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Recorded January 18th 2012

A step by step discussion with a local Dallas team that will explain the process of rehabbing, from:

• Finding the property
• Doing proper due-diligence
• Handling pre-rehab issue
• Managing the rehab
• Selling the property

This webinar will take us through the process of a successful fix and flip project.

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Article on Atlas Van Lines or download the PDF file.

Where is America moving?

As it does every January, Atlas Van Lines reviews data on the origins and destinations of interstate moves during the last 12 months. The 2011 Migration Patterns study results provide a snapshot of relocation patterns, showing an overall increase in the number of moves over last year.

Southwestern and Mid-Atlantic coastal states were popular destinations in 2011. The Midwest continues to lose residents, but Michigan became a balanced state after six consecutive years of steady outbound moves. For the sixth year in a row, Washington, D.C. had the highest percentage of inbound moves, while Ohio came out the clear leader in the highest percentage of outbound moves.

Other migration trends:

Northern States

With the exception of New Hampshire, which went from an inbound to a balanced state, and Massachusetts, Connecticut and West Virginia, which transformed from balanced to outbound states, the Northern States saw relatively few changes in moving patterns from 2010 to 2011.

Southern States

The Southeast remains balanced with the exception of Louisiana, which switched from a balanced state to an outbound one in 2011. Southwest states Texas and New Mexico continue to be inbound states, as well as Mid-Atlantic states Virginia and North Carolina. After becoming a newly inbound state in 2010, Kentucky is now balanced.

Midwestern States

Again seeing the majority of its states with more outbound than inbound moves, the Midwest region only has three balanced states – Iowa, South Dakota and Michigan. Despite uncertain economic conditions, Michigan became a balanced state following a six-year streak as an outbound state. Wisconsin, Nebraska and Kansas finished 2011 as outbound states – all of which were previously classified as balanced states for seven, nine and 10 years in a row, respectively.

Western States

The annual study shows that the majority of the Western states remain balanced with only two states changing status. Utah is now an outbound state and Wyoming is now balanced.

How is a state classified?

Each state/province has a threshold value, which is the total number of shipments multiplied by 0.55 (for example, in a state with 100 moves, at least 55 of them would have to be outgoing to classify the state as outbound). A state/province is considered:

• Outbound when outbound shipments exceed the threshold.
• Inbound when inbound shipments exceed the threshold.

All other states are classified as balanced. Shipments noted for Canada are cross-border-to the United States or from the United States (not inter-provincial).

Date: Tuesday, December 13, 2011, 6:50am MST

Valley employers have a more positive outlook for hiring in the first quarter of 2012.

According to the Manpower Employment Outlook Survey for the Phoenix area, 20 percent of employers plan to increase current staff levels next quarter, while only six percent expect to reduce staff.

This positive outlook puts the Valley among the top five markets in the nation for expected employment growth, said Frank Armendariz, director of metro markets for Milwaukee-based Manpower Group, which conducts the quarterly studies.

The Cape Coral-Fort Myers market in Florida had the most positive employment outlook, he said. The Phoenix metro area tied with Houston and Des Moines, Iowa, for second place.

The Phoenix metro area has a 14 percent net employment outlook. This comes from 20 percent of employers surveyed saying they plan to hire and 6 percent saying they plan to decrease staff levels. That overall 14 percent net employment outlook is up from 11 percent during the fourth quarter of 2011 and 12 percent during the first quarter of 2011.

Job prospects appear best in manufacturing, wholesale/retail trade, financial activities, professional and business services, leisure and hospitality and other services, according to the study. Employers in information and government plan to reduce staffing levels, while hiring in construction, transportation and utilities, and education and health is expected to remain unchanged, Armendariz said.

He said he was glad to see the construction forecasts staying the same because it had been trending lower during the recession.

He said it is no secret that construction and real estate were hit hardest in Arizona, and said he is starting to see that industry begin to stabilize.

“We are seeing that positive trend continuing to improve and it’s been a continuous increase and improvement throughout 2011,” he said. “With this 2012 forward-looking survey, it also gives us that positive optimism that we’re going to move into 2012 with the same type of trends.”

Armendariz said the solar industry is helping the state’s economy.

“Solar, as an emerging market for Phoenix, has been one of the drivers to create jobs here in Phoenix,” he said. “If you look at many of the engineering positions, technical positions, program management positions and manufacturing, many of those are created by emerging markets of solar here in the state of Arizona. Many businesses have come here to support that new sector.”

Overall, he is seeing positive trends in the Valley.

