Virtual Real Estate?

•June 10, 2017 • 4 Comments

Last night at Cashflow, we had a guest that blew everyone’s mind.  When I say everyone, I’m talking about the investor team on the table.  This young lady (her name is Nina) did not have any real estate experience, but was top notch, formidable business woman.  She picked up the game very easily and with Vicki’s mentoring was able to get out of the Rat Race relatively quick.  During our time with her, we heard her story.  She was in the Navy.  After the Navy, she operated several businesses. All were lucrative, but on each one she was working many hours with no time for her own family.  Her question to us was, “Have you ever heard of virtual real estate?”  I’ve never heard of it.  I was thinking, “What the heck? What is virtual real estate? Is that sort of like a virtual life? Pretend houses, apartment buildings, commercial buildings, etc. in a virtual world?  What do you use to buy? Bitcoin?”

This is her current business and she makes some decent money.  The best I can explain it is, she buys a URL, creates a webpage for a specific type of business, and rents out the site to the type of business that needs the site.  Apparently, there are takers.  Listening to her stories, and how she came upon doing this was amazing and inspirational.  We learned a few things about marketing from her, and it was so simple that I was kicking myself about how I’ve been marketing.  I am going to implement some of what she was talking about.

Usually at the end of the game, I go around the table and ask everyone what their “take away’ was for the evening?  On many occasion we learn something new from our “first timers” especially the ones that have some business experience.  They bring a different perspective to the table.  However, last night really blew our minds.  Not only did we learn something, we…or at least I, will be applying what I “took away” from her.  Thank you for coming Nina!  We hope that you found a reason to come back to play!

Cashflow 2/10/17- The Green Rat

•February 12, 2017 • Leave a Comment

Today, I was the Green Rat.  The Green Rat was the Mechanic, low-income, low expenses, no assets, a few liabilities.  There were only three players, a truck driver and a lawyer.  I know the truck driver will be similar to me in terms of income, expense, assets and liabilities.  However, the lawyer will have high income, high expenses, no assets, high liabilities.

My strategy was to wholesale big opportunities to the lawyer, but first a few rounds around the Rat Race and small deals, if they come up.  I started picking up stocks, and collecting paychecks, then made the move on a big opportunity.  Lucky me, it was  3/2 house with 132% ROI.  Obviously, I need to beg, borrow or steal (oops…no stealing) money to get this property.  It so happened that I had enough for half of the down payment and borrowed the other half at 10% from the bank.  Cashflow was good.

I know the lawyer was picking up big opportunities when she could.  I pulled a few to see if I could partner up with the lawyer, but all I was getting were business opportunities out of both our capabilities….for the time being.

Then, someone pulled a market card and 3/2 houses were being sold for $65,000.  Selling the property would put at least $30,000 in the bank and allow me to pay off some loans, then I’ll be able to look for big opportunities.  I will also lose the cashflow this property produces, and the only property I currently have in my portfolio.  Who sells a property that produces 132% ROI???  I sold it.  I got my $30,000, paid off loans and still had enough to potentially do some big deals that could produce better cashflow, not necessarily better ROI.

To make a long story short,  I’ve gone around the Rat Race several times, picked up a Coin Operated Telephone business that produced good cashflow.  It was a $20,000 purchase, no liability (no mortgage loan).  I eventually reduced my expenses by paying off most of my liabilities, and built up enough passive income to leave the Rat Race early but chose to stay in to build more passive income and help the others to get out.  When I finally move to the Fast Track to start buying businesses and other investments, I landed on a Russian Oil Deal.  To win the game, a player needs to accumulate an additional $50,000 per month in cashflow either from purchasing enough businesses or investing in deals, or the player lands on and purchases their dream, which they picked at the beginning of the game.

I rolled a 4, which gave me $75,000 per month.  I WIN!

2017-0210-cashflow-greenrat1-jpg

Do you have a will or trust?

•June 20, 2016 • Leave a Comment

One of the things I’ve learned throughout the years of being in business is the importance and need of a will or trust.  It is most definitely part of my education in Renatus, and has reminded me of why it is so important especially if you have assets that you want to pass onto family members.

I’d like to introduce you to Mark Kohler, one of the instructors for Renatus.  Mark has written an article on his blog that talks about the late Prince Rogers Nelson (a.k.a. Prince) who did NOT have a will nor a trust.  It is so inconceivable to me that a man like Prince with the assets he had did not have a will nor a trust.

