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Linda Pliagas
Pliagas Enterprises, Inc.
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Kathy Kennebrook
Sharon Vornholt
Edward Brown
Gerry Guterman
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Bruce Kellogg
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Karen A. Walker
Jay Butler
Randy Hughes
Tim Houghten
Kristine Gentry
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91
7. 7
contents
11 Comfort Curtails Abundance
15 Allowing a Lender to Cross Collaterize
Against Additional Property
21 Using the Right Mailing Lists to Locate
Motivated Sellers (Part 2)
28 Why Choose Probate Investing?
34 Real Estate Investing: A Market
Correction is Coming
39 Generational Opportunities For Creating
Cash & Wealth in Real Estate
45 Uber of Self Storage
51 Just Do It: Be the Difference
You Want to Make
57 Alton Jones: From LAPD to Rehabbing
Los Angeles
64 Think Differently to Uncover Huge
Hidden Profits
70 Inside and Outside Lawsuits
76 Besides the Purchase Price,
There are Other Costs You Must Consider
81 Virginia Land Trusts
85 In Memory of Geradline Barry
REI Icon, Investor, Educator
92 Tips for Working with Probate Leads
96 How to Avoid the Pitfalls
of Hiring a Bad Contractor
p. 57
p. 85
p. 21
p. 28
p. 15
11. 11
LINDA'S LETTER
Linda Pliagas, Publisher
Photo by John De Cindis
A
s a 25year media
veteran and
nationallypublished
journalist, I've had
the pleasure of interviewing
numerous celebrities, selfmade
millionaires and other VIPs. Many
of the people I have spoken with
went from zero to multimillions
in a short amount of time. Yes,
they worked hard, and were
dedicated, but when the money
came, it kinda just fell into place,
quite magically and very quickly.
In the financial industry, they call
it a "windfall."
It doesn't have to take a lifetime
of toiling to build wealth.
Abundance can literally happen
overnight... it's almost eerie.
One single deal can put you
over the top. One business idea
can manifest millions for years to
come, even for generations to
come!!
By my examination of wealth
creation, I've noticed something
very important: Those who don't
take risks, don't make the big
bucks.
If you were not lucky enough to
be born into wealth, like many
people I know, you have to go out
into the real world and make your
way in life. It's great to read about
all the success stories out there.
The reality is anyone can have
abundance and prosperity, but
often times, people don't because
they are "comfortable". The reality
is, in order to be wealthy, you
MUST go outside your comfort
zone.
For example, a real estate
investor must take risks to make
money. They have to purchase
property, spend money to fix it up,
put in on the market, and trust that
it will sell for the price they want.
Here are a few tips to get out of
your comfort zone and start
ushering in more prosperity into
your life...
1. Examine your goals.
Do you have a written plan? Do
you know what you want in life? If
you don't know where you want to
be five years from now, one year
from now, or even one month from
now? If not, how will you know if
you've reached your ultimate
destination? Know EXACTLY
where you want to go. Have a
written guide to what it is that you
want to accomplish. Whether your
goal is to be a topproducing real
estate agent or a millionaire real
estate investor, WRITE IT DOWN
AND HAVE A TIMELINE.
2. Observe How You Spend
Your Time.
The most precious thing in our
lives is time. Once time is gone, it
can never return. Time is so
precious that one must be careful
By Linda Pliagas,
Publisher
Comfort Curtails
Abundance
"THOSE THAT ARE AFRAID TO VENTURE
OUTSIDE OF THEIR COMFORT ZONE, DO
NOT END UP WITH ABUNDANCE."
12. 12
LINDA'S LETTER
with how we use it. We must be
STINGY with our time and guard
it carefully. We have all heard the
line: Time is MONEY. So, I ask
you: How do you spend your
precious free time? Are you
blopped in front of the television
set, just veggin' out? Do you spend
a lot of time going out to "party"
with your pals? Do you spend all
your free time gossiping with your
girlfriends and putting others
down? Those who succeed,
discipline themselves to a strict
regimen. Observe your schedule:
is it one that will lead you on a
path of success or failure?
3. Learn More, Earn More.
Those who carve time out to
study, ALWAYS come out ahead.
I'm not saying to go back to school
to earn your MBA, although that
will certainly help put you at a
whole new level. The cold fact is:
The more you INVEST in your
education, the more ABUNDANCE
you will have. Don't be
complacent: go to a seminar, take a
class at your local community
college, sign up for an online
course. At least read a book, for
God's sake! In order to earn more,
you must first LEARN MORE.
4. Program Your Mind for
Success
Our brain is a computer: what
we input, will be displayed. If you
go around with thoughts of fear,
poverty and lack, that's what the
world will dish out. From my
studies of clinical hypnotherapy, I
KNOW for a FACT that a person
can be PROGRAMMED for
success. Every single person in this
planet has the ability and the
capability to enjoy ultimate
abundance, health and joy beyond
their wildest dreams!! We have
everything we need, right here,
right now, at this very moment in
time! But the majority of people
stand in their own way and limit
their own success with negative
words, negative actions and
NEGATIVE THOUGHTS.
5. Get Out of Your
Comfort Zone!
Do you have a comfortable,
easybreezy life? Then guess,
what? You are not growing! You
are not expanding! You are not
performing at your peak! You are
not doing every thing you are
capable of. You are not fulfilling
your Godgiven destiny!! In order
to manifest miracles and create
abundance, one needs to get out of
their own complacent, conservative
lifestyle and take risks. There is no
other way around it:
Success will not come
knocking at your door, one
must go out there and seek
it, and REQUEST IT!
I hope these tips have motivated
you and have given you a short
road map to success. I have
utilized these principles over and
over again. Every time I faithfully
follow these rules, I experience
exponential growth and success in
a short amount of time. Thank you
for allowing me the opportunity to
write this and remind myself of
these important rules.
May you seek and receive all
the joy, love, health and prosperity
you were meant to have.
Until next time,
Linda Pliagas
Realty411.com
info@realty411.com
16. 16
for $200,000. The borrower wants
to buy another rental for $800,000
and has $250,000 to put as a down
payment. The borrower asks a
lender to loan the remaining
needed $550,000, but the lender is
not comfortable with the LTV
[68.75%], so the lender asks what
other real estate the borrower
owns, so it can cross collateralize
its $550,000 loan. The borrower
mentions the other rental, and the
lender decides to ask for crossing
on the first rental. Thus, the lender
has lowered its risk because of the
equity in the first rental.
Now, let’s say that the borrower
receives an unsolicited offer for
the first rental of $525,000, and he
wishes to accept it. If there was no
cross collateral against this
property, the borrower could
accept the offer, pay off the
existing first of $200,000, and
pocket the $325,000 remainder.
However, because the rental has
been crossed, the lender has
There are times when a
lender is going to ask for
additional [real estate]
collateral in order to make a
borrower a loan. The most likely
scenario for this is when there is
not enough equity in the target
property. Other scenarios include
a borrower with less than stellar
credit, or the type or quality of
the target property may not be
enough to satisfy the lender to
make the loan, as most lenders
are more interested in making
loans that will pay them back
instead of facing foreclosures.
For this reason, the lender may
ask the borrower to put up
additional collateral satisfactory
to the lender so as to give the
borrower an incentive to avoid
defaulting on the loan.
In many cases, this cross
collateralization may not be
something the borrower worries
about, as the borrower intends to
pay the lender in full. The
general plan is for the borrower
to refinance the target property at
a point where a new lender does
not require cross collateralization,
pay off the existing lender, and
the existing lender releases both
properties; however, what
happens when the borrower sells
the crossed property, or has the
opportunity to refinance the
target property, and there is not
enough to pay off the current
lender who crossed?
The danger here is that the
lender may hold up the sale
because it does not want to
release their lien until they are
paid in full. For example, let’s
say the borrower owns a rental
house that is worth $500,000 and
there is a first mortgage in place
$550,000 against the property in
second position. That means that
there is technically $750,000 of
liens showing up against the
property. The borrower cannot
accept the $525,000 offer without
having the second [the crossed
loan] release its lien.
