wise to leave his wife behind. Days later he came home with mountains of advice and no suntan. Mr. Wilson shares lessons learned.

BAsics

8A Good Deal, At What Price?Whether Silicon Valley or Las Vegas or Miami, investors are competing with homebuyers. As inventory shrinks across the United States, what price should you bid on real estate? Jeb Henley, investor and broker, answers.

24Defer Capital Gains Taxes with a Real Estate Structured SaleWhen it’s time for an investor to arrive at an exit strategy, there are a few classic plays, then there is the little known structured sale. Kevin Kaaha, investor and expert in real estate structured sales, explains this often overlooked option.

FeAtures

16JD Esajian—Values-based SuccessMany people think they know JD Esajian from his appearances on television’s Flip this House, but what is the true method behind the man? Geraldine Barry, publisher of REI Voice Magazine, set out to discover his secrets.

20Rapid Success: The Anthony Lolli StoryA rental-based franchise, founded by New Yorker, Anthony Lolli, is poised to ride the wave of rentals across the country. How Mr. Lolli discovered this unlikely route to rapid success.

18Real Estate Investment EXPO Comes to Silicon Valley, Sept. 8Twenty-one hours of sales-pitch-free real estate investment workshops in one day are coming to Silicon Valley, sponsored by three bay area real estate investor associations. Learn why and how you can participate in this one-of-a-kind event.

26Social Networking for DealsSocial Media expert Aaron Norris readily agrees that social networking can quickly become a black hole of wasted time. Yet, he’s successfully managed social networks for The Norris Group and tracked leads to deals. He shares his tips.

Words to Thrive By: Tuigim, Ger

19 cAlendAr

29 investor resources

TABLE OF CONTENTSSOUND OPINION—WISE DECISIONS: VOICE OF THE PROFITABLE REAL ESTATE INVESTOR

WINNER

of the

National

REIA Award

for Best Print

Publication

30

4 REI VOICE June - August 2012

We see them with our own eyes as we drive down certain streets, not to mention that pre-foreclosure data is readily avail-able. As president of an investor association, I find this trend worrisome. Our goal is investor education AND investor par-ticipation. We have the former covered, but participation? We can’t force inventory to open up just as we can’t hold back inves-tors who are ready to get into the market.

This issue of REI Voice is fo-cused on the deal: where to find one, how to analyze one, when to walk away, when to go all in.

Portions of the real estate market are unforgiving to nov-ices. First timers rarely make money on their first flip. We have heard the pain. Likewise, first-time, do-it-yourself land-lords find plenty to complain about: “My tenant is always finding something wrong. I’ve already spent thousands on that house, when am I going to start making money?”

Finding a deal is relative to your experience as an investor. An REO or short-sale property may be a deal for someone with a few rehabs under their belt, but a money pit for a first time investor.

This is where turn-key op-erators have stepped in. They create the deal for both the nov-ice and hands-off investor. By identifying a good property, co-ordinating the rehab, setting the

tenant in place, ensuring cash-flow, and offering professional property management, they have created a turn-key product that is ready to place with a new or hands-off investor. The busy professional doesn’t have to deal with the headaches of an SFH rental, but reaps the benefits of ownership without actually do-ing the work.

Tom Wilson, SFH Expert on the Dallas/Fort Worth market said,“As an investor in this mar-ket, it is not only imperative to select a location and product that definitely produces cash flow immediately, but that also has the lowest risk of further declines and a maximum prob-ability of appreciating.”

Cash-flow has become more important than owning proper-ties within a fifty-mile radius of one’s home. Chris Clothier, part-ner at Memphis Invest, has seen this first hand. “The vast major-ity of our client base is out-of-state (clients from 39 states and 6 countries). We obviously like our current markets, Memphis and Dallas,” said Clothier, “and feel that they will continue to be strong markets for single-fam-ily rental investments, and we continue to look toward expan-sion into Atlanta and possibly Nashville. These southern cities are some of the fastest growing areas in the country and have solid, fundamental economies in place.”

All turn-key operators, how-

ever, are not created equal so buyer beware — the due dili-gence on where to invest and the company to work with is critical to success. Fly by night operators selling properties to unsuspecting individuals in war zones is an all too com-mon occurrence. Visiting the property before inking the deal and checking out the company before you pull the trigger are highly recommended. Tom Wil-son shared, “Location is key - if there is anything I have learned from my 1,800 unit transac-tions it is that sub-markets vary tremendously in performance. Like all metros however, it is critical that one utilize an expert in the area to locate and secure the best products in the best neighborhoods.”

Turn-key operators who have weathered the storm with the re-cent downturn, are poised to be very successful in this segment by simply providing top notch service to ensure that this desir-able demographic has an expe-rience that is pain-free. These ready-to-go rentals with tenants in place mean that the investor enjoys cash flow from day one, by managing the managers. For many, that is a great deal!

PuBlisHer’s note

WELCOMEMany investors today are bemoaning the fact that they can’t find a deal. Inventory is constrained, despite the obvious fact that numerous distressed properties exist.

GERALDINE

BARRY

Publisher,

President

of SJREI

Association

REI Voice™ MagazineA publication of SJREI Association™

PublisherGeraldine Barry | 408-264-3198

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Page 1(951) 780-5856 • www.TNGtrustdeeds.com

Location: Lancaster, caApprAised VAlue: $80,000loAn Amount: $47,000loAn to VAlue: 58.75%pAyment to inVestor: $352.50rent: $1,000term of loAn: 8 yeArs

Property Facts:3 bedroom, 2 bAthrooms, 1,158 sf, 41,694 sf. lot, built in 1984. this property is Currently under rehAb

If you are interested in this trust deed investment and would like to see the entire appraisal, please call the office at 951-780-5856 and ask for Craig Hill.

Zilpy.com – Rents (Range = $900-$1,250)

1 $900 SFH 3 br/2 ba 1,134 sqft 40635 166th St, Lancaster CA, 93535 5/2/20122 $1,200 SFH 3 br/2 ba 1,320 sqft 40617 E 159th St, Lake Los Angeles CA, 93535 1/25/20123 $1,200 SFH 3 br/2 ba 1,384 sqft 40265 162nd St, Lake Los Angeles CA, 93591 1/27/20124 $1,100 SFH 3 br/2 ba 1,463 sqft 40139 Ronar St, Lake Los Angeles CA, 93591 3/10/20125 $1,250 SFH 3 br/2 ba 1,346 sqft 41418 158th St E, Lake Los Angeles CA, 93535 4/30/20126 $1,100 SFH 3 br/2 ba 1,134 sqft 41348 154th St E, Lancaster CA, 93535 5/2/20127 $950 SFH 3 br/2 ba 1,025 sqft 40912 173RD ST E, Lancaster CA, 93535 1/25/20128 $950 SFH 3 br/2 ba 1,300 sqft 15163 Greenrock Avenue, Lake Los Angeles CA, 93535 3/12/20129 $1,250 SFH 3 br/2 ba 1,388 sqft 40661 178th St East, Lancaster CA, 93535 12/11/2011


Location: Los angeLes, caApprAised VAlue: $250,000loAn Amount: $150,000loAn to VAlue: 60%pAyment to inVestor: $1,000rent: $2,000term of loAn: 8 yeArs

Property Facts:3 bedroom, 2 bAthrooms, 1,476 sf, 5,500 sf. lot, built in 1949. this property is Currently under rehAb


Zilpy.com – Rents (Range = $900-$1,800) # Rent Type/beds/bath/sqft Address Last seen

1 $900 SFH 3 br/2 ba 1,520 sqft 1611 W 137th St, Compton CA, 90222 3/7/20122 $1,800 SFH 3 br/1 ba 1,200 sqft 14002 S NESTOR AVE, Compton CA, 90222 4/21/20123 $1,795 SFH 3 br/1 ba 1,076 sqft 13916 S Nestor Avenue, Compton CA, 90222 4/30/20124 $1,200 SFH 3 br/2 ba 1,198 sqft 922 East 163rd Street, Carson CA, 90746 4/30/20125 $1,500 SFH 3 br/2 ba 1,042 sqft 200 N Nestor Avenue, Compton CA, 90220 12/10/2011

9% First trust DeeDs

Location: Lancaster, CAAppraised Value: $80,000Loan Amount: $47,000Loan to Value: 58.75%Payment to Investor: $352.50Rent: $1,000Term of Loan: 8 Years

Location: Los Angeles, CAAppraised Value: $250,000Loan Amount: $150,000Loan to Value: 60%Payment to Investor: $1,125Rent: $2,000Term of Loan: 8 Years


Location: Desert Hot springs, caApprAised VAlue: $91,000loAn Amount: $55,000loAn to VAlue: 60.43%pAyment to inVestor: $412.50 rent: $1,000term of loAn: 8 yeArs

Property Facts:3 bedroom, 2 bAthrooms, 1,664 sf, 6,534 sf. lot, built in 1986.


1 $900 SFH 3 br/2 ba 1,600 sqft 13340 Quinta Way, Desert Hot Springs CA, 92240 3/22/20122 $895 SFH 3 br/2 ba 1,500 sqft 12990 BEECH AVE, Desert Hot Springs CA, 92240 4/27/20123 $875 SFH 3 br/2 ba 1,318 sqft 13785 Hermano Way, Desert Hot Springs CA, 92240 3/13/20124 $1,050 SFH 3 br/2 ba 1,598 sqft 68271 Calle Descanso, Desert Hot Springs CA, 92240 2/20/20125 $975 SFH 3 br/2 ba 1,561 sqft 13905 Hidalgo St, Desert Hot Springs CA, 92240 1/13/20126 $1,125 SFH 3 br/2 ba 1,929 sqft 12578 Avenida Serena, Desert Hot Springs CA, 92240 3/7/20127 $1,700 SFH 3 br/2 ba 2,000 sqft 12079 Redbud Road, Desert Hot Springs CA, 92240 3/28/20128 $1,300 SFH 3 br/2 ba 1,750 sqft 13838 OVERLOOK DR, Desert Hot Springs CA, 92240 4/30/20129 $1,095 SFH 3 br/2 ba 1,200 sqft 67650 SAN JACINTO ST, Desert Hot Springs CA, 92240 4/18/2012

10 $900 SFH 3 br/2 ba 1,200 sqft 15402 Avenida Mirola, Desert Hot Springs CA, 92240 4/15/2012



Location: Moreno VaLLey, caApprAised VAlue: $101,000loAn Amount: $63,000loAn to VAlue: 62.37%pAyment to inVestor: $472.50rent: $1,050term of loAn: 8 yeArs