Prince’s net worth is estimated to be in the exclusive neighborhood of $300 Million. Hence…welcome to probate court.

Because Prince left no will or trust, the probate laws of the State of Minnesota will decide who inherits his massive estate, and in what percentages.  Prince left no surviving spouse or living children, and his parents and grandparents are all deceased.  In the absence of any such relations, Minnesota law requires that his estate be split equally among his parents’ other children.  This means that Prince’s one full sibling and five surviving half-siblings are all out at the courthouse (with their attorneys in tow) making sure to claim and protect their windfall.

But they’re not the only ones.  A Probate action gives other people an opportunity to claim that they are entitled to some or all of the estate’s assets.  And (surprise!) when an estate is valued at $300 million, there is no shortage of people ready to come out of the woodwork.  A small selection of those who have already stepped forward after roughly three weeks includes:

  • Kimberly Felecia Potts – A Minnesota woman who was actually arrested for trespassing at Prince’s Paisley Park compound in January 2016. She claims she is due $500,000 because she “created” Prince’s 2004 album “Musicology” and Prince had promised to “reward” her for doing so.
  • Rodney Dixon – A California man who claims he should be considered the “sole and exclusive owner of all intellectual properties after the death of Prince Rogers Nelson.” The basis for his claim is that he had an “implied agreement” with Prince, valued at $1 billion. Dixon claims he met Prince in Maryland in the early 1980’s and became close with him to the point that Prince wanted him to take control of his music and legacy.  In speaking with the New York Daily News about why he is entitled to the estate, Dixon said: “He chose me because I’m the only one who gets it – spiritually, musically and legally.  I’m the only one inside who got it all.  That’s why I got it all.”
  • Carlin Q. Williams – A Colorado prison inmate who claims to be Prince’s son, and as such, the sole heir of Prince’s fortune. If DNA tests confirm Mr. Williams’ claim (and if no one else is confirmed by DNA to be Prince’s biological child), then after claims like those above are either dismissed or settled, the entire remainder of the estate of the man who once wrote a pro gun control anthem with the lyrics “we’re tired of cryin’ and people dyin’ – let’s take all the guns away” will go to Mr. Williams, a man Prince apparently never met, and who is currently serving 92 months in a Colorado federal prison for possession of a firearm by a felon!

These claims (and others) are going to keep Prince’s estate in limbo for years, and will likely cost hundreds of thousands in attorney’s fees to litigate.  To boot, while Prince liked to keep his private life very private, the disposition of his estate will play out in open court and be splashed all over TMZ and other media outlets.

As you might guess, I am using Prince’s tragic death to illustrate a point.  The point is that much like having insurance, estate planning isn’t important until it becomes really important!

Much of the chaos surrounding Prince’s estate comes from the fact that no will has been found, and he did not own his assets in the name of a trust.  So, this begs the question, how would things be different if Prince had done some estate planning?

What If Prince Had a Will?

If Prince had a valid will (but no trust), then a Probate action would still have to be filed in Carver County.  However, instead of a “Special Administrator” being appointed by the court to facilitate the process, Prince’s will would have named an Executor (also known as a Personal Representative), who would have likely been a trusted advisor, friend or relative, to serve in that capacity.  The terms of the will would also control as to who is to get what assets from his estate.  If not otherwise named in the will, Prince’s siblings would have to file and prove claims that Prince had promised to take care of them in some way in order to recover any assets.  Ms. Potts and Mr. Dixon could still file their dubious claims, but their legal path to prevailing on those claims would be even more difficult because they would have to overcome the fact that Prince left them out of his will.  Mr. Williams would also be in a tough position.  Merely proving that he is Prince’s biological son would entitle him to nothing from the estate, unless the will provided for him in some way.  He would have to prove that Prince left him out of the will on accident.  All of this would still play out publically – in open court.

What If Prince Owned Substantially All of His Assets In a Trust?