For this reason, it is imperative
for there to be an agreed upon
release price in which the lender
agrees ahead of time to release its
interest in either properties for a
specific sum. It does not
necessarily have to be just the
remaining equity in the first sale
[$325,000 in our example]. The
release price could be a smaller
amount. It could also be a larger
amount [up to what the lender is
owed]. If the lender desires more
than the $325,000, the borrower
would have to come up with
additional cash in order to transact
the sale. This may not be all bad,
as the crossed lender’s loan has
then been reduced.
17. 17
For example, if the crossed rental was sold at a 5 CAP
rate, and the crossed lender’s interest rate was 7%, the
borrower may choose to sell the rental and come up with
money to satisfy the lender should the lender want more
than the $325,000 net proceeds from the sale. In other
words, there are times when it makes economic sense to
come up with money in order to sell property. Another
similar scenario like this occurs when there is a blanket
loan covering multiple properties, as is the case when an
apartment building has been converted to condos and the
owner of the building desires to sell off one condo at a
time. A typical lender on the building will usually have
release prices [agreed ahead of time] under which the
lender will allow each unit to be sold and the lender takes a
specific amount [or percentage of each sale] as a paydown
of its loan.
The release price can be negotiated between borrower
and lender. Because the lender did not take the new
property alone due to the high LTV, many times the lender
will reduce its paydown to where it feels comfortable with
a specific amount of its loan on the remaining property. To
make this point clear, let’s say that the lender usually
makes loans for rental properties at an LTV of no more
than 55%. Since the new rental was purchased for
$800,000, the lender would be fine with a loan balance of
$440,000. Thus, in order for the lender’s exposure to be
reduced from its original loan of $550,000, it may be
willing to accept $110,000 from the sale of the first rental
in order for the lender to release its crossed lien. In this
case, the borrower would sell the first rental for $525,000,
pay off the first mortgage of $200,000, and pay the lender
in second position $110,000 [to release its crossed lien of
$550,000], and pocket the rest of the proceeds from the
sale [$215,000]. The borrower would keep $215,000 from
the sale, and the only debt on the second rental would be
the lender [who crossed] of $440,000.
Borrowers who overlook release prices [a specific
clause in the loan documents] risk having to ask the
crossed lender after the fact under what circumstances the
lender would be willing to release the first property. If
there is no agreement ahead of time, the borrower runs the
risk of being at the mercy of the lender, as the lender does
not have an obligation to release its lien for less than what
it is owed.
Many lenders may be willing to work out a reasonable
amount for releasing either property, as it is in the lenders
best interest to reduce the borrower’s default risk. Having
more than one property as collateral sounds good in
principle, but the added exposure of having a loan spread
out amongst more than one property may not be worth the
risk. Each situation will be different, but, as a general rule,
it is more conservative from the lender’s viewpoint to have
18. 18
Meet Edward Brown
Edward Brown currently
hosts two radio shows, The
Best of Investing and Sports
Econ 101. He is also in the
Investor Relations
department for Pacific
Private Money, a private real
estate lending company.
Edward has published many
articles in various financial magazines as well as
been an expert on CNN, in addition to appearing as
an expert witness and consultant in cases involving
investments and analysis of financial statements
and tax returns.
Edward Brown, Host
The Best of Investing on KDOW AM1220
on Saturdays at noon
a low LTV on one property compared to having crossed
on one or more additional properties that have a higher
LTV. Additional costs of foreclosure, if needed on more
than one property, as well as having to deal with an
existing first mortgage [keeping them current, so that
lender does not foreclose] may not be a desirable solution
to protecting the lender’s interest.
Many lenders may be willing to work out a reasonable
amount for releasing either property, as it is in the lenders
best interest to reduce the borrower’s default risk. Having
more than one property as collateral sounds good in
principle, but the added exposure of having a loan spread
out amongst more than one property may not be worth the
risk. Each situation will be different, but, as a general rule,
it is more conservative from the lender’s viewpoint to
have a low LTV on one property compared to having
crossed on one or more additional properties that have a
higher LTV. Additional costs of foreclosure, if needed on
more than one property, as well as having to deal with an
existing first mortgage [keeping them current, so that
lender does not foreclose] may not be a desirable solution
to protecting the lender’s interest.
This is the primary reason why typical banks do not
usually cross collateralize their loans. Most banks do not
like a lot of moving parts. They want to focus on one
property and the risk associated with it.
Borrowers should make sure that the lender does not
hold any of the borrower’s properties hostage and that
release prices are set at a point where the borrower feel
comfortable.
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23. 23
If you are working with the list of death notices, just
make sure you send them a generic type of a “we buy
houses” type of letter and don’t refer to the fact that you
know someone has died. This is a good way to alienate
a potential seller. I have done many deals from this
particular mailing.
Another great list to mail to would be people who are
in the military. These are people who work in the
military, own a home and end up getting transferred.
They now have a home and a mortgage payment they
neither want nor need. These are excellent leads for
“subject to’s”, or properties that the
sellers will simply deed to you since
generally there isn’t a lot of equity in
these properties and not a lot of time
for the seller to sell them.
This is a very easy list for you to
obtain. You would obtain a list of
everyone who has a VA loan and has
purchased their home within a specific
timeframe in the area surrounding the
military base. This is a very good lead
source for you and you are also doing
a “public service” when purchasing
these homes since you are solving a
big problem for military personnel. In addition, once you
have purchased a couple of these properties, you will get
other leads strictly by word of mouth. I have had
excellent results with military mailings.
I also prefer mailing a letter to these folks as opposed
to using post cards since they are more likely to open a
personal looking letter and read it.
Check out my website at www.marketingmagiclady.com
for all the information and tools you need to create highly
successful direct mail campaigns to find highly qualified
motivated sellers.
“Another great list to mail
would be people who are in
the military. They now have a
home and a mortgage payment
they neither want nor need.”
23
If you are working with the list of death notices, just
make sure you send them a generic type of a “we buy
houses” type of letter and don’t refer to the fact that you
know someone has died. This is a good way to alienate
a potential seller. I have done many deals from this
particular mailing.
Another great list to mail to would be people who are
in the military. These are people who work in the
military, own a home and end up getting transferred.
They now have a home and a mortgage payment they
neither want nor need. These are excellent leads for
“subject to’s”, or properties that the
sellers will simply deed to you since
generally there isn’t a lot of equity in
these properties and not a lot of time
for the seller to sell them.
This is a very easy list for you to
obtain. You would obtain a list of
everyone who has a VA loan and has
purchased their home within a specific
timeframe in the area surrounding the
military base. This is a very good lead
source for you and you are also doing
a “public service” when purchasing
these homes since you are solving a
big problem for military personnel. In addition, once you
have purchased a couple of these properties, you will get
other leads strictly by word of mouth. I have had
excellent results with military mailings.
I also prefer mailing a letter to these folks as opposed
to using post cards since they are more likely to open a
personal looking letter and read it.
Check out my website at www.marketingmagiclady.com
for all the information and tools you need to create highly
successful direct mail campaigns to find highly qualified
motivated sellers.
24. 24
Meet Kathy Kennebrook
Kathy Kennebrook is the ultimate
success story. She spent over 20
years in the banking industry before
discovering the world of real estate.
After attending some real estate
seminars this 4 foot 11 mother of two
got really excited and before you
know it she’d bought and sold hundreds of properties
using none of her own money or credit.
Kathy holds a degree in finance and has coauthored
the books The Venus Approach to Real Estate Investing,
Walking With the Wise Real Estate Investor, and Walking
With the Wise Entrepreneur which also includes real
estate experts Suze Orman, Robert Kiyosaki, and Dr.
Wayne Dyer.
