401K's and IRA's - Control Your Destiny

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Disclaimer: I’m not a certified financial planner or stock broker just someone who has been educated by millionaires.

Are you in control of your own financial destiny or do you place it in the hands of someone else? Think about this before you read on.

Did you know you can self-direct a 401k and IRA? Did you know you can borrow from a traditional 401k and IRA if there is a borrowing provision and make money on it? You can borrow from your own 401k that has a borrowing provision but you cannot borrow from your own IRA or someone that is of lineage descent. However you can borrow from someone else’s IRA such as a friend, co-worker, Uncle, etc. Our leaders can direct you in the right path. Start taking control of your own financial well being.

Did you know you can self-direct yours or someone else’s retirement account(s) into real estate tax free? Wealthy people do this, why not you? If you do not have a retirement account you can borrow from someone else and our leaders can show you how. How about maximizing the 60 day rollover? This is a favorite of one of our leaders.

Do you know how to use your retirement plan to loan money and increase your retirement account(s)? Do you know how to utilize this strategy, become the bank, and grow your money in your specific account(s) instead of consistently losing it in the hands of someone else? How does it feel to keep losing your money while it is in the control of a third party?

You can set-up self directed retirement plans and invest in anything you want allowed by law including investing in real estate tax free. Financial planners do not want you to know this information because it does not benefit them. They receive no commissions on a self directed plan and they do not want you to take money out of circulation in their accounts. Stop throwing away your money and start investing it wisely.

There are different ways to grow your retirement plan(s) by investing or loaning money from these retirement account(s). It works. It is done all the time. Are you ready to take back control of your financial life and stop throwing away your money to a third party who does not care whether or not you win or lose?

Thank you for reading this! Very powerful and there is a lot more where this came from.

Happy Investing!

Tony

MINDSET: Business Owner vs. Employee

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There are 2 types of people in the working world, the business owner and the employee. IRS tax deductions favor the business owner dramatically. Employees receive limited deductions whereas the business owner can take advantage of over 400. The IRS loves business owners because they provide jobs, stimulate economic growth, and give back to their communities. Business owners approach life in a different way when it comes to work. They think in a certain way, act in a certain way and focus on learning specialized knowledge, continuing their education to grow their business.

Business owners control the majority of the wealth in the world. The 5% who own businesses control 95% of the wealth. On the other side, the 95% who are employees or self-employed control only 5% of the wealth. This is a stark contrast and should be an eye opening revelation for everyone. The main difference is the employee thinks and then lives a life of scarcity. The business owner thinks and lives a life of abundance. This is the MINDSET difference. Change the way you think and you can change the way you live.

This will not happen over night. It takes time, determination and discipline. Personal Development is a key component that helps change your way of thinking. Every successful business owner I have spoken with engages in personal development. The mindset shift will start to happen as you go along through this process.

Passion is a major factor in your success. If you don't have passion, you will not have success as a business owner. Your passion leads to WHY you do what you do. If you want to start a business go out and love what you do. Give back to others and you will receive more in return.

Happy Investing!

Tony

Fiscal Literacy

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There is a way to turn your money 4 times by purchasing a product using your credit card. If you have a credit card that gives you airline or hotel points, then let's get started. We will use Nouveau Riche's products as an example.

Nouveau Riche's Regents college tuition costs $16,000.00. With it you receive 2 years of education and you may bring a tuition partner for free. First year to take your classes and the second year to repeat them as often as you want.

Second is their home study course. $3500.00. 15 volume set recorded by instructors from the college.

Finally, S.E.E.K. Internet modules to assist you in starting your business. $1695.00.

Total Cost = $21195.00. Ready to rock and increase your benefits by using your credit card.

1. Charge all 3 products to your credit card. You will earn miles or hotel points based on the type of card you have. (Turn #1)

2. Borrow from your 401k and pay off your credit card. Charge yourself a higher interest rate on your 401k. Now you are putting more money back into it. (Turn #2)

3. You can write off the interest you charge yourself at tax time. (Turn # 3)

4. The purchase of NR's products can be a write off at tax time because it is a start up business expense. (Turn #4)

There you have it. 4 easy ways to add more benefits to your life by using your credit card to purchase a product.

Happy Spending and Happy Investing!

Tony

Mortgage Fraud

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I added a new link to Rachel Dollar's Mortgage Fraud Blog. Ms. Dollar is an attorney and Ceritfied Mortgage Banker specializing in fraud recovery litigation for lenders and secondary market investors nationwide.