If Prince had established a revocable living trust and owned substantially all his assets in the name of that trust, then the courthouse in Carver County would be a lot less hectic than it is right now.  This is because no probate action would have been necessary.  In large measure, Probate is simply the legal process by which assets are transferred from the name of a deceased person to their heirs.  When assets are held in the name of a living trust and the trust grantor/trustee/beneficiary (in this case, Prince) dies, there is no deceased person on title because the trust didn’t (and doesn’t) die.  The trust would designate a successor trustee (again, probably one of Prince’s trusted advisors, friends or relatives) who is vested with the authority to distribute the trust’s assets as Prince directed in the trust, and without the need of filing a Probate action.  The ability to avoid probate would likely save Prince’s heirs months of time and thousands in legal fees.  In addition, the administration of a trust is private – no court filings are necessary.  The lack of an existing and ongoing Probate action also means that claims like those made by Ms. Potts and Mr. Dixon would have to be brought independently.  When hundreds of millions of dollars are at stake, such lawsuits would still likely take place.  However, in a more “typical” estate, the lack of a ready-made forum for claims and challenges can dissuade potential litigation.

What Can you Do to Avoid this type of Saga?

The takeaway is that you don’t have to be worth $300 million (or even $300,000) for an estate plan to make sense.  If you own real estate or an interest in an LLC or corporation, or even if you just have minor children or other dependents who would need to be taken care of if something happened to you, then estate planning is vitally important.  It is an investment that will pay huge dividends in saved time, money and headaches for your loved ones when you are gone.  Oftentimes, a Trust can be a simple and affordable addition to your overall Business and Asset Protection plan that merges into your Estate Plan.

Here is a Video to further explain how YOU can help your family avoid Court a potential mess after your passing:

 

The Bottom Line

Procrastination is easy – especially when it comes to something where the benefits won’t be apparent until you are either incapacitated or have passed away.  However, if you care about saving your loved ones thousands in legal fees, months of time, and a mountain of headaches and worries, then completing your estate plan is truly a caring act of charitable service that you should consider completing before it becomes everlastingly too late.

Ironically, during the month’s of May and June each year, we offer an “Estate Planning Special” at the law firm of KKOS Lawyers.  We complete Estate Plans in all 50 State with an Attorney in our office walking you through all of the details every step of the way- AND tailoring it to your situation. If interested, learn more about our Special here.

[co-authored with fellow attorney at KKOS Lawyers- Jarom Bergeson]

 Mark J. Kohler and Jarom Bergeson are Attorney’s at the law firm  Kyler Kohler Ostermiller & Sorensen, LLP. Mark is also a CPA, Radio Show host and author of the new book “The Tax and Legal Playbook- Game Changing Solutions For Your Small Business Questions”  and “What Your CPA Isn’t Telling You- Life Changing Tax Strategies”. He is also a partner at the accounting firm K&E CPAs, LLP. For more information visit him at www.markjkohler.com.

– See more at: http://markjkohler.com/this-is-what-it-sounds-like-when-estate-planning-attorneys-cry-the-ballad-of-princes-estate/#sthash.tVwGASjU.dpuf

 

If you’d like to know more about the Renatus education and what it entails, feel free to write to me at re.investor.opp@gmail.com or contact me via phone or text at (619) 800-6832.

Llew

 

Cashflow Event 4/22/2016

•April 23, 2016 • Leave a Comment

I hold a Cashflow Game almost every Friday evening at 6pm.  I invite people to come and play to learn how to build wealth by buying real estate, businesses and stocks, and by reducing liabilities.  You would think the object of the game is to win before anybody else does.  Yes it is to win, but through cooperation.  The game teaches you how to manage your finances and that you need to have enough passive income coming from assets to equal or surpass your expenses in order to get out of the “Rat Race”, and on a deeper level learn how to analyze potential opportunities to see how you can buy it, or if you need sell it off to another player for a quick buck, or negotiate a joint venture with the other players in order to get a partial income rather than no income at all.

For people who are thinking about getting into real estate investing, this game helps them understand how to think and speak like an investor.  Words such as Return of Investment or ROI, cashflow, passive income and cash-on-cash return (CCR) are routinely used.  For many it is their first step into the real estate world.

This particular evening, I had invited two “newbies” seeking to discuss flipping homes with both myself and my business partner, Todd.  The intention was to introduce them to Cashflow so they understand that there is more to real estate investing than just “flipping homes”, and that they really needed to get properly educated and mentored or they can lose a lot of money, and of course we can help them get that needed education.