She is the nation’s leading expert at finding highly
qualified, motivated sellers, buyers and lenders using
many types of direct mail marketing. She is known
throughout the United States and Canada as the
Marketing Magic Lady. She has put together a simple
stepbystep system that anyone can follow to duplicate
her success.
Kathy has been speaking throughout the country and
across Canada for over 14 years and has shared the stage
with Ron LeGrand, Dr. Phil, Dan Kennedy, Mark Victor
Hansen, Ted Thomas and Suze Orman to name a few.
Kathy is going to share with you how she generates a
seven figure income by mailing a handful of letters
throughout the year to highly selected targets by knowing
exactly what to send them, who to send them to and
exactly how to deliver her message. She will teach you
the secrets of prescreening and automating your
marketing and follow up systems to put your entire Real
Estate business on autopilot.
I also provide information on my website for resources
to locate list brokers who can provide you with the lists
you need to find the motivated sellers you are looking for.
Once you find the lists you need that are current and
targeted to the types of motivated sellers you want to find,
you will have the beginnings of a machine that will
provide you with all the motivated sellers you will ever
need.
"A lot of these folks
are people who have
a problem they need
to solve, they just
don’t know how until
they are contacted by
you. A lot of these
people have inherited
properties they
neither want nor
need and appreciate
your offer to
purchase it,
especially if they
have just received
another big tax bill
to pay. This is an
extremely good lead
source for really
great deals."
29. 29
W
hy Choose
Probate
Investing?
Probates have been my #1
source of leads for more than a
decade. I love working with
probates, however that’s not true
for all investors. The reason this
niche is so good is because you
will never run out of leads, and
the heirs almost always need to
sell the property. It’s usually
just a question of whether it’s a
“pretty house” that will be listed
(listen up Realtors®), or it’s an
ugly house needing repairs and
updates that will be sold to an
investor. It’s a pretty straight
forward choice in most cases.
Whether it’s a pretty house or an
ugly house, there is so much
opportunity here.
Why Do Investors
Shy Away from
Probates?
I think there are two main
reasons investors are reluctant to
work in the niche of probates.
1. First of all, they just
don’t understand how the
probate process works.
Investors think that they have
to know a lot of legal stuff which
just isn’t true. Since probate is a
legal process, you do need to
have a basic understanding of the
probate process and the steps
involved. Specifically, you need
to know when the house can be
sold. One other thing >
that will help you tremendously
is being familiar with the
terminology used in probate.
Knowing these two things will
allow you to show up as the
“expert” to help them with their
problem which is an unwanted
house.
2. The second reason is
that their mindset holds
them back.
Probate investing isn’t that
much different than other niches
in real estate, particularly when
it comes to offmarket deals.
There will be things you need to
learn that are unique to that
particular niche.
Because the property is part
of an estate, it makes a difference
in the way people feel about it.
Investors often feel like it’s
creepy working with probates.
Or they feel like they are taking
advantage of someone at what is
undeniably one of the worst
times of their life when they
make a lowball offer. They
feel guilty even when it’s a fixer
upper that needs a lot of work.
It’s important to understand
that it couldn’t be further from
the truth. In almost every case,
the property must be sold before
the estate can be closed. That
means that the heirs have to take
care of the business of settling
the estate, before the they can
collect what they have inherited.
Here is the main thing to
remember about probate; this is a
great niche for investors because
the heirs almost never want the
house. They just want the cash
sitting in that property. This is
also a very profitable and
untapped source of leads for
Realtors. In a seller’s market like
we’re in now, a large percentage
of those properties will likely be
listed on the MLS. I’ve been
doing this a long time, but I don’t
know of a single Realtor® in my
area that specializes in probate
property. As I said before, there
is so much opportunity for both
real estate investors and agents.
30. 30
Meet Sharon Vornholt
Sharon Vornholt is the
owner of Innovative Property
Solutions, LLC in Louisville,
KY.
Sharon owned and
operated a successful home inspection company for 17
years. She began investing in real estate in 1998 and
became a full time real estate investor in January of 2008.
Sharon specializes in wholesaling, and is also an
experienced landlord and rehabber.
In addition, Sharon is an internet marketer and also
writes articles for several national real estate sites. Sharon
is the author of a popular real estate blog called the
“Louisville Gals Real Estate Blog”. For your FREE
REPORT “Probates and Absentee Owners: Your Fast
Track to Real Estate Riches”, stop by her blog at:
http://LouisvilleGalsRealEstateBlog.com.
FREE BRAND ASSESSMENT AT
https://louisvillegalsrealestateblog.com/brandassessment
To find learn how you can become the probate expert in
your area, check out my course, Probate Investing
Simplified https://probateinvestingsimplified.com
Showing Up as the Expert
Remember that marketing is how you get leads, and
branding is why they choose YOU.
When you are able to show up as the expert to talk
to a motivated seller, they will choose you over the
other investors every single time because of your
knowledge about probate. The seller will be able to
identify with you. They will also be confident they’ve
made the right decision because they view you a trusted
expert.
Armed with your knowledge about probate, all your
marketing will get better results because you will have
built a rocksolid brand around your expert status. You
begin this whole process by changing your mindset.
That’s the first step. Then once you have learned the
terminology, you know the steps in the probate process,
and you understand how to market to these folks, I can
promise that you will be light years ahead of your
competition.
"You begin this whole
process by changing your
mindset. That’s the first
step... I can promise that you
will be light years ahead of
your competition."
35. 35
I
t’s inevitable. A market correction is coming. The
market has been on a high for years now. In 2018
alone, the Dow Jones Industrial Average broke a
record high 15 times. If history has taught us
anything, it’s that the market cannot sustain those highs for
that long without a correction. Real estate markets across
the country are still very hot. Even with the “cooling” that
some markets are seeing, real estate prices are still well
above records and competition is hot. “A cooldown has
been predicted for over in a year in our local market.
However, I’ve yet to see it. Sure there are some longer list
times for sellers but properties are still selling in record
time over asking price. It’s still a hot market,” says Eric
Jones, Director of Sales and Marketing for Freedom Real
Estate Group.
With all that being said, the question on every wise
investor’s mind: how can I prepare myself for the next
recession? The short answer, diversify. The long answer,
diversify into buy and hold, longterm strategies.
“The shortgame (fix and flip) is good. It’s instant
return. But you get hit hard by the tax man. Buy and hold
has some of the best tax advantages of any asset class,”
Jones stated. “Depreciation, property taxes, mortgage
insurance and more are all deductible expenses. Plus, with
fix and flips, it’s simply not a longterm strategy. It’s not a
way to build true wealth.”
To lessen the risk of any big swing in the market, the
answer is to diversify your
investment portfolio so all
your eggs aren’t in one
basket. The problem many
individuals faced in 2008
was that most of their
401k or other retirement
accounts were tied up in
stocks and mutual funds.
When the market tanked,
so did their accounts.
Now imagine if half of
those funds were
diversified into buy and
hold real estate. For many,
the outcome could have
been vastly different.
Here’s why.
The key to cash
flowing, rental properties
is that even during a
down economy, they’re still cash flowing at the same
amount. In some cases, even higher. Let’s look at it this
way. If you were getting an 8% return on your stock
investments, and the market crashes, you’re likely going to
be reduced to 2%4% if you are lucky. With rental
properties, the rent amount stays the same. Your mortgage
stays the same. Your property management fees, if you have
them, stay the same. Essentially, if you were getting 8%
returns on your property before, you’re still getting that. In a
down economy, rents rarely go down. You may not be able
to get rent increases during that time, but you will at least
have a steady, consistent amount of cash coming in each
month.
Rental properties tend to weather a down market in a
consistent or even appreciating way. Not necessarily
appreciating in value of the asset but appreciating in terms
of cash flow being received. In a bad economy, a few
things are happening. People simply aren’t buying homes.
Credit is tighter. People are scared. The pocketbook is
squeezed. Instead of purchasing, individuals and small
families tend to continue renting during a recession. In
addition, those that may be losing their homes to a
foreclosure turn to singlefamily or duplex style rentals
since it’s more private and familiar than a large apartment
complex. Therefore, demand may actually increase in a
down market which is a huge win for rental property
owners.