Property Facts:2 bedroom, 2 bAthrooms, 896 sf, 3,920 sf. lot, built in 1984. this property is Currently under rehAb



1 $900 SFH 2 br/2 ba 24115 AMBERLEY DR, Moreno Valley CA, 92553 1/25/20122 $1,000 SFH 2 br/2 ba 900 sqft 13368 Cavandish Lane, Moreno Valley CA, 92553 1/13/20123 $1,071 SFH 2 br/2 ba 24243 RADWELL DR, Moreno Valley CA, 92553 4/14/20124 $850 SFH 2 br/2 ba 1,100 sqft 13810 Caspian Way, Moreno Valley CA, 92553 12/20/20115 $1,090 SFH 2 br/1 ba 1,120 sqft 13805 gucci dr, Moreno Valley CA, 92553 12/29/20116 $1,200 SFH 2 br/2 ba 1,045 sqft 13719 Rena Court, Moreno Valley CA, 92553 1/1/2012

Location: Desert Hot SpringsAppraised Value: $91,000Loan Amount: $55,000Loan to Value: 60.43%Payment to Investor: $412.50Rent: $1,000Term of Loan: 8 Years

Location: Moreno Valley, CAAppraised Value: $101,000Loan Amount: $63,000Loan to Value: 62.37%Payment to Investor: $472.50Rent: $1,050Term of Loan: 8 Years


Location: Hesperia, caApprAised VAlue: $87,000loAn Amount: $54,000loAn to VAlue: 62.06%pAyment to inVestor: $405rent: $1,095term of loAn: 8 yeArs

Property Facts:3 bedroom, 2 bAthrooms, 1,229 sf, 28,000 sf. lot, built in 1984

Zilpy.com – Rents (Range = $1,050-$1,295) # Rent Type/beds/bath/sqft Address Last seen

1 $1,050 SFH 3 br/2 ba 1,314 sqft 18031 Manzanita St, Hesperia CA, 92345 3/18/20122 $1,100 SFH 3 br/2 ba 1,368 sqft 18125 Sequoia Avenue, Hesperia CA, 92345 4/29/20123 $1,100 SFH 3 br/2 ba 1,582 sqft 18181 Manzanita St, Hesperia CA, 92345 11/10/20114 $1,295 SFH 3 br/3 ba 2,307 sqft 17850 Sequoia, Hesperia CA, 92345 3/10/20125 $1,250 SFH 3 br/2 ba 1,829 sqft 11781 I Ave, Hesperia CA, 92345 4/29/20126 $1,095 SFH 3 br/2 ba 1,330 sqft 18155 Catalpa St, Hesperia CA, 92345 3/24/20127 $1,200 SFH 3 br/2 ba 2,440 sqft 18273 Birch St, Hesperia CA, 92345 4/9/2012



Location: compton, caApprAised VAlue: $232,000loAn Amount: $140,000loAn to VAlue: 60.43%pAyment to inVestor: $1,050rent: $2,000term of loAn: 8 yeArs




1 $900 SFH 3 br/2 ba 1,520 sqft 1611 W 137th St, Compton CA, 90222 3/7/20122 $1,795 SFH 3 br/1 ba 1,076 sqft 13916 S Nestor Avenue, Compton CA, 90222 4/30/20123 $1,800 SFH 3 br/1 ba 1,200 sqft 14002 S NESTOR AVE, Compton CA, 90222 4/21/20124 $1,600 SFH 3 br/1.5 ba 1,100 sqft 1105 W 134th St, Compton CA, 90222 1/25/20125 $1,500 SFH 3 br/2 ba 1,042 sqft 200 N Nestor Avenue, Compton CA, 90220 12/10/20116 $1,200 SFH 3 br/2 ba 1,198 sqft 922 East 163rd Street, Carson CA, 90746 4/30/2012

Location: Hesperia, CAAppraised Value: $87,000Loan Amount: $54,000Loan to Value: 62.06%Payment to Investor: $405Rent: $1,095Term of Loan: 8 Years

Location: Compton, CAAppraised Value: $232,000Loan Amount: $140,000Loan to Value: 60.43%Payment to Investor: $1,050Rent: $2,000Term of Loan: 8 Years


Location: Hesperia, caApprAised VAlue: $87,000loAn Amount: $54,000loAn to VAlue: 62.06%pAyment to inVestor: $405rent: $1,095term of loAn: 8 yeArs


Zilpy.com – Rents (Range = $1,050-$1,295) # Rent Type/beds/bath/sqft Address Last seen

1 $1,050 SFH 3 br/2 ba 1,314 sqft 18031 Manzanita St, Hesperia CA, 92345 3/18/20122 $1,100 SFH 3 br/2 ba 1,368 sqft 18125 Sequoia Avenue, Hesperia CA, 92345 4/29/20123 $1,100 SFH 3 br/2 ba 1,582 sqft 18181 Manzanita St, Hesperia CA, 92345 11/10/20114 $1,295 SFH 3 br/3 ba 2,307 sqft 17850 Sequoia, Hesperia CA, 92345 3/10/20125 $1,250 SFH 3 br/2 ba 1,829 sqft 11781 I Ave, Hesperia CA, 92345 4/29/20126 $1,095 SFH 3 br/2 ba 1,330 sqft 18155 Catalpa St, Hesperia CA, 92345 3/24/20127 $1,200 SFH 3 br/2 ba 2,440 sqft 18273 Birch St, Hesperia CA, 92345 4/9/2012


Location: Lancaster, CAAppraised Value: $90,000Loan Amount: $56,000Loan to Value: 62.22%Payment to Investor: $420Rent: $1195Term of Loan: 8 Years

California Trust Deed Investingby

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B y B ruce N o rri s

For your free e-book on trust deed investing, visit

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flyer-ad.indd 1 5/21/2012 1:50:37 PM


AnAlysis

An Interview with Lori Greymontby Geraldine Barry

LORI GREYMONT

President

Summit Assets Group

www.SummitAssetsGroup.com

in intimAte detAil:AtlAntA, GA


Q: Why did you select the

Atlanta market to focus on for

your turn key business?

About 2 years ago we started notic-ing the high rents that we could get in the Atlanta market. The demand seemed very strong and so we invested in a couple rentals to test the market. We started researching it as a viable rental market and the statistics sup-ported our experience.Q: How are the employment

numbers in Atlanta?

The unemployment rate in Atlanta Metro Area is 9.20 percent (U.S. avg. is 8.60%). Recent job growth is posi-tive. Atlanta Metro Area jobs have in-creased by 1.00 percent over the last 12 months. Projection for next 10 years is 32.8% growth for the Metro area.Q: How does the Atlanta market

compare to the CA market?

Atlanta is a very diverse economy. There are parts of Atlanta that get poor rent ratios. But, then there are areas that are ground zero for new home buyers. These areas are where the highest foreclosures happened. The homes during the peak were selling in the $150,000 - $200,000 range and now are in the $40,000 to $70,000 range. This huge drop was caused by the number of foreclosures in the area and the lack of mortgage financing.Q: Your focus is on single family

homes (SFH)? Why is this

market appealing to you?

Having been an investor for over 25 years, I have owned duplexes, four-plexes, apartment buildings and single family. The vehicle of investment comes down to what your goal is. I am buying right now for the purpose of cash flow. Every purchase has to make sense on that premise. I also have an eye to the future- knowing that we will see inflation, interest rates will go up and that people prefer to live in single family homes over rentals or even multi-unit dwellings. New construc-

tion has been on hold nationwide for the past 5 years. As demand for hous-ing increases, there will be a shortage. It may not be for 3 years, 5 years or even 10 years; however, the demand will increase and if I am holding SFHs, I will get a higher price when I sell than if I had a multi-unit. Homeowners buy on emotion and will pay a higher price for the same house as an investor. Multi-units only sell to investors who are always looking for a deal. My ulti-mate exit is to sell or to leverage these homes when the market appreciates.Q: How are rents trending?

Occupancy rates?

Per stats collected by NARPM; Av-erage days on market in Atlanta is 61 while the national average is 102.

Median rents went from $1,086 in May of 2010 to $1,146 in May of 2011. Occupancy is around 91% metro wide. Vacancy is higher in crime ridden ar-eas, no surprise, and 35 miles or more out from the metro area. Q: What percentage of the

population are renters?

In the inner city area, nearly 52% are renters. The suburbs average around 30%Q: Do you have specific

areas that you focus on?

Atlanta is a huge metropolitan area. They don’t have any geographi-cal boundaries to contain the growth. There is the inner city of Atlanta, the beltline and then the suburbs. Most people divide Atlanta into four sec-tions- NW, NE, SE and SW. When you choose an area to invest in, you need to pay particular attention to the crime stats for that area. Using a national av-erage of 100 for crime, there are areas in the high 600’s and areas in the low 20’s. There are Zip codes to avoid, such as all the codes between 30303 – 30318. Many investors are fighting over the southern half of the city. The prices are great and rentals are needed. We fo-cused on the Northern half of the city for nearly 2 years without any compe-

tition, but I guess the secret is out now. We are writing over 20 offers weekly and get about 1 out of every 50 homes we bid on. So, the inventory is tighten-ing up significantly.Q: How do you allay the fears

of out-of-town investors? How

does your process work?

Investors need to remember they are buying a commodity, not a “home.” We live in a home, we buy investment properties. When an investor first con-tacts us, we work up an investment blueprint. We want the investor to be thinking about wealth creation for the long term and building a portfolio of investment properties. One house out of state can be an expensive head-ache, but when you build a portfolio of homes, it creates economy of scale.

Once an investor has a plan, we review our inventory of properties to select the ones that match their crite-ria. We provide the investor with a 10-day, no questions asked due diligence period and help arrange whatever inspections or due diligence the inves-tor deems necessary. After that period, we close. Most of our investors pay cash for the properties because the price point is so affordable. Over 55% use IRA money. We close the property through an attorney in Georgia. We have a lo-cal property management team that is very thorough on the management aspect and one of our team members contacts the investor every month as the key point of contact. Our goal is to cre-ate a no hassle wealth building experi-ence for our investors.Q: What resources do your

recommend for researching

the Atlanta market place?

Aside from me? The internet is a great resource. I like Sperling’s best places (www.bestplaces.net) as a start-ing point. You can contact the local chamber of commerce for the specific areas you like. Also, call realtors and interview them.