There is a tremendous amount of mortgage fraud happening in todays real estate market. Whether you are an investor or home owner you must be aware at all times. Always ask for references and verify legitimate businesses and those who contact you saying they can "help" or "assist" you during the foreclosure process.

Please click on her link in the Recommended Links Section.

Thank you Rachel Dollar for this informative blog!

Happy Investing!

Tony

Short Sale Using Option Contract

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There are many short sales being closed with large profit margins right now. Here is a deal we funded for Brian Kurtz and he was so nice to put this detailed outline of his first SS deal to share for everyone. It was much longer and more detailed but I had to shorten it to post. (to many characters)

This post will be rather long. I’m going to try to answer most of the questions everyone is bound to ask in advance. That being the case, I’ve created 3 deal reviews with the third being a play-by-play review of each stage of the deal. If you want to replicate the process you’ll want to pay attention to the in-depth review as it has the details that will help keep you out of trouble.

Links to download scans of all the actual documents AND the checks are available at the very bottom of this post.

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Basic Review

So here’s the general overview.

Sellers owed $470k (a first and a second both owed to Homecomings). We’ll call them Mr. & Mrs. Smith. The loan was in in the wife’s name.

Mr. Smith got a job transfer to Colorado. Home now has to be sold so they can move on to the next stage of their life, but obviously they owe significantly more than what it’s worth.

I made an offer to the bank through my LLC to buy the house at a significant discount. I then began looking for an end buyer by listing the home on the MLS. Found the buyer, worked through to closing.

On closing day we arranged for a back-to-back double close where my LLC bought the home at 2pm and the end buyers purchased the home from my LLC at 3pm.

You can see the idea is pretty simple. Buy at the absolute lowest price you can negotiate with the bank taking the short sale and get them to agree to. Then resell to an end buyer for a profit. All without making a single repair to the property or spending your own money. Tall order, right? But my partner and I pulled it off.

We did this transaction without using a dime of our own money. But my lender never did a credit check, never did an appraisal, or a verification of income. The entire deal was done with full disclosure to both the lender taking the short sale and the end buyer’s lender. No fraud in any way/shape/form.

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Process Review

Here is how the deal is structured to get you to the closing table, with full disclosure to all parties involved.

Upon the initial meeting with the original seller I explained the short sale process and they were on board with the program. As long as they avoided foreclosure and didn’t have to bring large sums of cash to the closing table to buy their way out of their home they didn’t care how much I made.

We signed an Exclusive Option to purchase at a price of $287k. (remember that they owed $470k) They also signed an extensive disclosure statement and a Record of Option.

I then recorded my LLC’s interest at the County Register of Deeds. This places my LLC in chain of title with all documents specifically empowering it to list the home for sale and clouded title so that no closing could take place unless the option was addressed.

I then had my LLC list the home for sale and placed it on the MLS. We started the home at $359k but lowered it to $339k over a few weeks. I didn’t lower it below that price because the EXACT twin of the house directly next door closed and sold for $370k and I began do doubt how much of a discount I could get on the purchase.

We secured an end-buyer through another agent in my office and moved forward to closing.

After much drama, stress, and strain we showed up and purchased the home using private money and then instantly resold to the end buyer. The total profit on this deal ended up being $53,830.16

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My funding source, Coastal-Funding.com, is informed that we are in the home stretch on this one and to begin planning on setting up the wire for funds. You may or may not know that this company does interm financing for these back-to-back double close deals. No credit check, no appraisal, no job verification. Nothing. You could have had a finalized foreclosure and a BK yesterday and still be able to buy houses at 100% financing, rolling all costs in just as long as you are double-closing on the same day to an end buyer. How cool is that?

Sept 5th (Friday – Closing Day)

2:00 PM – Money is taken care of on Coastal-Funding’s end so my partner and I show up to take care of the first leg of the transaction where the LLC Buys from the original seller. That takes all of 15 mintues.

3:00 PM – End buyer shows up with their attorney in tow. This did NOT go smoothly. We had to be put in separate rooms for the closing. It was out of control in their room. The buyer’s attorney and the buyer’s agent both started picking apart every piece of paper, fluffing their feathers in front of the buyer trying to show how “knowledgeable” they were on real estate matters and generally trying to justify their pay.

They did dig me for an extra $5,000 at the closing table. THAT suggestion came from the attorney of course. My broker prepared a hold-harmless release for all agents involved and told me I better come back with it signed. Attorney though that one up...saying that this “new” chain of events entitled the buyers to a contribution.