36. 36
With all that being said, a down market is definitely not
the time to sell your rental properties. It’s a buy and hold
strategy. During a down market, it is always best to hold
these properties unless there is some absolute reason you
must sell. When the market begins to climb again, then you
may want to consider selling to upgrade to another
investment property in a better neighborhood or better yet,
purchase two and double your cash flow.
The best part of investing in rental properties is
investors are wealth building while cash flowing. Very few
investments offer this kind of opportunity. With a buy and
hold strategy, you are receiving the benefit of monthly cash
flow while also building a portfolio of tangible assets that
will always – no matter the market – have value. “If you
have the right plan, with a decent amount to invest, you
can quickly scale up to a very healthy portfolio. We
worked with a dentist who had $400K to invest and
wanted to receive $10,000 a month in cash flow so he
could retire. We built a plan and got him to his goal in
three and a half years. He was able to retire early.
However, not only did he keep receiving the cash flow
each month, now he has tangible assets that he can sell off
if he ever needed to and can pass on to his children and
grandchildren,” Dani Lynn Robison, CoFounder of
Freedom Real Estate Group stated.
Something else to consider is how you are using the
power of inflation to your advantage. Most 401k plans
aren’t able to keep up with inflation. With the small
returns and high managements fees, unless you are able to
invest a lot in those funds, you may not even be able to
keep up with the rate of inflation. However, with rental
property, you are working with inflation to win in two
ways. First, your mortgage payment doesn’t change. Let’s
say when you purchased the property it was a $500 per
month payment. If the market tanks, it’s still a $500
payment on a fixed rate loan. If the market is great, same
payment.
When the market is doing well, your asset, if all goes as
planned, is increasing in value. You’re actually earning
value on the asset while effectively reducing the value of
the money you’re paying due to inflation. Second, you
will likely be able to increase the rental amount between
1%5% per year. That’s additional cash flow and value
you will be receiving yearly.
Finally, it’s important to note that this is an investment
and with any investment, there is inherent risk. No
investment is guaranteed. However, real estate is one of
the most proven, assetbased investment classes in history.
Most millionaires were either made through investing in
real estate or find large value in investing in real estate. As
you explore this investment opportunity, look for markets
that do not have super highs or super lows in market
crashes (like 2008). States affected greatly were Florida,
California and Arizona. One of the cities most notorious
for being hit hard in the crash was Las Vegas. These may
be markets to steer clear of. If a market crash occurs again,
it may cause migration out of those areas resulting in rent
losses. “Consider markets that may seem ‘boring’ like
many in the Midwest including our market – Cincinnati
and Dayton, Ohio. These have proven to weather a down
economy and not have big drops in real estate values or
population. These are the markets where you truly win.”
Eric said.
Diversification is the key to weathering a down turn in
the market. More specifically, investing in buy and hold
rental properties not only is a proven strategy to survive
and even thrive in a down market, but one that holds
many positive attributes such as consistent cash flow,
numerous tax benefits, and true wealth building.
40. 40
T
he real estate market cycle appears to have
come full circle again. This is one of those
moments in which many will go broke, while
others achieve substantial leaps in their wealth
and incomes. It’s all about knowing how to take
advantage of the market and the negligent moves of
others.
While there are plenty of real estate investors still
blindly and bullishly thrashing away in the market, and
many uneasily eyeing where things are headed from the
sidelines, the truly experienced are stepping in with
predictable investment strategies. They see the same
careless blunders being made by many of the same
characters. They know where the market is going. They
see the big opportunities to buy smart and convert assets
into cash.
Where We Are in the Real Estate Cycle Now
It’s not rocket science. It’s no longer a
closely guarded secret that only a few have
the data on. All real estate professionals
really need to do is look back at what was
happening in 2005 to 2010. Then compare
that to what’s happening around them
today. You’ll see the same glaring
mistakes.
Interest rates are going up,
lending is tightening, oversupply is
becoming an epidemic and too
many people are paying too much
for units that aren’t really a good
fit for the market.
There are really only one of three
choices to make in this phase of the
market:
1. Keep blindly investing and hold on as the
sinking ships go down
2. Do nothing and miss out on the best asset prices
3. Replicate the successes of the biggest winners in
similar historical cycles
Gerald (Gerry) Guterman and his firm sold out all of
their real estate assets in 2006. They did it again in 2016.
Since 1978 they’ve delivered 58.3% returns to their
investors. Now Guterman Partners is in acquisition mode
again.
Experience is Everything
Guterman Partners has managed almost 100M
rentable square feet of real estate since 1969.
Among the buildings and locations they’ve been
involved in that you may recognize are:
● Galt Towers, Fort Lauderdale
● Gramercy House, New York
● Sutton Tower, New York
● Ibis Club Apartment, Naples
● Memorial Building, Houston
● The Stanhope, New York
Gerry who is Senior Principal Partner and Chief
Investment Officer at Guterman Partners has
what is probably one of the strongest resumes
in the business when it comes to being a
sought out industry expert as well.
This includes being a guest lecturer at
Cornell University. Being the founding
benefactor of several charitable
organizations and medical research
facilities. Plus trusteeships and
directorships with the Metropolitan
Museum of Art in New York, New
York City Opera and Dallas Opera,
as well as The Rent Stabilization
Association of New York.
On an international level Gerry
has been Chairman of the
Committee on Banking and Finance
at the United States Center for
Strategic and International Studies in
Washington, DC. He has been an advisor to
the governments of Romania and Austria.
So, if anyone has the depth and breadth of experience
to really understand what’s going on in the market, and
the track record of knowing how to manage real estate
assets during these times, Gerry is definitely up there at
the top of the list. We were hugely blessed with the
opportunity to catch up with him for an exclusive
interview and his take on what’s happening now.
.
41. 41
Once Again, Generational
Real Estate Opportunities
Gerry recently published the
latest of his white papers
covering the state of the market,
and where he sees the
opportunities now.
Among the current challenges
he tackles in his report are:
● The increasing number of
rental to condo conversions
● Reducing value of
condominium units
● Cash flow problems due to
rising costs and rates
● Difficulty in refinance for
developers
● Overleverage by builders
● Lack of product to market fit
● Reluctance of lenders to
provide more debt
● Oversupply of luxury condo
units
What this all leads to is
that many of these
developers are sitting on a
huge amount of inventory.
Inventory on which they
can’t really reduce retail
prices on themselves.
While they are facing
more cash flow crunches
and challenges in
restructuring debt. In
some cases individual
developers in NYC are
sitting on 1,000 or more
unsold units. They need
out. It’s a repeat of 2004
to 2008 all over again.
Though when the same
problems show up, the
same opportunities for
creating great cash and
leaps in wealth arise too.
Strategies for Taking
Advantage of the Current
Market
Gerry told us his firm
currently sees opportunities in:
● Medical offices
● Retail strip plazas
● Family sized apartments
This is of course restricted to
certain states and markets. Most
notably outside of some of those
facing some of the most fierce
political and regulatory
uncertainty at the moment.
Among Gerry’s favorite
strategies in this phase of the
market is bulk buying of condo
units. For example, 80 or so units
at a time. Those units are
converted or resold. Typically
within 19 months.
.
Gerald (Gerry) Guterman
Senior Principal Partner and Chief Investment Officer at Guterman Partners
42. 42
3 Big Differentiators
Three things that Gerry tells us have really helped the
firm continue to excel include:
1. Making your money on the day you buy
2. Focus on demographics and market fit
3. Focus on the wife as the decision maker
Gerry says you don’t make a dollar on the day you
sell. It’s all about what you are buying at. Guterman
Partners targets prices of 45 to 55 cents on the dollar.