With planning for the Real Estate Investment Expo Silicon Valley well under way, we decided to take a look at another region that is making claims about tech driven growth: Atlanta. Lori Greymont, president of Summit Assets Group, identified the Atlanta real estate market as one with affordable real estate coupled with a solid economic engine. Here is her interview:

Lori’s Seven Reasons to Love Atlanta

♥ Low property taxes and mini-mal homeowner insurance rates makes Atlanta unique and allows investors to maximize their ability to cash flow on rental properties.

♥ The rental laws favor the land-lord. The only thing a judge looks at for an eviction is wheth-er or not the tenant paid rent. A tenant can be evicted and moved out in less than 20 days.

♥ Prices have fallen more than 70% in some of the areas, creat-ing a unique opportunity for af-fordability. Because these prices are below rebuilding costs, it is an opportunity for significant prob-ability for price appreciation.

♥ US Census Bureau predicts At-lanta will gain over 2 million peo-ple in the next 20 years, growing to a total of over 6 million.

♥ Atlanta ranks #3 in terms of net migration for those 65 years of age and older. It is one of the economies that supports multi-generational families. Employed grandchildren live near grand-parents and make for a stable community.

♥ 13 Universities and 14 colleges make for an educated, employ-able workforce

♥ Diverse economy sectors- Fi-nance, Health Care, Service, High Tech, Transportation and Con-struction. Home to 12 Fortune 500 companies and 15 Fortune 1000 companies.


BAsics

A Good deAl, At WhAt Price?

First, however, consider where you want to invest. Not all real estate mar-kets are re-bounding at the same pace. A market with continued outward migration, high-unemployment, and depressed rents, is not a bargain at any price. Look for a combination of rental income and potential apprecia-tion. That combination is often found in major metropolitan areas. High oc-cupancy rates are a good indicator of a strong investor market. In those markets, income is higher on most properties than I have seen in 35 years of investing. Investors can now trust that their buildings will have tenant demand.

Once you’ve identified the market, what cost considerations make or break a deal?

Many investors consider a rent ratio of 1% as the breakeven point. On the face of it, rent ratio is a simple calculation:

monthly rent [purchase price + rehab costs + fees]

FOR ExAMPLE:

$1,000 monthly rent[$75,000 purchase price + $25,000 rehab

+ ($5,000 mortgage, leasing, and other fees)]=.01 or 1%

Assuming a rent ratio of 1% is the breakeven point, a good deal is anything above that. For example, in a neighbor-hood where rent is $1,000, an all-inclusive purchase price of $84,000 produces a rent ratio of 1.2%.

Keep the math simple with income property, but do factor in rehab and other fees. If you paid $84,000 for just the title

and didn’t factor in at least $30,000 for re-hab and fees, your actual all-inclusive pur-chase price would be $114,000 with a rent ratio of 0.87% —not a good deal at all.

To determine your maximum offer for a property, use this equation:

max offer = [ rent – rent ratio*(rehab costs + fees) ]

rent ratio

$1,000 – .012 * ($20,000 + $5,000).012

= $58,300 (your max. offer)

The rent ratio analysis is a helpful way to quickly analyze a single family home you intend to flip and hold yourself, to analyze a turnkey property, and to ana-lyze a small multi-fam.

When you calculate the rent ratio for a turnkey investment, you don’t have to fac-tor in the rehab or, usually, the initial lease fee, but you do have to include any points or fees if you purchase the property with a loan. And you should deduct the property management fees from the expected rental income.

HOW TO IDENTIFY A DEAL?

• Look to high employment metropoli-tan areas with inward migration.

• Look for a rental market with a 90% oc-cupancy rate. A really great market shows 95% occupancy.

• Do the math. Aim for 1.2% rent ratio or above.

Remember, as prices increase, your profit on a deal may not unless you pay at-tention and do the math.

Contact Jeb Henley at [email protected] 831-419-4200

Jeb Henley is

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By Jeb Henley

Prices and rents are rising in most markets. Demand is exceeding supply. Whether Silicon Valley or Las Vegas or Miami, investors are competing with homebuyers. As inventory shrinks across the United States, what price should you bid on real estate?


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Advice

12 WAYS TO LOSE MONEY IN REAL ESTATE TODAY

Kathy Fettke is the CEO of Real Wealth

Network, and is frequently featured

on CNN, NPR and CBS MarketWatch.

For more tips on how to protect yourself

and make money buying real estate

as an investment today, join www.

RealWealthNetwork.com (it’s free!) and download the free

report: “7 Steps for New Real Estate

Investors.”

Kathy Fettke is the CEO of Real Wealth

Network, and is frequently featured

on CNN, NPR and CBS MarketWatch.

For more tips on how to protect yourself

and make money buying real estate

as an investment today, join www.

RealWealthNetwork.com (it’s free!) and download the free

report: “7 Steps for New Real Estate

Investors.”


By Kathy Fettke

Realtors often preach about all the ways you can make money in real es-tate. Rarely are we told about how we can lose money. As a real estate pro-fessional, I’m here to set the record straight. Here are 12 sure fire ways to lose money:

1. NOT UNDERSTANDING

THE INVESTMENT

Never put money into an invest-ment you don’t understand. Get ad-vice from a professional who does. A good attorney can be your best friend when it comes to investing. Get your advice from someone who has suc-cessfully done what you are trying to achieve - ideally someone indepen-dent from the transaction.

2. NOT UNDERSTANDING TAx

IMPLICATIONS

Plenty of people are learning this lesson today. Anyone who did a short sale or walked away from a property may be facing debt relief taxes this year. 1031 Exchange laws are strict and auditors are now actively auditing those who claim real estate profes-sional status. Never make any financial moves without the advice of a CPA who specializes in real estate and under-stands our ever-changing tax codes.

3. BELIEVING, NOT SEEING

There’s wisdom in the old saying, “You’ve got to see it to believe it”. Too many people are buying U.S. real estate today based on what they are being told, without verifying it them-selves. It seems obvious, but never

buy a property you haven’t seen - es-pecially from someone you haven’t met. Certainly don’t trust what you see on the internet! Just like on-line dating, reality can be very different than what ‘s shown on the web.

4. SAVING $350 ON AN

INSPECTION

It’s fairly easy to protect yourself in real estate by ordering an inspec-tion and an appraisal. It could be the best $350 you’ve ever spent. Make sure the inspector is representing you, not the seller. Not all inspectors are licensed and some may point out problems just so they can go in and fix them. Get guidance from associa-tions like www.ashi.org and www.ap-praisalinstitute.org.

5. SPENDING MONEY ON

PROGRAMS YOU DON’T NEED

There are many self-professed real estate gurus out there who charge thousands of dollars for bootcamps and training programs. These slick speakers are masters at getting at-tendees to run to the back of the room to purchase programs that promise great wealth. Unfortunately, their information is often outdated and even inaccurate. There are many books in the library that can teach you what you need to know, or join a local investment club to learn from others who have done what you hope to do.

6. DOING IT YOURSELF

If you’re not a contractor, prop-erty manager, lawyer or accountant, don’t act like one. Using the services

of qualified professionals will pay off in the long run. No one wants to inherit low quality work, except the IRS. They thrive on your weaknesses. Anyway, how much is your time re-ally worth? You need to add that in to the equation when calculating returns.

7. CONFUSING HIGH DISTRESS

WITH HIGH PROFITS

Money can certainly be made when purchasing distressed property for a discount and then fixing it up. But when the entire area is distressed, no amount of fixing will help. When the majority of properties for sale in an area are foreclosures or short sales, you are no longer getting a deal. You are buying at market value. And what will you do with your property? If you plan to live in it for at least 5-7 years, you may be fine as long as the area doesn’t suffer from high crime. If you plan to rent it or sell it, you will have lots of competition. Competition in real estate means lower prices.

8. BREAKING S.E.C. LAWS

If you are raising money to buy real estate, you may be entering into securities territory. If you are lending money to someone who wants to buy real estate, you may be entering the twilight zone. Always get profesional advice before borrowing or lending money to anyone (especially family or church members).

9. NOT GETTING ENOUGH

INSURANCE

It’s no fun, but you’ve got to read the fine lines - or get an attorney to

do it. Get as much insurance as you can get. It doesn’t cost much more but will cover things you may not be expecting. And read the fine print, or have an attorney do it for you.

10. TAKING POOR ADVICE

Everyone seems to be an expert when it comes to real estate. Don’t listen to your neighbors or your hairdresser, unless they are super successful real estate investors. Get your advice from someone who’s successfully done what you’re try-ing to do.

11. THINKING YOU HAVE TIME TO

FLIP PROPERTIES

There are many ways to profit from real estate. Some strategies are totally passive and some require hands-on, time-consuming work. If you work full-time and have family, you may not have the time to take on a renovation. Instead, consider working with turn-key providers who specialize in finding great deals and fixing them up for rent or sale.

12. WORKING WITH REAL ESTATE

AGENTS WHO AREN’T INVESTORS

Most real estate agents special-ize in selling residential property within a particular radius. Do not expect an agent to be an expert in areas outside their comfort zone, and certainly don’t expect a resi-dential agent to understand com-mercial or investment property. Only work with professionals who have successfully done what you are trying to achieve.

approach a basic analysis of the prop-erty to determine whether I’d even spend time looking at relevant comps to formulate an offer.

What data would strike my inter-est first is the days on market (400) which tells me it is grossly overpriced and may be ripe for a low offer, or the site has building constraints (perhaps it sits in an historic overlay within a city that will require development by com-mittee) or restrictions that render it too small for development such as setbacks from each street that are 20 feet which is the reason I hate corner lots. Next, the owners are an older couple who own it free & clear. This tells me they have a potential HUGE gain in the property which means big taxes to be paid if they sell for all cash.

I’d begin by having a sit-down with the sellers to determine their moti-vation, their financial situation and whether they are aware of the tax con-sequences of an all cash sale. Let’s as-sume that they are living on a pension and social security, so they don’t need a chunk of cash to supplement their fixed income if it means 15% goes to the feds and 10% to the state right off of the top! Now I know I can put together a more creative purchase offer that will benefit them by having them finance the sale thereby diminishing the tax impact. They will only pay taxes as the income comes in and that can be structured to be in monthly payments of, say, $2,000 a month for the next 20 years or any other payment plan that will work for all par-ties involved. In this situation I can offer more for the property because I have no down payment and I have low interest or NO INTEREST financing spread out over 20 years. Since I’ve determined this arrangement is attractive to them I must now take a look at the deal more closely.