I settled at $2,500.

In the end we closed. Bought for $251,780 at 2pm and sold for $325,000 at 3pm. Total profit (Commission and “The Spread) was $53,830.16. When was the last time YOU made $53,830.16 in one hour helping someone avoid foreclosure?

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Below are the docs, so you can examine them yourself:

1)Option Contract for Sale and Purchase – This is the instrument that gave me the right (but not the obligation) to buy the home for a period of aprox 1 year at the price of $287,000. As you’ll see in section 6e, the option discloses that the buyer (My LLC) intends to sell the home for an immediate profit. The bank taking the short sale gets a copy of this, so they KNOW upfront what my LLC intends to do in this scenario. Section 6f – also specifically grants powers to the buyer to list the home for sale. Sweet!

Here’s the link to download: http://www.shortsaleshow.com/proof/OptionContractV1.pdf

2)Affidavit of Understanding Addendum – this is a giant CYA disclosure so that a seller can never say “I never KNEW what I was doing. If I knew that this guy was going to make $50,000 an hour “helping” me then I would a never done it. I was wronged and want the $50,000.” Notarized baby.

Here’s the link to download: http://www.shortsaleshow.com/proof/U...Disclosure.pdf

3)Record of Option Contract for Sale and Purchase – this is the document that was designed to put the world on notice that your interest exists, that you have the power to list the home for sale, and sell for a profit. This was NOT acceptable at my Country Register of Deeds and was rejected. I understand it works in most areas with mine being the exception to the rule.

Here’s the link to download: http://www.shortsaleshow.com/proof/RecordOfOption.pdf

4)Notice of Claim of Interest – same as above except it fits the format my county wants it in. It also doesn’t have to be signed by both parties…only by the party claiming interest.

Here’s the link to download: http://www.shortsaleshow.com/proof/N...OfInterest.pdf

5)Renegotiation Explanation – this is the letter, and the contractor estimate I used to get the price knocked from $287k to $252k. I didn’t scan in the home inspection. I assume you’ve already seen one before. $300 buys me $35,000. Pretty good deal.

Here’s the link to download: http://www.shortsaleshow.com/proof/R...xplanation.pdf

6)Title Commitment A to B – this is the title commitment issued to my LLC when they bought the property.

Here’s the link to download: http://www.shortsaleshow.com/proof/A...Commitment.pdf

7)Title Commitment B to C – this is the important one because it is what the end lender was reviewing. You’ll see in the structure of it that Fee Simple Owner was the ORIGINAL owner and for the end buyer’s to be granted clean title a Warranty Deed had to be issued first to my LLC, and then a warranty deed issued to the End Buyer. This is an IMPORTANT POINT because the end buyer’s lender is put on notice here that their buyer is NOT buying from the original seller, but from my LLC who may or may not be making a profit. Thus full disclosure is provided to the end lender! Seasoning is not an issue as long as the end buyer’s lender is Conventional and is not applying seasoning “risk overlays” in addition to Fannie/Freddie Standards. Excellent Smithers.

Here’s the link to the download: http://www.shortsaleshow.com/proof/B...Commitment.pdf

8 ) A to B HUD Closing Statement – Here you see all the figures on the purchase of the home by my LLC from the Original Sellers.

Here’s the link to download: http://www.shortsaleshow.com/proof/AtoBHUDStatement.pdf

9)B to C HUD Closing Statement – Here you see all the figures on the sale of the home from my LLC to the End Buyers.

Here’s the link to the download: http://www.shortsaleshow.com/proof/BtoCHUDStatement.pdf

10) Coastal Funding Payoff – Here is the simple document that shows the fees I paid to borrow the money to facilitate this deal. Simple and clean:

Here’s the link to the download: http://www.shortsaleshow.com/proof/CoastalPayoff.pdf

11) Proof Checks – Here you’ll see proof positive in the from of the two checks issued at closing. One for Commission, one for Profit Spread. Nice.

Here’s the link to the download: http://www.shortsaleshow.com/proof/ProofChecks.pdf Special

Thanks to www.Coastal-Funding.com for making this possible and way to easy!!!! (1)

(1) Source from WannaNetwork Forum.

Education then action is key to success. If you want to learn how to do a short sale like this, please contact me in the Contact Us section of my blog.

Happy Investing!