That gives them plenty of room to absorb market
fluctuations and to move units fast at a discount from the
original list price, while still enjoying hefty profit
margins,
However, not any product will do. It has to be
desirable to the consumer. He says many speculators,
converters and developers have had no interest in doing
any homework on what consumers really want. They may
put up stylish buildings. Yet, there aren’t many families
who are really trying to move into microapartments in
some of the better neighborhoods of Manhattan. He adds
that you also have to consider who the real decision maker
will be and what is most important for them. That often
includes size of the unit and security features.
Guterman Partners is now raising capital for its 47th
year. The current fund is a 506c offering for accredited
investors, which pays out a cumulative preferred return of
7% to 12% and 50/50 split of profits.
Find out more about the new fund, the firm’s track
record and Gerry’s white papers on the outrageous pricing
of real estate, the tricks funds are using to try to get
investors to accept lower returns, and the rules to
successfully investing in real estate at
GutermanPartners.com.
46. 46
I
f you want to build
wealth through investing
it’s important not to
become myopic when
thinking about what you’ll
invest in.
As a seasoned real estate
investor, developer, and
property investment educator,
Scott Mednick has a keen sense
of the marketplace and the
foresight to keep ahead of
changes in the market.
“I'm kind of new...I started
about 30 years ago and I started
in Commercial Real Estate with
back then it was Coldwell
Banker, today it's CBRE
selling apartment buildings. I
did that for a few years and then
sort of got the bug to work for
myself, so I started building
custom homes back in the 80s...
“My timing was not good. I
got right in before the market
crashed, so my home building
career didn’t last long. I started
working for banks as a general
contractor, fixing up the REO
properties for them. I
remodeled about 2500 houses,
here in Southern California, and
in 1997, the market changed
pretty quickly; at that point, I
started buying and selling
houses myself and have been
flipping properties for over 20
years now.
“I’ve been investing here in
Southern California as well as
Florida, Texas and Las Vegas,
but I primarily invest in
Southern California as I like
to stay close to home where I
can keep an eye on my
projects.
“I'm a licensed real estate
broker, so I often broker my own
deals. However, even though I
am a general contractor, I do hire
a GC to run my projects. It’s
been a long road, but it's been a
lot of fun…”
Using knowledge and
experience gained from years of
investing, Scott helps other
investors do what he’s done.
“I train investor's how to buy
and sell houses. Having done
hundreds of flips there’s not
much I haven’t seen. I have over
30 years of real estate experience
and I manage a fund buying
valueadd self storage properties
across the United States.
Just as he helps investors learn
how to buy and flip properties,
he’s helping them build up their
portfolios through investing in
storage facilities.
In case you were wondering,
the selfstorage industry is no
small market...
“A house is just a place
to keep your stuff while
you go out and get
more stuff.”
George Carlin
47. 47
According to Self Storage
Association — a notforprofit
advocacy and support
organization for the selfstorage
industry, there are
approximately 49,000 primary
selfstorage facilities.
The total amount of storage
space among these facilities is
estimated at 2.6 billion square
feet, generating approximately
$32 billion in revenue each
year.
Other fast facts:
• Facilities across the nation
are about 90% occupied
• There are, on average,
about 540 units at each
facility across the country
• The percentage of
households in the U.S.
using these units is
estimated to be about 9.3%
(as of the first quarter of
2018)
Through his company Square
Storage, Scott buys self storage
properties located in diverse
markets, buying only those
facilities where there’s an
opportunity to add value and
the demand for storage, retail
and housing are strong.
Some of the reasons why a
selfstorage facility may be
doing poorly include:
• Mismanagement
• Undercapitalization
• Not enough storage space
• Insufficient or ineffective
management tools
Anyone who’s been investing
for a while understands the
need to diversify their portfolio.
Selfstorage facilities are the
perfect accompaniment, either
through ownership, as part of a
REIT, or other investment
vehicle.
Says Scott, “It's also the
perfect business model, because
in a down market when
homeowners loses their house,
they put their stuff in storage
and they move in with mom and
dad.
“And then, the economy
comes back, they get a new
place, they get their stuff. But
usually when the economy
comes back they're so happy to
have money again they buy too
much stuff, so the extra stuff
they put back in storage...so it's
the perfect cycle.
We are seeking accredited
investors to partner with us in
the self storage business. If you
want to be a part of the next
commercial real estate boom,
give us a call and we can
explain why self storage is the
next big thing. This is your
chance to get into the Uber of
real estate.
An Interview with
Scott Mednick
Founder
SquareStorage.com
52. 52
Y
ou want to make a
difference? Start
by BEING the
difference. And if
you’re serious about being the
difference, start with trust.
Famed leadership consultant
Stephen R. Covey said it best:
“Trust is the glue of life. It’s the
most essential ingredient in
effective communication. It’s
the foundational principle that
holds all relationships.”
John Aaron and Gene Simmons,
cofounders of Floridabased
Prestige Executive Funding,
have each independently put
mutual trust and the strength of
honoring their word primary in
their real estate and lending
relationships long before they
partnered together to better
serve their sophisticated clients.
In fact, trust is so fundamental
to everything they do in
business that it’s second nature
to them, and to their team.
Trust is an integral part of
every transaction in which they
participate, regardless of client
sophistication, background or
anything else…. that is,
regardless of anything else
except the equal trustworthiness
of their clients and their
arrangements.
Noteworthy
This year, at age 29, John
Aaron was featured in Forbes
magazine’s “30 under 30”
highlight. He achieved
consistent success in the fix and
flip marketplace with, according
to Forbes, more than $100
million in residential properties
purchased and flipped at the
time of the article.
Gene Simmons, cofounder
and copresident of Prestige
Executive Funding, says Aaron
has about 80 properties in his
portfolio at any given time.
Parlaying his residential fix and
flip success into the commercial
arena, Aaron is also purchasing
large commercial apartment
buildings, developing modern
waterfront properties,
condominiums, hotels and retail
properties.
But Aaron would rather DO it
than talk about it. He’d rather
lead by example than tell you
what to do.
For Aaron, his early character
traits and principles of good
business remain the same as they
did when he first started: Focus,
Integrity, Quality, Consistency, a
lot of Hard Work, and Giving
Back.
Just for the record, Giving
Back is a core motivator for
Aaron. Years ago he launched a
nonprofit foundation and, as
Simmons describes his young,
motivated and sharp partner,
“Aaron is always doing stuff for
the community. He’s at soup
kitchens a lot and helping
homeless and those in need. He
likes going into an area,
purchasing retail and bringing
much needed jobs and
opportunities into areas where
people are struggling. He does at
least five major serviceoriented
events a year. That’s a big part of
who he is.”
53. 53
New York to Florida
Gene Simmons comes from
the other side of the real estate
development and investment
business; the lending side.
Originally from New York, he
relocated to Florida years ago.
At this point in his career,
with more than 20 years
experience in mortgage and loan
business, he’s seen his share of
ups and downs in the industry.
He’s also seen—and chosen to
live by—the timeless principles
of good ethics and honoring
one’s word, regardless of what
this or that other lender is doing.
Those principles have served
him well, even through some
wild years for some sectors of
the lending industry. But
Simmons never veered from his
core path of excellence in
service, good ethical practices,
and highquaiity loans.
For Simmons, it’s not solely
about the money or the profit.
He takes a longer view. For him,
it’s always been about building
solid, trustworthy and valuable,
longterm relationships with his
clients. This makes his partnership
with Aaron a solid one.
Early mentors
Both Aaron and Simmons
know their area of expertise so
well that they practically could
do it, excellently, in their sleep.
But when you talk with either of
them about their beginnings,
they are each quick to point out
excellent mentors in the
beginning of their careers.
For Simmons it was an early
boss in the loan business. The
man was renown for not only
his nimble and creative loan
solutions, but also, and more
importantly, for the ethical way
he did business. Every. Time.
For Aaron, it was a real
estate investor guru. Again, this
mentor was bold, challenging
his mentees and always
available when a student needed
help. Above all, he was ethical to
the core, and Aaron valued that.