If this lot could have a single family spec home built on it that will have at least 3 bed/2 bath and be no less than 2000 sqft, let’s ASSUME it would sell based on comps for $830,000.

Here is the REALITY: architect’s

plans, site engineering, additional regulatory impact of 2010 California Green building codes now in effect, plan checking and permits will cost $130,000; cost of labor and materials to build will be about $600,000 in a custom-home neighborhood; therefore, the finished product will cost around $730,000. We haven’t even taken into consideration the cost of the lot and we only have a $100,000 GROSS profit before taxes.

The deal doesn’t make sense if they give me the lot for free!

I can’t spend a year in design, plan check, permitting and construction for a gross of $100,000 even with the land giv-en to me free and clear. No Deal! I don’t even bother to try to get it under con-tract and wholesale it to another builder because they aren’t stupid either.

Editor: Mary Morrongiello noted the age of

some of the comps and astutely recognized this

neighborhood may have an historic overlay. In fact,

the neighborhood is in an area of “historic interest”;

however, the neighbors have thus far successfully

fought it being designated a historic district.

Glenn Polf, Diversified Ventures Group, LLCCONCLUSION: Deal Potenial

I first calculated the price per square foot for all of the comps: a.) $366, b.) $376, c.) $264, d.) $495, e.) $363. Then, I threw out the high one ($495), which is high be-cause of a very small house. Now, we see that all of properties fall into a nice range of about $366-376/sqft for 2,100 to 2,700 sqft houses. Note that these comps are older homes with the newest being 1992 (20 year old). If we take the deal and build, we should be able to get a premium for our house since it will be new and with a much nicer and larger lot.

Given these initial numbers, it appears that we can achieve $395/sqft; however, we would need to verify this estimate with local, experienced agents or brokers. We’d also attempt to uncover comps with an in-law unit and with comparable lots.

In my opinion, the best use would be to build a 2,650 sqft house, with possibly an in-law unit or other structure, about 750-1000 sqft. For the secondary structure we

by Susan Hare

When is a real estate investment opportunity a deal, a steal, or wipeout? We identified an investment opportunity in San Jose, California, and then asked three experienced investors to analyze it. We weren’t so much interested in their ultimate

conclusions as in their thought processes. What are the considerations that successful investors take into account? To be fair, we gave each person the same set of facts. However, even that isn’t quite fair, is it? Some of the inves-tors were intimately acquainted with the San Jose area, some were not. Others were more experienced in rehabs and flipping, not ground up construction. Nevertheless, their insights might help you the next time you’re asked to participate in the real estate deal of the century.

Before you read their astute conclusions, consider the facts yourself. What would you do in this situation? Then, compare your conclusions with our panel of investors.

Mary Morrongiello, Bootstrap Patriot Corp.CONCLUSION: No Deal

My first dilemma is that the comps given are completely USELESS for anal-ysis. First, only comps sold within the last 90 days are relevant in this current market. Values are continuing to decline in most markets. In others, proper-ties are beginning to garner multiple offers creating an environment that is a “moving target for values.” This situation requires the investor/flipper to use ONLY the most current sales to avoid over paying or under bidding and losing the deal to somebody who knows this is a pocket neighborhood that is increasing in value.

Second, without knowing the condition of the comps when they sold one cannot judge their value. Was the home built in 1908 completely renovated with updated plumbing, electric, windows, flooring, paint, siding, insulation, HVAC etc. with permits and when was that done? in 1985 or 2011? Get my drift?

So... that being said I have to ignore the comps and just explain how I would

AnAlysis

THE OPPORTUNITY

Lot for Sale: Huge, flat, level, corner lot with room for large home and sepa-

rate shop, detached garage or granny quarters. Separate curb cutouts for

driveway access from front or side street. Desirable San Jose neighbor-

hood with custom homes built between 1900 and 1970’s.

Size: 9,583 sqft lot. Zoned: R-1-8.

Asking Price: $505,000. Days on list: 400. No liens, owned outright by

retired couple.

The building department of San Jose recommends using the following for

a rough estimate of permit fees: 5% to 8% of the building valuation for most

projects.

Comps: Sold between 2011 and present

Year Built Bed Bath Sqft Lot Price

1975 3 2 2,100 4,791 $769,000

1941 3 3 2363 6720 $889,600

1992 4 4 3,023 5,750 $799,000

1902 3 2 1,347 6,656 $668,000

1908 4 3 2,698 6,098 $980,000

DEAL OR NO DEAL?



Ms. Hare is a real estate investor and principal of Susan Hare Marketing. Her consulting firm focuses on bringing big business marketing to small busi-nesses and professionals. Ms. Hare is also a pub-lished author and editor-in-chief of REI Voice maga-zine.

would use a lower estimate on the price per foot, say $264/sqft. To calculate the potential selling price we take 2,650 sqft x $395=

$1,046,750 plus the small unit. $1.25M resale is a number I’m com-fortable basing my analysis on.

Cost CalculationsMy cost calculations take into account my experience acting as

a general contractor, therefore, my building costs would be lower than those of an investor who had to hire a contractor. Also, my calculations assume that I’m only out of pocket the $100k down payment on the lot. Everything else is financed.

Building$510,000. Construction (2650/sqft + 750/sqft x $150/sqft)

$30,000. Permits at 6%

Holding:$2,000. /mo Insurance, utilities, lot loan

($400k lot at 6%, with $100k down only)

$1,600. /mo Construction loan at 8%

average of $250,000 per month

$1,400. /mo Miscellaneous Costs

(appraisals, points, lender fees)

x 10 months

$50,000. Subtotal Holding

Resale Costs:$4,000. Staging

$62,500. Commissions

$12,500. Escrow/title misc. fees (1%)

Subtotals:$540,000. Building (+5% misc below)

$50,000. Holding costs, min.

$80,000. Resale costs

$500,000. Lot purchase

$25,000. Misc costs

$1,220,000. Total Cost

$1,250,000. Estimated Price

$30,000. Profit

In this particular deal there are many variables, including the cost of the lot. Worst case, the seller wants the full asking price. There is no profit in the deal at the lot’s current list price; however, at $400,000 ($100k down, with the seller carrying the note) the deal becomes more interesting. Potential selling price is another vari-able. If a $100k bump in the selling price proved reasonable based on further research, then this deal looks even better and has the potential for $230K profit.. Finally, I estimated 10 months for construction. Before ground is even broken, I’d expect to spend six months on blueprints, planning and permits. The minimum time to market is likely 18 months. What’s the market going to

Experienced Investors Answer the Question

▲ THE LOT

▲ THE HOUSE ACROSS THE STREET

▲ THE HOUSE NEXT DOOR • CONTINUED ON PAGE 14


PRICES AREGOING UP

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be like in 18 months? I’m very comfort-able looking 30 to 60 days out—about the time it takes me to rehab a house. I’m less comfortable looking a year or more out. In the rehab business, we look for 30% to 50% ROI on our deals. How-ever, I’d rather have a 30-day deal and make 10% than a 12-month deal at 30%. A builder might feel differently.

My assessment? This vacant lot is a potential deal with the following reser-vations: 1.) The seller will accept $400k and carry the note; 2) Research confirms that the location would support a selling price of $1.35M; 3)The project would not exceed 18 months.

Editor: Glenn Polf keyed in on the poten-

tial for an in-law unit on the property. What he

didn’t know is that quite a few of the properties

in the neighborhood have in-law units. Also that

there are some very large estate homes in this

neighborhood that command a very high price

but rarely come on the market. It is a stable com-

munity where people tend to move in and then

never move out.

Stuart Baeriswyl, Broker, CRS TeamCONCLUSION: Deal Potential

This scenario illustrates that working with an experienced real estate broker in the area can make all the difference. Much has been taking place in the Santa Clara County real estate mar-ket since the beginning of the year; namely, inventory of active residential listings is way down. This is largely due to there being too few properties avail-able for the many seriously interested buyers. As would be expected in a hot market like the one we are in, even the generally considered unattractive properties – the distressed ones – are selling too. This situation makes a new construction in an established area more appealing.

Regarding the area, again, this is where experience and longevity in an area are an advantage. Just by the de-scription of custom homes and the ages of the comps, I can guess that this lot is in the Willow Glen, Rose Garden, or Naglee Park neighborhoods. All are very desirable and have held their value, even in the downturn. This assumption influenced my analysis. Of course, in a real situation, there would be no need to assume.

A 9,583 sqft lot is large enough to ac-commodate two duet structures. Nice duet units can sell for in the high 600k’s to low 700k’s in the many desirable San Jose neighborhoods. Additionally, there

is a trend within bay area cities to claim support for in-fill development, and the Green Belt Alliance is both vocal on this issue and holds some political sway. The right allies would help this project.

Because the property is wholly owned, it is critical to know whether the seller would allow the buyer the time to go through the long process (1 year) to get a Tentative Map made. A lender would not want to provide a loan with-out one.

The comps provided are insufficient since the property lot size is significantly larger than any of the comp properties; however, one does get a rough idea of value. Also, the estimated permit fees do not included the many and varied ‘other costs’ that the city can often come up with to charge for building develop-ments. I would double or triple these estimated costs.

Before either I, or someone I was working with, made an offer I’d want these three questions answered:

1.) Where exactly is the property? The Alum Rock neighborhood and the Wil-low Glen neighborhood are seven miles and several hundreds of thousands of dollars apart. Also, is the lot near a busy highway or in a quiet residential area (as it appears)?

2.) How close is the property to exist-ing utilities (water/sewer/electrical)?

3.) Would the seller consider giving the buyer time (i.e. 12 months) for se-cure Planned Unit Development (PUD) permits?

If the answers to the above questions are positive ones, then this property could be a deal. Any property should be developed to its highest and best use; in this case, perhaps two, duet structures (4 dwellings). Newer versions of these can be very nice and fit in well even in established neighborhoods.

Editor: Stuart Baeriswyl came up with an out-of-the box idea: duets (a.k.a. duplexes). What Mr. Baeriswyl did not know was that there is precedent in this particular neighborhood for duets AND, he correctly surmised, for long planning cycles.

Many thanks to the contributors of this article. You may contact Glenn Polf at 925-997-4965 [email protected]; Stuart Baeriswyl at 408-373-6766 [email protected]; and the editor, Susan Hare at 408-391-8068 [email protected].