Usually, I have my team with all equipment ready to go. But, today people were slowly filtering in and I did not have all the equipment needed to get started (i.e. calculators, pencils, worksheets, etc.).  The first three people were “newbies” which included the two that I invited.  I was doing my best to keep them intrigued about what we were about to do. Then, two others showed up. They were an older couple and both had been to our Cashflow events in the recent past, but they were relatively new and still building relations within our community.  With 5 guests in the room, I wanted them to introduce themselves and what they did.  When I got to the couple, the woman (I’m trying to keep names out) introduced herself, told us what she did, and why she is here.  Then it was her boyfriend’s turn and things changed.  He introduced himself and how he at one time was worth over $2 million due to real estate, and then lost it all because of some excuse, and that he was obligated to come this evening as part of an agreement he made with his girlfriend.  Then, he proceeded to tell the group that he sees no value in what we are doing because nothing is being done to make any money and as far as he’s concerned this was a waste of time.

I have two new people investigating whether or not I was real and if they could learn from me and my team, and this guy was spouting off that this was a waste of time.  I was livid.  I wanted to kick the crap out of this guy. I did my best to hold my anger in front of everyone.  By this time, some of my team started filtering in so they caught my response.  I began to tell him that I completely disagreed with him.  This is an event to help new people understand what real estate investing entails and that they need to know what to do before they start putting any money down and making any deals.  I pointed at the newbies and said, “this is the first time you’ve met me, you have no idea what’s going on, but you want to invest in real estate and make big money.  I’m a real estate investor and Realtor, if I told you I had a deal right now where you can make $30,000 to $50,000 within 6 months and showed you the numbers, then asked you to drop $100,000 (30% – 50% ROI)…..would you do it?” They said “No”.  So why is that?  It’s because we have no relationship, they do not know if what I have is a good deal. They are not educated enough to understand the deal, nor know what I know and what I’ve done.  This event is not to make money, it’s to teach and offer them the opportunity to learn.

Eventually, Todd showed up with the rest of the equipment needed to start the games.  We had two games running and more people showed up.  The place was packed.  We actually had to move one game into another conference room.  I was thinking we may have lost the 2 gentlemen I invited due to the fact I was lacking people and equipment at the beginning, as well as the negative statements from the boyfriend.  But, with the help of the team to mentor the new players it made a difference.  They began to see that there is plenty to consider when making real estate deals and making money.  In the group this evening were four actual real estate investors that essentially impressed upon the new players that playing cashflow helps hone their skills for the real world, and indicated that it is a great tool to utilize.

At the end of the game, we go around the room to see what people have learned. I was especially interested in the new players answers.  One young lady’s answer was she began to realize there were rules she needed to follow in order for things to flow and to be successful.  My two guests expressed their surprise because it was not at all what they were expecting.  I asked if being mentored throughout the game was helpful?  Yes, they saw the value of having someone coach them through the game, especially since both were able to get out of the Rat Race and into the Fast Track.  Awesome!

So what did I learn?  Make sure I have all the equipment and paperwork before game start. Have a story to stall the game if needed. And, realize that I may have some negative people in the group and that I need to know how to counter them with the truth.

http://www.meetup.com/chulavistacashflow
http://www.facebook.com/propertymerchant

House in La Mesa, CA

•March 18, 2016 • Leave a Comment

An old friend of mine gave me information about a property in La Mesa, CA that may be available for sale.  Apparently, the person who owned it passed away and it was up to the heirs to either keep or sell it.  I had the opportunity to meet with one of the executors of the estate (Son).  Here’s the info on the deal:

Single Family Residence; 3 bedroom, 2 bath; built in 1960; 1760 sq.ft.; pool; 2-car garage. Free and Clear.

Asking: $450,000
Estimated ARV: $580,000

Sounds like a good deal?

My business partner and I estimated the cost of repairs.

There is the cost for demolition…it was in bad shape. The removal of kitchen appliances, cabinetry, countertops, sinks; bathroom sinks, tubs, shower, vanities, hardware, etc.; the removal of carpets and floors from 3 bedrooms, 2 baths, kitchen, living room, family room, etc. (Estimated $2,000 -$4,000)

The cost to repair or update systems (i.e. electrical, plumbing, HVAC, etc.) [$5,000]

The cost for new hardware, appliances, equipment, floors, paint, windows, doors, etc. [$20,000- $25,000]

And, that’s just the inside…..