But mentors without students
who are willing to follow the
advice of their mentor yields no
fruit. The students themselves
have to be willing to DO what
they are challenged to do, even if
it is out of their “comfort zone”
and doesn’t seem to make sense
at first.
Both Aaron and Simmons
were willing to take those newbie
leaps of faith, to take advised
action, to “just do it,” but only
because of the high level of
proven trust they each had for
their early mentors.
Now they, in turn, are trusted
guides for their team, for each
other, and for their select
clientele.
"Trust is the glue of life. It’s the
most essential ingredient in
effective communication. It’s the
foundational principle that holds all
relationships."
Stephen R. Covey
54. 54
Customized Solutions
“Each deal we do is customized,” says Simmons,
whose firsthand, creative, ethical funding examples lie
ready for sharing when the need arises.
“We are a full service commercial lending source,”
continues Simmons, who often recognizes ethical,
creative financial solutions that are unique for each
client’s situation long before others even—if
ever—figure them out.
“Our staff has over 30 years experience and are
able to structure financing requests in just about
every aspect of commercial lending. We cater to
Corporate Executives, Music Industry Executives,
Entrepreneurs and Professional Athletes as well as
Entertainers and Actors from Television and Film.
We pride ourselves in being extremely competitive
and honest . We work closely with our more than
100 institutional relationships in order to meet our
client’s customized needs, and to guide our clients
every step of the way.”
Prestige Executive Funding primarily serves
sophisticated clients since they are capable of, and truly
enjoy, providing customized, sophisticated solutions
that create exciting winwinwins for all parties,
including the local community.
Summary
In sum, Prestige Executive Funding (FundMePrestige.com)
finances and provides a wide scope of investment
opportunities and solutions, including Office,
Industrial/Warehouses, Multifamily, Mixed Use, SBA,
Lines of Credit, International, Churches, Equipment
Financing, Factory, Hotels/Motels, Hard Money Loans,
Private Equity Mortgage, Bridge Loans, and
Development Financing.
What do you call any partnership with two trailblazing,
ethical real estate investing and lending entrepreneurs?
Unstoppable. Successful. A win for all parties.
Put a more practical way, Prestige Executive Funding
provides access to institutional capital, family office
funds, and direct private money for funding all types of
real estate investments. Lending in all 50 states. Up to
90% LTV, Prestige Executive Funding represents a group
of investors who have financed more than two billion
dollars worth of loans nationwide. Loans from $1 Million
to 100+ Million. Learn more at www.FundMePrestige.com.
“Each deal we do is customized...We are a
full service commercial lending source.”
Gene Simmons
58. 58
For Los Angeles Police Department (LAPD)
Officer and master real estate investment teacher
and trainer Alton Jones and his wife, Rocio, it’s
all about relationships, helping others succeed and being
your best self. Every day. Every minute.
But while Jones has helped people succeed in real
estate investing beyond their wildest imagination, he
doesn’t promise, and never himself expected, overnight
success. His experience as a police officer prepared him
for that.
He knows firsthand that success takes learning,
listening, focus, persistence, a good sense of humor, a
healthy dose of humility (did I mention persistence?!)
and, most importantly, taking action.
That last step—action—can be the most difficult, but
simply doing the right things and repeating until it
become second nature marks the difference between
success and none.
“It’s one thing to talk about it,” says Jones, “but a
totally other thing to actually DO it!”
Did you say police officer?
Jones has been an LAPD policeman for more than 34
years. For the first 16 of those years, he served as a full
time, active duty officer. After that—to this day—he serves
as reserve officer.
In the last 10 years, Officer Jones has been honored as a
Reserve Officer of the Year. Twice!
“Officer of the Year is a big deal,” explains Jones. “A
few officers are selected each year and honored for
exceptional service during the year. About 600 people
attend the honoree dinner, and it’s really a big deal, with
any funds raised going to help the families of fallen
officers or others in our police family who need it.”
At his more recent honoree event, the main cast and the
creator of the TV series THE ROOKIE attended, which
made it extra fun.
People skills
Just as in police work, real estate investing involves good
training and good people skills. Relationships matter.
“It’s one thing to talk about it,
but it’s a totally other thing to
actually DO it!!” ~ Alton Jones
59. 59
Knowing how to talk with a myriad of different types
of people can mean the difference between life and death
in police work.
“As an officer, especially on patrol, you have to talk
with so many different kinds of people—victims, drug
dealers, the mentally unstable, drug users on a high, the
traumatized, witnesses, violent or less violent criminals,”
says Jones. “Good officer safety skills are critical. You
also have to be able to get accurate, useful information
from witnesses. Those statements have to be able to hold
up in court or identify a perpetrator, so you have to know
how to ask a question and which information to pursue.
“In addition, sometimes you have just seconds to
assess a situation or persons involved. Knowing how to
quickly assess and talk with different people can
determine if you come home that day.”
In real estate investing, regardless whether you are
fixing and flipping houses, negotiating fair winwin
deals, managing contractors, or teaching others your
proven system for success, it’s critical to develop good
people skills and to build strong relationships.
And to build any kind of relationship, you have to be a
person of integrity in words and actions.
Knowledge alone isn’t enough
“It’s one thing to talk about it, but it’s a totally other
thing to actually DO it,” says Jones, who gets his
students quickly to action.
Again, the comparison to police work is clear.
In the training process you learn how to talk to
different people, what you need to ask and what to do in
different situations, what information you need, and so
forth. But learning it in a classroom doesn’t make you
successful.
It’s a different story when you get out on the streets
and you’re talking with real people, or in the chaos of an
incident and trying to sort it out.
"You have to
rise above.
There’s
EGO, but
you gotta
drop the “e”
and just
GO!"
“In developing a real estate
business, you have to have
the will to WIN. That keeps
you focused on the end goal.
It keeps you going forward.”
60. 60
Same for the investor.
Practice (i.e. taking action) sharpens people skills until
the right thing to do in negotiating an opportunity or
managing contractors becomes second nature.
Never stop learning: Mentors matter
Alton always says, “It’s OK to copycat, as long as you
copy the right cat.”
Jones got into the rehab, fix and flip business in 2009.
But he didn’t do it alone. He chose his mentors well. He
invested in himself and in his success, and he hasn’t
stopped to this day.
Even with the success he and his wife have achieved
and continue to achieve… even with his rapid rise to
being asked and encouraged by his mentors to become a
teacher for others, beginning in 2013… even with his
popular books and with the success he and his wife
continue to nurture and grow in themselves and others…
even with all that, Jones continues to listen and learn from
others.
Two of his standout mentors are Ron LeGrand and
Dan Kennedy.
From his mentors, Jones learned early on that to be
successful you must be purposeful in all you do. You must
run your business as a business, not as a hobby.
He learned what to do and how to do it.
He also learned to expect uphill battles and setbacks,
even after you’ve achieved remarkable success.
It is what it is.
Be prepared. Go forward. Keep your eyes on the prize,
on doing the right thing, and on serving others.
61. 61
Drop the "e" in "ego" and just "go"
“The majority of people will tell you ‘no,’” says
Jones. “So what? You have to rise above. There’s EGO,
but you gotta drop the “e” and just GO!
“In the police department you have to have the will to
live. You learn and you have to face the reality every day
that there are people who want you dead, but you have to
— you MUST — have the will to LIVE. That keeps you
doing the right things, following the good skills and
training you received.
“In developing a real estate business, you have to have
the will to WIN. That keeps you focused on the end goal.
It keeps you going forward.”
Good mentors tell you the truth. They also practice
what they preach.
The best mentors don’t just deliver knowledge. They
don’t teach swimming lessons while standing on the edge
of the pool. No. The best mentors lead by example.
They get in the pool with you and show you how it’s
done. They insist you get into the water and learn how to
swim for yourself. And they’ll be with you every step of
the way, IF you allow it.
When Jones holds training sessions and boot camps,
he tells it like it is. With a smile, he calls himself a
minister of truth. He doesn’t deliver what attendees might
want to hear. He delivers the reality, the truth.