CONTINUED FROM PAGE 13


By Tom Wilson

“Wow,” I thought, “how fortu-nate can I get. An opportunity to spend nine days of personal time with one of the modern icons of real estate investing!” I met Rob-ert Kiyossaki in 2002 and was impressed with his focus on fun-damentals rather than the gim-micks that are so prevalent with seminar gurus. However, this recent opportunity was not only extensive time with Mr. K, but also his wife Kim, a successful busi-ness leader on her own, five of his Rich Dad advisors and many oth-ers, including Ed Griffin (Federal Reserve expert): 16 powerhouses in all.

One hundred and fifty serious investors attended this real estate investment conference held on land and on a cruise ship from Orlando to Belize in May of 2012. I know what you are thinking: boondoggle. Well, this event, I assure you, was anything but sip-ping Margaritas in the sun. 8am to 11:30pm every day was packed with education and networking. There was only one non-structured, free afternoon during the entire trip. I hadn’t been this challenged to learn since my engineering school days. No one dared blink for risk of miss-ing something with this phenom-enal assembly of talent.

Everyone learns differently. Personally, I learn best by being with successful people who like to teach and answer questions. Kim told me that Robert doesn’t just like to teach, he needs to teach. And teach he did. So did everyone else. I was in heaven and came home exhausted. I learned so much I would have to write a book to cover it; however, I’m excited to

share a few of my take-aways from the event.

ECONOMY

All faculty supported Ron Paul’s Libertarian philosophies of small-er government and free market.

95% of the tax code is about how to reduce your taxes, not in-crease them. Do more of what the government wants you to do for society. This is why the wealthy pay less percent tax.—Tom Wheel-wright

The stock market is only predictable for about 1 month. —Andy Tanner

Civilization cannot grow with-out energy.

Our economic woes will come to a head in 2016 and there is a reasonable chance that we may have hyper (double digit) infla-tion. —Robert Kiyosaki

NUTS AND BOLTS

Beat the Fed by being your own fed. Use Other People’s Money (OPM). Don’t park your money;

keep it in action; velocity.Savers are losers. Don’t save

dollars or put it in money mar-kets; it will lose value. —Robert Kiyosaki

The problem with gold is that it doesn’t produce cash flow. —Andy Tanner

One of the best advantages of real estate is its ability to leverage and use OPM.

With social networking for business, the move is toward mo-bile websites; responses are much faster. You need many hits to cap-ture a prospect; average time per hit is 2 sec.

Wyoming and Nevada are the only states that protect a single member (single person or hus-band and wife) LLC. —Garrett Sutton

Best inflation hedges are tan-gible commodities including real estate.

Robert Kiyosaki is primar-ily invested in: 4,000 rental units, gold, silver, energy production, education.

When you need to get some-thing done, give it to a busy per-son.

PHILOSOPHY & GENERAL

Not everyone has the genetic makeup to be entrepreneur; don’t push it if doesn’t fit you (Robert Kiyosaki and Donald Trump). So-ciety mostly needs followers and producers; that’s OK.

Be 100% with the other person when they are speaking.

When you are absorbing oth-er’s ideas, don’t let your own phi-losophy and emotions interfere with your objectivity. —Robert Kiyosaki

The average person retains 10% of what they read, 20% of

what they hear, and 90% of what they experience. There is no sub-stitute for jumping in the game. —Kim Kiyosaki

Dream, acquire information, and apply. —Kim Kiyosaki

We act like we think; be careful what you think.

The military blinds soldiers into thinking that there are bad people in the world. After Viet-nam as a Marine helicopter pilot, Robert Kiyosaki became an inter-national citizen. The average heli-copter pilot lived 30 days.

You can’t be a leader if you aren’t a great speaker.

Be generous, not greedy. Give and you will get returns. —Robert Kiyosaki

Challenges make you smarter and stronger.

A bend in the road is not the end of the road unless you don’t make the turn. —Russell Gray

QUOTABLE QUOTES:

Just because you can doesn’t mean

you should. Not everyone should

be an entrepreneur.

Let fear prepare you, not paralyze

you.

You don’t need to give childbirth

to a new idea; you can just adopt

someone else’s!

Live everyday as though it were

your last.

The best way to help the poor is

to not be one of them. —Laing

Hancock

Contact Tom Wilson at408-867-1867 [email protected]

Advice

Nine Days with Robert Kiyosaki

Tom Wilson

is a thirty

five year real

estate vet-

eran who has

executed over

$100M and

1,800 units

of real estate

investments.

After thirty

years of man-

aging some of

Silicon Valley’s

pioneering

technology

companies,

Mr. Wilson put

his business

and manage-

ment experi-

ence toward

fulltime

investing. One

of his compa-

nies, Wilson

Investment

Properties,

offers high

quality, high-

cash flow, fully

rehabbed and

leased proper-

ties to other

investors.

ROBERT KIYOSAKI


By Geraldine Barry

Fresno, the fifth largest city in Cali-fornia is so far out of the way, that the I-5, the main artery between Silicon Valley and Los Angeles, completely by-passes it. If it has any reputation at all, it’s that of the most boring place in Cali-fornia, certainly not the home of entre-preneurial powerhouses. Yet, Fresno is the hometown of JD Esajian, Paul Esa-jian, and Than Merrill, the childhood friends behind Fortune Builders—one of the top three education companies in the nation (Inc. magazine, 2011), the popular A&E reality show “Flip this House,” as well as the successful real es-tate investment company, CT Homes.

When we caught up with JD (yes, that’s the name on his birth certificate) he was in his San Diego office overlooking Pacif-ic Beach. He might have left Fresno miles behind, but JD still carries the values of that blue-collar town. Work hard. Make time for family and Family. Take care of yourself. Treat people right. Do what you can to make a difference.

WORK HARD

Late in 2003, JD’s brother Paul and friend Than founded CT Homes in Con-necticut. The idea was to renovate ugly houses into beautiful ones and make money on the result. At the time, JD was living in California. He’d graduated from college with a degree in econom-ics and had purchased his first home. While he enjoyed the appreciation of that up-trending market, he lacked the

resources and support team necessary to grow a business in California. When Paul and Than invited him to join CT Homes, JD seized the opportunity. He had always dreamed of building a com-pany with friends and family and he had something valuable to offer back—a no-nonsense attitude and profound work ethic, attributes essential to grow-ing any young company.

In his first year with CT Homes, the company did 30 deals. That’s thirty es-crows, thirty kitchens, sixty bathrooms, acres of new carpeting, and barrels of paint. In the second year, the team did 70 deals. By year three, they were up to 104 deals. The big need at that time was to take over some of the rehab work from Paul. JD is now Director of Operations for CT Homes and Na-tional Speaker and Trainer for Fortune Builders. He has the final say on every property under consideration and re-fuses to invest the company’s money until he has seen the property—even though that means hundreds of hours traveling each year.

MAKE TIME FOR FAMILY AND FRIENDS

With his hectic travel schedule, re-sponsibilities, and 10 to 12 hour work day, how does JD make time for family and friends? That’s not so difficult with a corporate culture that values rela-tionships. Of the company employees, the vast majority are friends recruited by other friends, husband and wife teams, brothers, sisters, and other rela-tives. JD’s wife, Debora, works for the

company. Than Merrill’s wife, Cindy, runs Than’s charitable foundation is no stranger to the office.

TAKE CARE OF YOURSELF

To have energy available for family and friends, JD is conscientious about taking care of his mind, body, and spirit. He gets up at 6am every morning and starts the day with quiet time: col-lecting his thoughts, stretching, practic-ing his mantras. He eats breakfast and has coffee 99% of the time whether he is traveling or not. JD is a big believer in living a healthy lifestyle, including working out and eating well.

TREAT PEOPLE RIGHT

Treating people right is both a per-sonal value, and a core value of the company, that JD considers essential to success.

“If I like you and like the way you treat your team, I probably would like to be your customer. Pretty simple re-ally,” JD explained.

In order to treat people right, JD and his partners believe that you have to be at the top of your game. That’s why FortuneBuilders/CT Homes values per-sonal development. JD, Paul, and Than start with themselves. They invest in their own education, and attend busi-ness and personal growth training that keeps them primed and moving for-ward. They follow through by coaching and educating staff.

“We simply want everyone in our organization to continue to grow and

develop on our watch, and we do that primarily through example and train-ing,” JD said. “We encourage our em-ployees to go after what they want. We treat each of our employees is an intra-preneur. We give them the freedom to exercise decision making and the train-ing to make good decisions.”

The result of those good decisions is a 2629% growth rate according to Inc. magazine, a vocal and loyal cus-tomer base, and a solid reputation in an industry that has had its share of black-eyes.

MAKE A DIFFERENCE

“I want to finish every day better than I started,” JD said. The bound-less, positive possibilities of transfor-mation motivates JD personally and professionally. “Rehabbing houses transforms neighborhoods. We trans-form the lives of buyers by providing them with high quality products that allow them to attain the goal of home ownership. Through Fortune Builders I get to transform people and their lives through education. And by being part of a like-minded management team, I have the support to encourage our staff members to grow, stretch, and excel. The ability to make a positive impact is what feeds my soul.”

HOME TOWN VALUES

The beach town of San Diego where JD now calls home is a far cry from dusty Fresno, but he’s still a home-town boy at heart. The only time JD

FeAture

Jd eSAJiAN: VAlUeS-BASed SUcceSS


JD ESAJIAN

www.cthomes.com

www.fortunebuilders.com

Jd eSAJiAN: VAlUeS-BASed SUcceSSbristled during our entire interview was when I expressed surprise that he hailed from that much maligned city. To set the record straight, Fresno is the birthplace of such luminaries as Ross Bagdasarian, Sr., creator of Alvin and the Chipmunks; Kirk Kerkorian, fa-ther of the mega-resort and major Las Vegas developer; Sam Peckinpah, director and screenwriter; William Saroyan, Pulitzer Prize-winning au-thor; and, forgive me for mentioning, Kevin Federline. We can now add the following names to that list of Fresno success stories: Paul Esajian, Than Merrill, and JD Esajian.

On the FortuneBuilders website, JD posted a quote from Zen teacher Cheri Huber, “How you do anything is how you do everything.” He explained the importance of that philosophy. “Our actions speak louder than our words. How you conduct yourself in business is who you are. Lead by example, respect people, conduct business with integrity. Maintaining our core values is very important for us. We don’t want to forget where we came from. That’s why we go the ex-tra mile with a rehab. It’s why delight-ing our clients with our coaching and education is very important to me.”

It is JD’s fundamental decency, loyalty, and humility that is so small-town-America and yet so essential to his multi-million-dollar success. It makes speaking with the man an in-spiring experience. Just don’t make fun of Fresno.