Landscaping – removal of plants and junk in the yard, trimming of trees and bushes to be kept.
Pool – repairs to the pool and the water pump system, removal of old equipment
Aluminum patio cover – removal
Shed – removal
Roof & Soffits – repair of soffits
Fencing – repair
Hardscape – repair on cracks or replace cement
Repaint house
Replace garage door

We estimated another $25,000 to $30,000 for removal, replace or repair on exterior stuff. Total estimate so far is approximately $65,000 just on repairs.

Closing costs estimate includes Realtor commissions (6%), title & escrow fees and peripheral fees – $43,000

What about our profit? $40,000 minimum

So a total of $148,000 or $150,000 (rounded) needed to fix this place up.

$580,000 – estimated ARV
– $150,000 – costs to repair
=$430,000 – offer

Oh…I forgot to mention holding costs for 6 months…maybe another $10,000? So, $420,000 offer

Here’s what we offered:

Option 1 – $350,000 all cash at closing, close in 7 days

Option 2 – $425,000; Seller finances 100% for five years for 5 years @6%, no payment due for the next 90 days.  After rehab and sale of property, we will pay seller 10% above sale price of $550,000.

Somebody else got the property.  No worries…we keep on looking for properties and make offers.

Renatus

•March 18, 2016 • Leave a Comment

REInvestor seeks Student

Renatus is a real estate investing education company.  There is an Essentials program that has 11 courses that includes how to structure your entities properly, and a mortgage acceleration course that teaches how to pay off your mortgage within 7-10 years.

Renatus also give you the opportunity to market the company, hence make money as you learn how to build and keep wealth.

I bring this up because I brought Bill onto my team who is much older, retired Navy and has been looking to create wealth to supplement (i.e. surpass) his retirement income. He is plugged in, up every morning listening to live stream of our leaders about how to do this business while learning how to invest in real estate.  In just 44 days he made a certifying sale that created a $10,000 commission.  Great job Bill!  Keep it up!

http://www.facebook.com/propertymerchant
re.investor.opp@gmail.com

 

 

Cashflow

•February 22, 2016 • Leave a Comment

Have you ever played the game, CASHFLOW?  It’s a game created by Robert Kiyosaki, the author of Rich Dad, Poor Dad.  The book and the game teaches you how to manage your money as well as to build wealth.

I host a game every Friday evening to help teach people the basics of financial management and wealth building.  We learn and practice how to recognize a “good” deal and learn how to buy or partner up with our fellow players in order to take advantage of “positive cash flow”.  It is significantly more than that, but I don’t want to spend time explaining.  You’ll just have to come to my event or find a group of players and play it.

So, why am I bringing this up?

The place we hold our event is being utilized as “office space rentals” or  “co-working space” and the person who started it subleases space to upstart tech-type businesses.  The idea is to give these new businesses a location where they can create and build their ideas into large successful businesses.

Now I don’t know the numbers, but this person funded his idea with a 401k in hopes that  enough “renters” would take a liking to the place and cover the rent so he would not have to “self-fund” his idea.  Well that hasn’t happened, he’s run out of funds and is now on the verge of losing the space.  He has asked everyone to pay more in order to keep the location open.

Now I applaud the guy and what he is trying to do, because there is nothing like it in San Diego County and it’s needed,  but if this was an opportunity in the game CASHFLOW would it be a good deal? Possibly.  I don’t know if he figured out his ROI if it all worked out, but from what I understood, he didn’t want to “profit” from it, he just wanted to help new techs get started somehow, so he charged a small ‘rental’ fee.

Let’s look at it from the perspective of a Cashflow player…

He had a lump of cash, took a negative cashflow and hoped he could get enough people to rent spaces to “break-even” or reach a zero cashflow by a certain time.  Although he charged a small rental fee, he is now out of funds and about to lose his space and is asking the renters (me) to increase their rent payments to twice or three-times the amount they are currently paying until there are enough renters to break-even, at which point he could lower the rental fees.  In other words, he is asking renters to increase their expenses in order for them to keep the space open, and some of them may have not yet seen an increase in income.  Thus, their cashflows will then be less than usual. And, there are no guarantees that there will be enough people wanting to lease space within the time frame needed.

If you are a player, do you pay the higher rent and increase your expenses?

Maybe our friend should have played CASHFLOW with us more often?

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Cashflow Game Board