Tony

Residential Real Estate Encyclopedia (R2E2)

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Nouveau Riche offers a home study course to review while you begin your investing career. The Residential Real Estate Encyclopedia (R2E2) is a 15 volume set recorded and written by our educators at college. In this set you will receive information on:

The Checkered Flag – A Winning Approach to Real Estate Investing™

Murphy's Law – Legal Pitfalls in Real Estate Investing and How to Avoid Them™

Diamonds in the Rough – A Guide to Successful Rehabs™

Long Profits on Short Sales™

The Reference – The Building Blocks of Real Estate Investing™

Give me a Break – Tax Minimizing Strategies for Real Estate Investors™

Property Professor – Standard Edition - A Powerful Analytical Software Tool™

Tenants, Toilets, & Termites - Successful Landlording Without Losing Your Money Or Your Sanity™

Effective Real Estate Negotiations®

It’s All About the Money – Raising Private Money for Real Estate Investments™

Divide & Conquer- Creating Wealth In Creative Ways With Multi Family Dwellings™

Put the Gold in Those Golden Years - Simple & Safe Wealth Maximizing Strategies to Enhance Your Retirement™

Here Today, Gone Tomorrow – The Wholesale Real Estate Game and How to Win It™

Flippin’ Explosion – Fix ‘n Flip, the Fastest Growing Trend in Real Estate™

The Standard - Unconventional Profits from Mortgage Financing™

For more information on Nouveau Riche, their products or to attend a local briefing, please contact me in the Contact Us section of my blog.

Happy Investing!

Tony

Seller Financing

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In an earlier article I mentioned a big factor in building your wealth is using leverage. A great form of leverage for obtaining real estate is using seller financing. There are several ways to get seller financing for your deals. The seller can take back a second mortgage, you can take over the property 'subject to' the sellers existing financing, write-up a wrap-around mortgage, and if you are investing in commercial properties you may be able to assume the existing mortgage. Assuming a loan does not exist in residential loans anymore. In this article, I'm going to focus on 'subject to' financing.

As you start to invest you made need to educated certain professionals along the way because they tend to only know one way of operating real estate transactions.

Case in point: I was showing a group of people how to fill out my contracts so they can start making offers on deals. First thing they did was take my contract to their attorney for him to review for accuracy and legitimacy. I'm glad they did this. Trust but verify. I love it! In our next session they came back telling me their attorney had an issue with some writing on my contract. Their attorney told them no title company will close on a deal 'subject to' the sellers existing financing.

The group happened to have their laptop with them. I asked them if they had a HUD 1 Settlement statement in their word documents. After hearing yes, I asked them to open it so I could show them their attorney was wrong. The HUD 1 Settlement statement is a document with all the numbers and closing fees for a real estate transaction. Page 1 of the HUD, Left Column, Line 203 it clearly states 'subject to sellers existing financing.'

I told them to call their attorney and point this out to him. His rebuttal (of course) was "I wanted to make sure you are covering your bases." He was simply saying he didn't know this existed. Imagine how many more transactions he could have closed for his business if he understood this strategy. Title companies issue the HUD 1 for closings and attorney's use them every day.

The more education you have, the more benefits you will receive!

In a 'subject to' transaction you negotiate with the seller to quit claim the deed of his/her house to you but keep the financing in their name. You are now morally obligated to make their mortgage payments. If this is an investment strategy for you, you should have already complied a list of sources to put renters into the home to cover the mortgage payment.

With the transfer of deed, you now own the property and the equity that exists. You must ease the sellers mind ensuring them you will pay their bill every month. As an investor you are not going to put forth all this effort to close the transaction and not make the payment. However, as the investor, you need an exit strategy in case you cannot make the payment further on down the line if you have a shortage of cash or no renter.

My business partner and I put a clause in our contracts every time to get rid of the property if we cannot pay the mortgage because of depleted funds. It doesn't matter if we have $500,000 in our accounts, we still put a clause in for our protection and that of the seller.

If you want to be successful, you must treat this as a business and run it morally and ethically. This will result in building a positive reputation as an investor and more referrals will come your way. There are a lot of people not operating their investing business in an ethical way. The seller suffers and eventually the investor gets caught and is shut down.

I cannot stress enough the value of the right education and who is teaching you. Nouveau Riche's real estate investment college does exactly this. Also, there is a huge community of other investor's in NR that you can talk to and generate more ideas. I'm constantly learning new ways to invest, negotiate and profit on my deals because of the people I associate with. In turn, I do the same for new people getting involved who want to make a difference not only in their life, but the lives of others.

To learn more about Nouveau Riche please contact me in the Contact Us section of my blog.

Happy Investing!

Tony