FeAture

The bay area’s leading fo-rum for real estate investment training and networking is delivering 21 sales-pitch-free educational workshops and bringing together hundreds of real estate pros from across the U.S. to America’s home-base for innovation. The 4th annual Real Estate Investment Expo Silicon Valley is being held September 8, 2012 at the Santa Clara Convention Cen-ter. The Expo’s goal is to help individuals new to real estate investing and experienced real estate investors understand the current market dynamics, learn best practices, and ex-plore investing opportunities.

“For people new to real estate investing, education from reputable professionals is critical. Real estate investing can be as unforgiving as it is rewarding.” said Bruce Norris, real estate market timing ex-pert and president of The Nor-ris Group. “Networking with real estate investors who’ve been in the game a long time and attending educational fo-rums, like Expo Silicon Valley, is the best way to make sound, profitable decisions.”

The long slump in real es-

tate prices makes this a buyer’s market. People who have been waiting on the sidelines for the market to bottom out are now ready to make the move into real estate. At the same time, many who’ve made their wealth in high-tech stocks are looking to diversify their in-vestment portfolio to include property holdings.

To serve these investors, SJREI Association is hosting Real Estate Expo Silicon Valley. In partner with NorCalREIA and California Apartment As-sociation Tri-County region, SJREI Association aims to ensure that both new and sea-soned investors are provided high-quality, no-sales educa-

tional workshops as well as the opportunity to meet and mingle with deal makers from across the U.S.

“Even experienced real es-tate investors need to recharge their batteries now and then,” said Kathy Fettke, CEO of Real-Wealth Network. “The energy, the networking opportunities, the exposure to how other investors are leveraging mar-ket trends, are all reasons to attend industry events. That, plus the quality of organiza-tions involved with REI Expo Silicon Valley, is the reason RealWealth Network is proud to sponsor the Expo.”

Silicon Valley and the great-er bay area is home to 2.6

million households within a 1 hour drive of the Expo, yet Geraldine Barry, President of SJREI Association, expects participants from across the country.

“I’ve been to multiple in-dustry events that purport to be educational in nature, yet lack content while pressing participants to spend even more money on training,” said Ms. Barry. “Real estate educa-tion is often associated with get rich quick schemes. It takes time, effort, and unbiased edu-cation to become proficient in real estate investing. At SJREI and with the Expo, we affiliate and associate with real estate professionals who possess integrity and smarts. The Real Estate Investment Expo Sili-con Valley is an information rich forum for new investors, and with high-level workshops to expand the knowledge of experienced investors. It will not disappoint.”

For more information about the Real Estate Expo Silicon Valley, September 8, 2012, or to take advantage of early bird discounts, please visit the Expo website: www.ExpoSili-conValley.com.

Real Estate Investment EXPOComes to Silicon Valley, Sept. 8

Twenty-one hours of sales-pitch-free real estate investment workshops in one day are coming to Silicon Valley, sponsored by three bay area real estate investor associations. New and

experienced real estate investors will discover current market dynamics, learn best practices, and explore investing opportunities.


cAlendAr

BE A PART OF SOMETHING AMAZING!BECOME A MEMBER TODAY

(408) 264-3198 or www.SJREI.org

W hether you have yet to purchase your first investment property, or are working on your hundredth deal, you’ve found the bay area’s source for sound, principled advice and networking. As inves-

tors ourselves, we understand the challenges that investors face, and cus-tomize our programs to address real-life situations and scenarios.

MEMBER BEnEfITSHear the best speakers, get the best adviceOur educational meetings are delivered by recognized experts in their field. They keep you up to date on issues such as market timing, new legisla-tion, and techniques that may affect or enhance your real estate investing.Network with iNvestors, buyers, sell-ers, ANd the people who support themAll successful people rely on a network. Bringing like-minded people together to share information, assistance, and resources is a core goal of our chapter meetings.stAy motivAted, Avoid pitfAllsWho but another investor understands the doubts, challenges, and successes of real estate investing? SJREI Association fosters a positive climate of mutual sup-port and sound advice. Your questions are respected, your participation is valued.three ChApters• south bay• east bay• mid-peninsula

Membership entitles you to free admission to your local chapter’s month-ly educational and networking programs and much, much more.

THE BAY AREA’S MOST DYNAMIC INVESTORS ASSOCIATION

Benefits ExEcuTIvE MeMBership

preMiuM MeMBership

Annual Membership Dues $500 $225

Additional Member* $350 $200

Guest passes (use at any chapter meeting) 1 1

free registration & attendance at local chapter meeting

network with other investors at each event

free registration & attendance at all chapter meetings: Mid-peninsula, san Jose, east Bay

Invitation to annual Leadership roundtable

Vip seating at registered events

personalized name badge with ex-pedited event check-in

On-line community: member profile, read and post messages on message boards

Hundreds in discounts for goods and services through national reiA affiliation

Discounts on workshops and special events

Invitation to Quarterly Insider Luncheon

Audio library of past events

new member orientation

21 MID-PENINSULA MEETING, Crowne

Plaza in Foster City – Speaker TBD

2 SOUTH BAY MEETING, The Domain Hotel in Sunnyvale

with michelle lenehan of Foreclosure Radar

1 EAST BAY MEETING , Hyatt in Dublin with

michelle lenehan of Foreclosure Radar

28 JUMPSTART PROGRAM

17 MID-PENINSULA MEETING, Crowne

Plaza in Foster City – Speaker TBD

12SOUTH BAY MEETING, The Domain Hotel in Sunnyvale

with Investor, michael Zuber on “How to be Successful

in Real Estate while Working a Full Time Job”

11EAST BAY MEETING , Hyatt in Dublin with Investor,

michael Zuber on “How to be Successful in Real

Estate while Working a Full Time Job”

19MID-PENINSULA MEETING, Crowne Plaza

in Foster City with mary morrongiello on

“Flipping in A Sizzling Hot Market”

7 SOUTH BAY MEETING, Domain Hotel in Sunnyvale

with Bill tan on “How to Make Money with Notes”

6 EAST BAY MEETING, The Hyatt Place in Dublin with

Bill tan on “How to Make Money with Notes”

Ju

ne

Ju

lyA

uG

us

t

REGISTER ONLINE FOR OUR AWARD-WINNING EVENTS: SJREI.ORGSIGN UP FOR OUR EMAIL LIST FOR THE MOST UP TO DATE EVENT NEWS

save the date:Saturday, September 8, 2012: SFBAY ExPO

FOR MORE INFORMATION OR TO REGISTER FOR ANY OF THESE EVENTS, VISIT: WWW.SJREI.ORG


By Geraldine Barry

In just over two years, Rapid Realty, has grown from a single office to 54 franchise loca-tions throughout New York.

This rental-based firm, founded by Anthony Lolli, is poised to ride the wave of rentals across the country and plans to open 50 more locations in key markets like Los Angeles, Chi-cago, and Boston. How did this com-pany come so far, so fast? Credit it to the genius and boundless energy of Anthony Lolli.

Sixteen years ago, when Anthony was just out of high school, he expe-rienced a profound “ah-ha” moment. It was during a real estate course he was taking in preparation for New York State real estate license exam. He looked at his instructor and thought, “If there is so much money in real es-tate, why is this guy teaching?”

At the break he spoke with the instructor and discovered that the instructor owned the school, the building, and was a real estate inves-tor. He told Anthony, “This school earns approximately $1.4 million an-nually and is just one of my ventures.” Anthony realized that becoming an agent was only one of many ways to make money in real estate. This lesson held him in good stead 14 years later when he developed the Rapid Realty business model; however he still had a lot to learn.

Anthony quickly obtained his license with a clear career path in mind: join a large firm, learn all as-pects of the business, then go to work

selling multimillion dollar brown-stones in Brooklyn Heights, which he called “The Beverly Hills of Brook-lyn.” The first two goals proved easy enough; he signed on with one of the largest firms in Brooklyn, and in a matter of months he became their top salesperson.

Making the move to Brooklyn Heights, however, turned out to be more difficult than he had imagined. Broker after broker told him he was too young to be effective, despite his prior success. Finally, he wandered into a brokerage firm on the second floor of a building. The owner disclosed that he was involved in several lawsuits and was not hiring. Undaunted by the law suits, Anthony persuaded the owner to take him on by agreeing to pay the bills and share all earnings 50/50.

For the next several months, An-thony talked to everyone—he door-knocked neighborhoods, he secured co-ops and condos and listings for millions of dollars, and he recruited agents for the company. The compa-ny, and its profits, grew by leaps and bounds. But Anthony had another lesson to learn: the broker (Anthony’s boss) lost his lawsuits and reneged on his agreement to split earnings with Anthony.

Like a true New Yorker, Anthony brushed himself off and started over—this time on his own terms. He left Brooklyn Heights and went deeper into Brooklyn, where he could afford to buy a three story building. He renovated the apartments on the upper floors and turned the ground floor into the office of his own broker-

age, Rapid Realty. From an initial staff consisting of

just Anthony and a small handful of agents, Rapid Realty quickly grew, thanks to Anthony’s training and leadership. Again, his success attract-ed success and soon Anthony had 150 agents working for him. He was ready to expand. After grooming his seven member training staff to open seven new offices, they all left to start their own businesses without him. Real es-tate agents, he discovered, have very little incentive to be loyal to a single broker and he had just trained his own competition! He clearly needed another business model that made his investment in people worthwhile.

An investor friend who owned a fran-chise spoke to Anthony and suggested that he consider a franchise model.

“At first, I thought McDonalds and Burger King,” Anthony said, “not real estate. But once I started to learn more about it, I realized that the fran-chise model is actually very similar to the relationship between a broker and an agent. In a real estate broker-age, the broker provides training, infrastructure, and support, and in exchange the agent splits their com-missions with the broker. In franchis-ing, the franchisor provides all the same things to the franchisees, and in exchange the franchisor collects a portion of the sales as royalties from the franchisee.

The more he considered it, the more interesting franchising became. By using a franchise model, Anthony would eliminate all the things that make people in business fail, plus

FeAture

Rapid Success: The Anthony Lolli Story


Rapid Success: The Anthony Lolli Storyhe would provide the infrastructure, website, and other marketing for Rapid Realty’s franchisees. All that the franchisees had to do was sell real es-tate—or more accurately, in Anthony’s business model, lease apartments.