Rehabs 2 Riches
It was an unexpected honor when Ron LeGrand, in
2016, not only praised the system for success Alton and
his wife had developed, but when he also strongly
encouraged Jones to launch his own training courses on
that very system.
Alton’s Rehabs 2 Riches courses, bootcamps and
more soon followed, to popular acclaim by attendees.
“I believe what we do changes lives,” says Jones.
“People who come to one of our events, they’ll make a
lifechanging decision at that event. Those relationships
made at our events can take you from $0 to self
sufficient.”
Jones smiles when he talks in his bootcamps about the
importance of building a Million Dollar Rolodex of
exceptional resources for your business. “These days
there are a lot of people who don’t know what a rolodex
is,” he says. But it hasn’t held any of his students back.
They still understand the point.
Jones practices in three markets—Southern California,
Dallas and Memphis. Of all these, however, his preference
is his beloved southern California.
For more information, go to Rehabs2Riches.com.
Alton Jones says that in this business there are five
things you have to do to succeed:
1. Locate prospects
2. Prescreen prospects
3. Construct and present offers
4. Followup
5. Close quickly
Books by Alton Jones include:
• Ask Me How I Know? Four biggest houseflipping
mistakes that made me millions, by Alton Jones
Karen A. Walker is the founder and executive producer of
The Mentors Radio Show (TheMentorsRadio.com)
65. 65
N
obel Prizewinner
Albert von Szent
Gyorgy once said
that "discovery
consists of seeing what
everybody has seen and thinking
what nobody has thought.” It’s a
description that captures what
sets LuxHomePro, its processes
and its cofounders apart from
others. In a nutshell, they think
differently about luxury vacation
rental property.
Founding partners Jerry Conti
and Dave Bynum were introduced
by a mutual friend. At the time,
Jerry was looking for a fresh,
innovative and lucrative
opportunity to market.
Dave had just completed an
eightyear, remarkably
innovative and profitable lead
generation program he had
developed and managed for a
number of major banks from
20012008. With that project
finished, Dave was also looking
for something new that he could
really embrace and enjoy as
much as he had enjoyed the
leadgen project.
Keep an open mind:
Unexpected connections
In truth, nothing innovative
happens in a vacuum, and rarely
at a convenient time.
As it turns out, Dave was in
the midst of planned chaos on
the day Jerry called to follow
up. That chaos included a
camera crew and live taping
session with Dean Graziosi.
Just days earlier, someone else
previously unknown to Dave had
tracked him down in an effort to
become a silent financial partner
on any project Dave had in mind.
At the time, Dave didn’t have
anything in mind.
Dave kept an open mind to see
where it all would lead.
Something clicked in the
conversations with Jerry. Their
synergy, diverse areas of
expertise, shared ethics of
openness and trust, serving
others, and creating winwinwin
opportunities that also allowed
for big, ethical profits resulted in
the launch of LuxHomePro at the
end of 2017.
Culling from his years of
experience fixing and flipping
homes and shortterm rentals,
Dave applied his knowledge to
what he saw as a new emerging
trend: an increasing demand by
travelers to rent luxury homes,
rather than stay in hotels.
AirBNB, VRBO and similar
platforms were beginning to pay
attention to the trend as well,
which opened up even more
opportunities for the untapped
winwinwin Dave recognized.
“I see opportunities
that people don’t
see...I can align the
dots enough to get it
going and then work
through any failures
to fix things and
make it work.”
~Dave Bynum
66. 66
And that’s what happened.
Further finetuning was needed and the business was
in full operation by April 2018, now offering about six
seminars a year, with turnkey systems and a variety of
optional, more intense training levels to participants.
“I have always led my life by being the quiet guy,”
confesses Dave. “When I’m at a meeting or in a crowd, I
tend to read the room, figure it out, plant a seed and then
listen. I spend more time listening than talking. I find
you learn more from others that way.”
In contrast, Jerry is a front and center, get onboard
and let’s have fun on the journey kind of person. The
two cofounders compliment each other wonderfully,
and they forged a bond of mutual respect and trust,
which makes for engaging, indepth and handson,
achievementoriented learning for their students.
Keep it Real, Keep it Simple
“For us, it always has to be a winwinwin,”
underscores Dave. “It’s a whole lot better if everyone is
upfront and transparent. When you have a problem, get
it out in the open so we can solve it together and move
forward. Otherwise it can fester, people sneak around
behind others’ backs and it’s just a waste of time and
energy. Keep it real! In every negotiation, every
relationship, keep it open and upfront.”
“One of the most exciting things for me,” Dave adds,
“is when I finally put together all the pieces of a problem
or project and it works! It’s exciting for me when people
say yes, believe in us, take action on what they learn,
and then achieve the same or better results. It’s exciting
because it helps change other people’s lives for the
better. That matters a lot to Jerry and to me.”
Core Concept
For those who’ve not yet experienced the LuxHomePro
opportunity, the core concept is brilliant.
There are basically three components:
• Luxury vacation renters. Offer dream housing
options to those seeking luxury vacation home
accommodations.
• Luxury home owners. Offer owners of qualified
luxury homes an option to sell at a good price and
also to earn significant revenue prior to selling,
without any work on their part and without having to
wait many months and even years to sell their high
end luxury home.
• LuxHomePro Student “Connectors.” Earn high
profits, on a consistent basis, following a proven
successful strategy and easytofollow templates and
systems, without the need to own anything or have
good credit.
It’s essential, of course, that the person connecting all
parties (“the connector”) follow the system correctly.
Everything is laid out for seminar attendees, including
how to properly market a property, how to develop
attractive pricing, how to upgrade for vacation renters
and how to manage the operation efficiently and
profitably.
67. 67
Leave out—or even worse,
cut corners—on any one of these
components and the promised,
surefire success is in jeopardy.
For example, rent a luxury
vacation rental home from Dave
and you’re sure to find such
amenities as a hot tub, inhome
games, pool or foosball table,
babysitting and personal chef
upgrade options and super
discounted access to local golf
club or other luxury amenities.
You can count on your
experience in one of his homes
to be truly luxurious and of more
value than that for which you
paid. Not cheap, but overthe
top value. That’s what
LuxHomePro trains its students
to provide.
So, if the LuxHomePro plan
is followed as laid out, and if it’s
managed correctly, it’s a
beautiful thing all around—
amazing profits for you within
46 months or so, amazing
experience for the renter, and
amazing profits for the home
owner. A winwinwin.
Not to mention, a no questions
asked, moneyback guarantee.
What others say
A broker in Michigan who
had done fix and flips for years
and recently got into short term
rentals said he found himself
struggling with the short term
rentals. “I tried do it the
traditional way like you see on
YouTube,” he explained “and
really struggled with it. I met
Dave and he helped me with it,
looked at the resources I had to
work with and took it from
there. He’s thorough. He’s
patient and he starts working
with you at wherever you are
starting out. He can take it to
where you want to go.”
Shelly Clayton from
Scottsdale echoes the Michigan
broker. Shelly raves about how
Dave’s system took her from
4% booking rate, which
translated into two bookings a
year (one of them even
cancelled) to a 96% booking
rate.
That’s a small segment of
realworld, firsthand feedback
from those who implemented
the LuxHomePro training and
systems. And all of it is music
to the cofounders’ ears!
For Jerry and Dave, it’s all
about helping to change other
people’s lives for the better.
Looking forward
Jerry and Dave recently
introduced a super simplified
option in which they’ll act as a
partner for select students who
have financial limitations, but a
strong desire to participate in
the vacation rental industry.
To learn more about all of
LuxHomePro’s offerings, go to
www.LuxHomePro.com
Top Five TakeAways
from LuxHomePro
Seminars:
1. Keen eye. Walk away
knowing exactly how to
identify profitable
luxury rental properties.
2. Love what you do.
Find your own niche or
niches in the industry
from which you’ll be
able to master and profit
year after year.