New York apartment leasing has unique quirks and the opportunity for making a lot of money. Unlike other major cities, New York City still prac-ticed the broker fee method when An-thony founded Rapid Realty. Tenants were expected to pay the broker’s fee in order to secure the lease. Anthony decided pioneer the no-fee method in NYC (actually, there still is a leasing fee; however, that fee is paid by the landlord, hence “no-fee” to the rent-er). He started a billboard campaign off the highways advertising no-fee leases and soon had 220,000 visitors a month to his website.

With that kind of success, Anthony was soon opening franchise offices throughout NYC. Rapid Realty differs from brokerage chains, like Coldwell Banker or Century 21, in several im-portant ways.

“First of all,” said Anthony, “we practice a different brand of real es-tate. We’re in the high volume rental business, as opposed to everyone else who focuses on sales. We are very unique in that we are the only rental real estate franchise model that’s out there.

“In our system, every agent and franchisee can work from any of our franchise locations. In other franchise models, both in real estate and in any other type of business, when you work out of one franchise you don’t ever

work at another one that is owned by a different franchisee. Our company works completely different in that all of our salespeople and franchisees work from any office they want to. While the salespeople are assigned to one particular office, if they get a customer who wants to live in an area outside of the area that their office is located in, they can visit any Rapid Realty franchise and work from there.

“It also helps us produce a lot more deals because it allows salespeople to always have a nearby office to stop in when they have a customer who is interested in applying for a space and leaving a deposit. Time kills deals, which is why it’s a great luxury and super convenient to the salespeople and our customers to have the abil-ity to use any of our offices, no matter what area they are in — making it less likely the customer will get cold feet and not take the space, because they thought about it too long and wanted to procrastinate some more.”

Rapid Realty’s unique take on the franchise model has become a phe-nomenon. In addition to their 50+ offices throughout New York City, the company opened its first office outside New York in September, 2011, in Jersey City, NJ. Currently there are Rapid Realty franchises underway in Boston, Philadelphia, and Atlanta. An-thony envisions Rapid Realty spread-ing across those cities the way it did in New York. He foresees the brand becoming America’s first household name for apartment rentals. At the rate the company is going, that goal seems well within reach.

ANTHONY LOLLIFounder/Chief Executive OfficerRapid Realty Franchise LLC


by Jeffrey B. Hare, APC

In 27 years, no one has ever asked me for legal advice because they made too much money on a real estate deal. More often than not, the typical comment is “I wish I had talked to you earlier.”

Lawsuits happen. Being served with Summons and a Complaint is guaran-teed to ruin your day, no matter what. The most important rule is “Don’t ig-nore it!” You have 30 days to file a re-sponse, so you need to get an attorney. Ignoring the Summons could result in a default judgment against you, which is a matter of public record and will have a significant adverse impact on your credit rating! The cost to mitigate the impact of a recorded Judgment can be quite expensive both in terms of money and time.

The first question a lawyer will ask you is “What happened?” In other words, what events took place that led up to the filing of a lawsuit? Lawsuits are rarely a surprise – most people have some indica-tion that a dispute exists that might lead to litigation. Keeping good records will help you prepare a detailed chronology of events, and might save you thousands of dollars in legal costs. Sometimes, a well-documented history of how you got

into the dispute will reveal clues how to get out of it.

Most people recognize the early signs when a deal starts to go sideways. The problem is that they don’t react properly. The first reaction is denial, and people have a tendency to seek confirmation that the problem will be corrected, and ignore evidence that indicates it will get worse. Personality conflicts, tension be-tween the partners, a breakdown in com-munication, a disappointing report, and unexpected delays can trigger the unrav-eling of even the most carefully planned deal. Documenting these events as they evolve will help you be better prepared if – and when – the time comes to answer the question “what happened?”

An experienced lawyer will ask is whether the dispute involves a business or a legal issue. Is it a disagreement over the amount of each investor’s share of profits or losses, or a question over the legal ownership of the property? Business disputes can often be quickly resolved through negotiation and me-diation in a more cost-effective manner than going to trial. Attorneys’ fees and litigation costs can very quickly exceed the total amount in dispute. On the other hand, if the matter in dispute only requires a judicial interpretation of the legal issue, the parties can stipulate as

to the facts and seek an expedited rul-ing.

The fact is that over 98% of all cases filed with the Court settle before a jury has the opportunity to issue a verdict. Alternative dispute resolution (ADR) options, including Early Neutral Evalu-ation (ENE), Mediation, and Arbitration – either binding or nonbinding, private or court-appointed – resolve most dis-putes. It can take up to five (5) years to get a case to a jury. Litigation extends rather than solves disputes, often de-laying closing of the transaction. A project involving a three-month rehab and flip can turn into a three-year legal battle costing hundreds of thousands of dollars in legal fees and litigation costs. If there is a 98% probability that the dispute will settle, doesn’t it make financial sense to resolve it sooner rather than later?

Don’t wait until the Summons and Complaint are served. Keep good re-cords, and take action as soon as you sense a deal is going sideways. Consult with an attorney, and attempt to get the issue resolved quickly, before the whole deal is lost. An early resolution will prove to be the best return on your investment.

Contact Jeffrey Hare at 408-279-3555

[email protected]

Advice

When Deals Go Sour

Jeffrey B. Hare, Attorney

at Law, provides out-

come-oriented legal

services to real estate

investors, commercial

and residential property

owners, and real estate

developers. As a real

estate attorney with

over 25 years experi-

ence in real estate and

business transactions,

Mr. Hare provides his

clients with a practical,

cost-effective approach

to solving complex legal

issues, including due dili-

gence, contract review,

and negotiations. He also

has extensive experience

with entity formations

(LLCs, etc.), and is very

familiar with the use of

self-directed IRAs for

alternative investments

such as real estate.


ASK FOR A “REAL ESTATE STRUCTURED SALE” FOR YOUR NEXT PROPERTY

TRANSACTION• DEFER YOUR CAPITAL GAINS TAXES.

• NO 1031 EXCHANGE INVOLVED.• RECEIVE GUARANTEED FIXED INCOME.

• INCOME IS NOT SUBJECT TO MARKET VOLATILITY.

• INCOME IS PROTECTED FROM CREDITORS

Investors and Buyers get a tool that increases their chances of getting the properties they want. Sellers get an exit strategy. They get a retirement vehicle that GUARANTEES their retirement life style and keeps their investment dollars working, long after the sale of their property. Call us for a No Obligation quote for the property that you want to buy or sell. Let us provide you with certainty during uncertain times.

CALL US FOR YOUR FREE CD ABOUT REAL ESTATE STRUCTURED SALES

Disclaimer: This transaction is governed under IRC, Section 453 and IRS, Publication 537. This information is provided for general consumer educational purposes. Real Estate Structured Sales cannot predict actual tax consequences for any given situation because relevant tax law, which may include statutes, regulations, ruling, treaties, or conventions, is subject to change. This information is not intended to provide legal, tax or investment advice. For individual advice, you should consult your legal or tax advisor.

Real Estate Structured Sales

KEVIN KAAHALICENSED / CERTIFIED STRUCTURED SALES AGENT

408-821-4131 [email protected]

INVESTORS. BUYERS.

SELLERS.

www.ressale.com

WHAT IS ALTERNATE DISPUTE RESOLUTION (ADR)?

ADR is a process in which a neutral person helps people who cannot agree, so that

they can resolve their case. ADR is designed to take place as early as possible in the life

of a case, to provide an opportunity to settle all or part of the case and keep litigation

expense to a minimum. (Parties in a civil case can use a mediator, neutral evaluator, arbi-

trator, or settlement conference neutral for assistance in resolving a case.)

TYPES OF CIVIL ADR AVAILABLE:

Mediation:

Mediation is an informal, confidential, flexible and non-binding process in

which the mediator helps the parties to understand the interests of every-

one involved, and their practical and legal choices. The mediator helps

the parties to communicate better, explore legal and practical settlement

options, and reach an acceptable solution of the problem.

Mediators are allowed to charge for their time.

Neutral evaluation

Neutral evaluation, sometimes called “early neutral evaluation” or “ENE”, is

an informal process in which the evaluator, an experienced neutral lawyer

hears a compact presentation of the case from both sides, gives a non-

binding assessment of the strengths and weaknesses on each side, and pre-

dicts the likely outcome. Evaluators are allowed to charge for their time.

Private Arbitration

The arbitrator hears the evidence and arguments of the parties, and then

makes a written decision. The parties can agree to binding or non-binding arbi-

tration. In binding arbitration the arbitrator’s decision is final and completely

resolves the case, without the opportunity for appeal. In non-binding arbitra-

tion, the arbitrator’s decision could resolve the case, without the opportunity

of appeal, unless a party timely rejects the arbitrator’s decision within 30 days

and requests a trial. Private arbitrators are allowed to charge for their time.

For more information, go to the Santa Clara County Superior Court web site:

http://www.scscourt.org/court_divisions/civil/adr/civil_adr.shtml


BAsics


Defer Capital Gains Taxes with a Real Estate Structured Sale

By Kevin Kaaha

A recent study concluded that 90 percent of retiring Baby Boomers indicate a need to focus on income in retirement, versus accumulation of assets. Over three-thousand Baby Boomers were then asked the fol-lowing question: “Are you more con-fident in knowing exactly how much money you’ll need at retirement OR how many gumballs are in the jar at the County Fair?” Sadly, 47 percent felt more confident in guessing at the number of gumballs, while 53 percent felt confident in their ability to gauge their retirement income needs.

There is an exit strategy that al-lows investors and owners to sell their properties, defer their capital gains taxes on the sale of that prop-erty and receive guaranteed, fixed income payments over a scheduled period of time. The payments be-come a guaranteed passive stream of income that IS NOT subject to market volatility. The seller gets cer-tainty during uncertain times.

This exit strategy is called a Real Estate Structured Sale. The transac-tion is governed under IRC, section 453 and IRS Publication 537.

Where did a Real Estate Struc-

tured Sale come from? Over the past several decades, many civil court cases have used an annuity product to fund damages. You often read about horrific accidents in which people were badly injured. At a civil trial, the jury decides that substan-tial damages are owed to the injured parties. In most cases, these dam-ages require payments to the injured party. The payments from these lawsuits are often funded by large A+ rated insurance companies and are called “structured settlement” annuities. They provide payments for a period of many years. These structured settlements provide the economic assurance that the in-jured party will receive income in a scheduled and timely manner. These large A+ rated insurance in-stitutions looked at the real estate market and determined that their structured settlement product could be used to defer capital gains for re-tirees who sell real estate.