3. Only winwinwin.
Learn the secrets to
setting up deals and
negotiations on the basis
of a winwinwin where
no one gets a bad deal.
4. Positive negotiation.
Learn how to successfully
negotiate with homeowners
so they will jump onto
your side and will want
to work directly with you.
5. Systems and Automation.
Learn which systems to
put into place to automate
your business for maximum
profits and efficiency.
“It’s a whole lot better if everyone is upfront and
transparent. When you have a problem, get it out in
the open so we can solve it together and move
forward. Otherwise it can fester, people sneak
around behind others’ backs and it’s just a waste of
time and energy. Keep it real! In every negotiation,
every relationship, keep it open and upfront.”
~Dave Bynum
76. 76
Besides the Purchase Price,
There Are Other Costs
You Must Consider
By Lloyd Segal,
Director of Los Angeles Real Estate Investors Club, LLC (LAREIC)
77. 77
When flipping
properties, you also
need to consider
repair costs, holding costs, real
estate commissions, closing
costs, estimated profit, and lost
opportunity costs. Let’s analyze
each of these costs separately.
Repair costs. The repair costs
will likely be your largest cost,
so you need to calculate them
carefully. If you’re able to
inspect the interior, you’ll be
able to estimate the repairs and
renovations needed to make the
house salable. However, if you
aren't able to inspect the interior,
use 10% of the purchase price as
your estimate of repair costs. In
the alternative, multiply the
square footage of the house by
$7.00. For example, if the
property has 1,500 square feet,
the estimated repair cost would
be $10,500.
Holding costs. It’s going to take
you approximately 24 months
to repair, market, and sell the
property. During those months,
you’ll incur holding costs (i.e.
mortgage payments, taxes,
insurance, and utilities).
Neophyte flippers frequently
forget to include these costs in
their budgets. If you’re worried
about these costs, you can
significantly reduce them by
living in the house during this
period, which is exactly what
many flippers do when they are
just starting out. Instead of
chalking up your monthly
expenses as holding costs,
simply consider it rent. Another
way to trim your holding costs is
to price the house correctly the
first time. By offering the best
home in its class at the best
price, you’ll sell the home faster
and lower your holding costs to
more than cover the cost of
selling the home for a little less.
Real estate commissions. You
can assume you'll pay a 6%
commission to your real estate
agent for selling the house when
you flip it. For that money, the
agent will market your property
for sale, list it in the Multiple
Listing Service and related
websites, advertise in local
newspapers, receive and submit
offers, negotiate with the buyer,
and assist you with the timely
close of escrow.
Closing costs. You will incur
closing costs when it comes time
to sell the property. These costs
include escrow fees, title
insurance, transfer tax, recording
fees, and other miscellaneous
charges. For a rough estimate of
closing costs, figure 2% of the
anticipated selling price.
“Every
investment you
make has an
opportunity cost.
With respect to
flipping, lost
opportunity cost
boils down to
making choices
between various
deals.”
78. 78
Estimated profit: While we're
at it, let's factor in profit. You
want to make at least a 2025%
profit on each of your flips. In
that way, if unexpected expenses
do popup, you’ll have some
margin before you lose money
on the deal. (And if you sell the
house for more than you
expected, or your expenses are
lower, you’ll make an even
better profit.)
Lost opportunity costs:
Opportunity cost is the cost of
pursuing one investment choice
instead of another. Every
investment you make has an
opportunity cost. With respect
to flipping, lost opportunity cost
boils down to making choices
between various deals. For
example, if you are considering
two potential deals and can only
make one, which one is likely to
generate the greatest return?
Which fits best into your
workload, your skill set, and the
time you have available? If you
can spend the same amount of
time and money on a property
that will generate a 20% return
instead of another property that
will yield only a 10% return,
which would you choose?
Time: Another cost that you may
not have considered is your time.
Successful flipping takes time. If
you buy a property and plan to do
some repairs yourself, you will
save money on repair costs but
you'll also spending your time.
How much is your time worth?
If you'll spend 300 hours
repairing and renovating a
property and will make $3,000 in
profit, your time was worth $10
per hour. If that sounds good to
you, great! If it doesn't, you'll
need to adjust your cost estimates
accordingly. For example, if
your time is worth $50 per hour,
you should factor $15,000 into
your budget for those same 300
hours.
“It’s going to take
you approximately 2
4 months to repair,
market, and sell the
property. During
those months, you’ll
incur holding costs
(i.e. mortgage
payments, taxes,
insurance, and
utilities).”
82. 82
O
ur modern world is fraught with dangers
and potential liabilities for the real estate
investor who just wants to work hard and
build an estate for his/her family. Learning
how to conceal assets and appear poor should be the
goal of all hardworking entrepreneurs. America’s legal
system has run amok and if you do not concern yourself
with asset protection you are doomed to fall prey to the
21st century terrorist…the contingency fee lawyer (and
his/her client).
An interesting and not well understood fact about
Land Trusts is that they do not have to be formed in the
same state where the property is located (or where the
beneficiary resides). Like the founding fathers intended,
Land Trusts have been left to each state to develop how
to rule on the use of them. There is no Federal Land
Trust law. Only a few states have a Land Trust Statute
(most have only case law supporting the use of Land
Trusts from other states), but all states recognize some
form of title holding trust. In this article, I will discuss
the Virginia Land Trust Statute and its unique benefits to
the real estate investor.
The English Statute of Uses was repealed by the
Virginia General Assembly in 1792, thereby eliminating
one of the hurdles to land trust validity. But in 1819 the
legislature enacted a limited Statute of Uses, which
applies to declarations of trust in which the trustee has
no duties whatsoever. Since Land Trusts are usually
drafted requiring the Trustee to do something, even if
only accepting property and deeding it out, this is all it
takes to get around the limited Statute of Uses.
Land Trusts in Virginia work exactly like those in
Florida and Illinois. 5517.1 of the Code of Virginia
spells out the modernday interpretations which
incorporates all these attributes. 5877 (2) of the
Virginia Code confirms that a trust is not taxed as a
corporation. And, 8.0181 et seq. of the Virginia Partition
Statute verifies that the remedy of partition cannot be
used by one beneficiary against another. Furthermore,
there is no transfer notification requirement nor a
requirement to disclose the beneficiary (as some states
have).
Note: Virginia Land Trust Law (Virginia Code 5558.1)
requires an instate Trustee. Therefore, if you are forming
a Virginia Land Trust to hold title to property in any other
state, you need to have a Virginia Trustee. I do not like
this requirement because although I prefer my trustees
located in the same state as where I am forming my trust,
it is nice to have the option to use someone from another
state.
So, how do you form an outofstate trust to hold title
to the property in your state? And, where can you find a
trustee from another state to serve as your trustee? These
are good questions for the concerned real estate investor
who wants to protect his/her hardearned assets. You will
find the answers to these and many more of your
questions at: www.landtrustsmadesimple.com
I encourage you to learn more by going to my FREE
online training at: www.landtrustwebinar.com/411 and
text “reasons” to 2062032005 for my free booklet,
“Reasons to Use a Land Trust.” You can also reach me
the old fashion way by calling me at 8666967347 (I
actually answer my own phone unlike most other
businesses in America today).
Randy Hughes,
aka, Mr. Land Trust™
It is difficult to convey all of
the benefits of using a Land
Trust in a short article like this.
I have been using (and writing
about) Land Trusts for the last
40 years. If you would like to learn more about how to
create your own Land Trusts, for FREE training go to:
www.landtrustwebinar .com/411 or email me at:
randy@mrlandtrust.net for my FREE booklet, “50
Reasons to Use a Land Trust” or contact me the old
fashioned way by calling 8666967347 (I actually answer
my own phone!) Randy Hughes, aka, Mr. Land Trust™
"An interesting and not well understood fact about
Land Trusts is that they do not have to be formed in
the same state where the property is located (or
where the beneficiary resides)." Randy Hughes