Here is a hypothetical example of a Real Estate Structure Sale. Bob, the owner of an apartment building is selling his property. He receives an offer of $3,500,000. At age 62, Bob is concerned with market risk and providing a reliable income during

retirement. Bob agrees to $500,000 cash at the time of sale and $3 mil-lion, deferred for 20 years, via the Real Estate Structured Sale. Under this agreement, Bob could expect the following benefits: $500,000 in cash, payable at the close of sale, and $14,490 per month, guaranteed for 20 years. This income is not sub-ject to market volatility. Bob also defers his capital gains taxes over a period of time.

The Real Estate Structured Sale is a clean way to exit the real estate market and realize your retirement dreams. Sellers simply have to ask their buyers for a Real Estate Struc-tured Sale offer. It is no cost to the buyer or to the seller. In fact, buyers who adopt the Real Estate Struc-tured Sale offer, may turn this option into a deal-winning advantage. The opinions expressed in this article

are those of the author and do not nec-

essarily reflect the viewpoint of SJREI

or REI Voice magazine. Individuals

should always consult a qualified tax

professional or legal advice to review

different options of selling highly

appreciated property.

Contact Kevin Kaaha at 408-821-4131 [email protected]

Kevin Kaaha is a Licensed and Certified Structured Sales Consultant with a focus on help-ing property owners sell their property and defer their capital gains taxes. Mr. Kaaha works with strategic affiliates, throughout the United States, in providing an edu-cational based platform to show commercial and investment prop-erty clients how to locate income producing properties.


By Aaron Norris

When I started with The Nor-ris Group back in 2005, I vividly remember getting strange looks when I said everyone was getting an email address with the @thenor-risgroup.com domain. One of our team members actually said, “Why do we need email?” Only 60% of our customers had email at the time as well.

Needless to say, things drasti-cally changed. Today, 99.99% of our prospects and customers have email addresses and large numbers engage on Facebook, LinkedIn, Twitter, and Google+. The question has quickly become: How on earth do you manage all these networks and do they really lead to deals?

Two important things to keep in mind before we get into specifics:

“What gets measured gets

managed.” – Peter Drucker

Forget about size: It’s quality,

not quantity.

The famous Peter Drucker quote reminds us to always show up with return on investment (ROI) in mind. If you’re not approaching social media strategically with busi-ness in mind, then leave it for per-sonal use with family and friends. It can quickly become a black hole of wasted time. If a social media site isn’t helping you learn, build valuable relationships or close deals, why are you there? Revisit the P.O.S.T. method (People, Objec-tives, Strategy, Technology) in The Groundswell to choose your tools wisely, create goals, measure suc-cess, tweak, and repeat.

I’m currently reading The 4-Hour Work Week by Timothy Ferriss for an upcoming podcast, and the fol-lowing quote struck me:

“You are the average of the five people you associate with most… If someone isn’t making you stronger,

they’re making you weaker.”It’s great advice not only for

friendships but also for social me-dia. Building a dense network of like-minded friends, colleagues, and prospects is exponentially more powerful than thousands of “friends” who don’t give a damn about what you do, and who provide absolutely no value to your business. In addition, building a strong, tar-geted network plays nicely into the evolution of social search.

With these two filters in mind, let’s dive into some tools that turn social networking into potential real estate deals. FACEBOOK PRIVATE GROUPS

I must admit, I am still recovering from Facebook Fatigue Syndrome (FFS). However, Facebook remains the most highly adopted social media tool in our industry. Private groups are one of my favorite tools when not abused. I’ve seen far too many groups die quickly because the Groupor invites Groupees with-out asking their permission. Then, the Groupor immediately starts pushing out unwanted messages and spam causing mass exodus.

A better approach would be to ask a small handful of knowledge-able and active Facebook friends to form a very small, invite-only group. This select group would be your go-to for specific questions and deals that you don’t quite know what to do with yet. Think of it as an

online mastermind group. Ask per-mission, keep it relevant, and don’t abuse the privilege. GOOGLE GROUPS

Google groups work like Face-book groups, except that Google groups are delivered via email. Someone posts a question and it arrives to all members via email, as do all subsequent replies. It quickly becomes annoying if the group is too large, if too many questions are asked, or if too many responses are made. When all members are not operating at the same level (e.g., too many inexperienced investors ask-ing really basic questions), the group experience may become counter-productive.

From finding favorite contrac-tors in particular areas to locating details on how to appraise a weird add-on, the value that I’ve received from the few groups I belong to has far outweighed any annoyance of additional email. If you’re starting a group, ask permission from those you want to participate, don’t abuse the list, and keep it relevant and interesting. Boot those that cannot control themselves.NICHE SITES

Looking to cast your net a little wider? Check out niche sites like Bigger Pockets and Active Rain. Bigger Pockets caters to real estate investors nationwide while Active Rain has more of a REALTOR® fol-lowing. It doesn’t matter if you’re a novice or an old pro. The currency on these sites is great questions by newbies and expert answers by ex-perienced investors. Like any social network, show up and listen first, comment second. Take it all with a grain of salt and realize that differ-ent laws apply in different states (in other words, always check to make sure suggestions aren’t illegal).

Beware, some of the greatest niche sites are gamified, which means that you get points and badges for participation. It can be

somewhat addictive. Just make sure you’re getting value for your time spent.LINKEDIN

Others must be experiencing FFS too because LinkedIn has ex-ploded with friend requests over the past six months. Admittedly, I don’t leverage this site as much as I could. However, I like LinkedIn be-cause it offers tremendous access to business professionals that I’d never have access to on my own.

Make sure to completely fill in your LinkedIn profile and pay spe-cial attention to the recommenda-tions on your page. This is your living resume and people do read it. Your LinkedIn profile can also be used if you don’t have a personal website.

I don’t friend everyone on Linke-dIn, and I do try to have a conver-sation with people whom I don’t know but who have requested to be added to my network. If they aren’t willing to engage after the request-ed friendship, what are the chances they plan on adding any value to your network?OFFLINE NETWORKING

Taking these online relation-ships offline and turning them into business is the most important piece of the puzzle. Buying houses isn’t quite the same as buying a sweater online (not yet at least) and an online presentation can be very different from what a person is like in real life. Most people are going to want a face-to-face meeting at some point before investing with you or referring deals your way.

If you’re creating goals for all of your online activity, make sure that you structure them in a way that de-livers value to you, and that you fol-low up in a way which makes your business grow — that’s social media done right. See you on Facebook.

Contact Aaron Norris at 951-780-5856 [email protected]

FeAture

Social Networking for Deals

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SOUND OPINION—WISE DECISIONS: VOICE OF THE PROFITABLE REAL ESTATE INVESTOR


by Geraldine Barry

Geraldine Barry is founder and president of SJREI Association, the premier educational and networking association for real estate investors in the Bay area. Under

Geraldine’s leadership SJREI has grown from a half-dozen investors to a vibrant three chapter organization with over 400 investors attending monthly meetings.

SJREI won the Award for Excellence from the National REIA (Real Estate Investors Association) in several categories in 2010. As an avid investor herself, Geraldine

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In addition to leading SJREI, Geraldine is the frequent host of the radio program, Going Beyond Real Estate, a regular guest on the nationally broadcasted NTDTV,

publisher of the award winning publication REI Voice Magazine, and producer of the much acclaimed annual Real Estate Investment Expo Silicon Valley. As a serial

entrepreneur, Geraldine is also a principal in Miles/Barry Contract Furniture serving corporations in the Silicon Valley. Additionally, she coaches business principals

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achieve their vision, and delegating effectively. Geraldine resides in Silicon Valley, and is the proud mother of Colin & Claire, her two children.

Tuigim,* GerP

roductivity is something that I am continually focused on. I am consistently considering how I can be more efficient. What can I tweak to make my day more productive, and en-

sure that I am constantly growing and achiev-ing? My goal is to move my own business and agenda forward, not to become part of someone else’s. The key to focus is being clear on a daily basis what you need to do in very specific detail to gain momentum and accom-plish rapid results. Implementing a system, if you will, that keeps your focus on the task at hand... more on that later.

What I have discovered is that technology is both a blessing and a curse. It’s a blessing in that it helps us to be more productive. We can effortlessly share documents and it simplifies disseminating information. It helps me personally to stay in touch with my family in Ireland in ways that were not pos-sible when I first came to this country, and I treasure that ability to stay connected and close. However, technology is a curse when it consumes every moment, you know what I’m talking about,—email, texts, phone calls, surfing the net—are a never ending circle. If we respond, and get distracted, every time we receive a communication, our thought process is interrupted which ultimately im-pacts our productivity and effectiveness. We

are human beings not computers. We just don’t have dual core processors. When we interrupt our flow while working on proj-ects, we impact our results. If we consistent-ly check email for example, we do ourselves a disservice by impacting focus on the task at hand.

What can you do to decrease your chanc-es of getting distracted? Manage technology in your favor:

• Put your phone on silent—who says that you have to answer every call as it comes in? If you happen to take a call, be sure to mention that you are in the middle of something but, “I have two minutes for you.” Big smile and mean it!

• Carve out chunks of time to work on a big project that is the only focus for that period. No technology during that time, no distractions. You will be amazed what you can accomplish when you do this.

• Don’t let other people’s agenda hi-jack your time. Only open emails that per-tain to a project that you are working on. This takes discipline, but remember disci-pline is a muscle and it gets stronger when you use it.

Customize your system to fit your needs. Remember systems only work if you work them. Once you have your system—im-plement and you will see your productivity shoot through the roof!

*Tuigim (pronounced tigg-im) is the traditional Gaelic answer to the question, “An dtuigeann tú?” (Do you understand me?)” Tuigim means “I understand,” “I got it,” “I follow,” “I’m with you…,” and is the answer Geraldine Barry, native of the Emerald Isle, most loves to hear.

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Produced by SJREI Association and REI Voice Magazine with the support of NorCalREIA and California Apartment Association

SJREI—Northern California’s Most Dynamic Investor’s Association | SJREI.org • REI Voice Magazine: Voice of the Profitable Real Estate Investor | REIVoice.com

FEATURED SPEAKERS

BRUCE NORRISPresident of The Norris Group

KATHY FETTKEFounder & CEO of RealWealth Network

JON HAVEMAN, PhDChief Economist with Bay Area Council Economic Institute

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PLUS 21 Educational Workshops

4 REI VOICE Dec. - Jan. 2012

REI Voice Magazine - June 2012

Documents

Transcript of REI Voice Magazine - June 2012