Copyright 2011 Phoenix Business Journal – Link to article

Strategy I: REOs (MLS)

Strategy II: Turnkey rehabbed and rented properties

Strategy III: Low-priced fix and flips

Strategy I

Low-priced Fix and Flips

Purchase price: $40,000 – Bought at the courthouse steps at an auction 

Rehab cost: $15,000 – this includes holding costs until sold

Average holding time 4.5 months

Profit: $17,000 – after closing costs and sales commission

Local team handles the transaction cycle from start to finish: researching properties before the auctions, bidding at the auctions, rehabbing and selling.

Profit sharing: the local team splits the profit with the investor, i.e. they only get compensated if there is a profit.

Program’s successful elements

Most of these elements are not typically seen in houses in this area:

1. Priced to sell quickly
2. Better than area’s standard finishes
3. Attractive fixtures
4. House staging
5. Finished garage
6. Quality photos

Call or email me if you are interested to learn more about this opportunity or to start investing now: dani@simplydoit.net, 650-440-5544

Sample Fix & Flip

Address: Cutters Mill Dr. Lithonia, GA 30058

4 Bedrooms | 3 Bathrooms | 1686 Sq. Ft. | 2003 Built | 2 Car Garage

Purchase price: $38,500

Repairs cost: $17,000

Total in: $55,000

Sale price: $74,000

Profit: $19,000

Offer accepted time: 6 days from listing

Before Photos

Strategy II 

Turnkey Rehabbed and Rented Properties

Price ranges: $45,000 to $70,000.

These properties are rehabbed and have a renter inside (or in the process of placing a tenant).

Rents are from $750-$1150 a month

Properties are located in good areas and in nice communities.

Note from Dani: I have driven into some of these communities and saw well maintained homes and streets.

Financing options:

Option A: Cash purchase

Option B: Purchase a $65,000 or higher priced property. Properties under $65,000 will not qualify for conventional financing.

Option C: Private lender (high rates)

Option D: IN SOME INSTANCES there are properties with seller financing – 50% financing at 7% interest rate. Qualifying is simple and easy (limited amount of houses under this option)

Call or email me if you are interested to learn more about this opportunity or to start investing now: dani@simplydoit.net, 650-440-5544

Sample Turn-key property

Brookstone Pkwy Ellenwood, Georgia 30294

4 Bedrooms | 3 Bathrooms | 1864 Sq. Ft. | 1987 Built | 1 Car Garage

Rent ready property.

Hemingway Rd Stone Mountain 30088

3 Bedrooms | 2 Bathrooms | 1344 Sq. Ft. | 1980 Built | 1 Car Garage 

Rent ready property.

Strategy III 

REOs

Prices for good properties in good area are from $30,000 

Homes need $12,000-$15,000 in work: new carpets, new paint, appliances, A/C compressor and some additional touch-ups

Financing: cash

Market value and Comps

Local team includes:

Purchase broker

Property management in place to handle the leasing and managing

Repair team to handle the work

Rents are there to support these low purchase prices.

Call or email me if you are interested to learn more about this opportunity or to start investing in this program.

Sample of REO Property

Waldrop Creek Court, Decatur GA 30034

3 Bedrooms | 2.5 Bathrooms | 1646 Sq. Ft. | 2000 Built | 2 Car Garage

This house needs new paint, new carpets, appliances, touch-ups, power wash exterior.

Call or email me if you are interested to learn more about this opportunity or to start investing now: dani@simplydoit.net, 650-440-5544

When someone raises money for a real-estate venture, often called a syndication, the securities laws apply.  There are a few rare exceptions, but this is generally true even when selling promissory notes or TIC (tenants-in-common arrangements) interests.  If the securities laws are violated, the money raised may have to be returned to the investors, the founders/promoters can be barred from making any future offerings and they may be subject to civil fines and even criminal penalties.  On the other hand, if done correctly, offerings can be an excellent way to raise money (and not just for real estate but for other businesses as well).

Structure

In terms of structure, to shield the syndicators and investors from liability, a legal entity is almost always formed.  For tax reasons, usually a limited liability company (LLC) or, for larger offerings, a limited partnership is used.  Generally “C” and “S” corporations are not used.

(A “C” corporation has two levels of taxation: If profitable, it pays its own income taxes and then the owners pay income tax on their distributions.  An “S” corporation often can’t be used because the venture is expected to – or might — have more than 25% of its income in some years from rents. If it violates this rule, it becomes a “C” corporation with very negative tax consequences.)

It is relatively easy to set up an LLC or limited partnership so that there are different classes of ownership if needed.  For example, investors can be given limited or no voting rights (or super majorities can be required to remove the manager), can be given priority on distributions (before the syndicators), or can be paid in a different manner than the syndicators, such as a specified rate-of-return percentage.  The manager or managers (who may or may not be the syndicators/founders) can be given virtually total control over the operation, or the investors may be given the right to approve certain transactions or major decisions.

Often the syndicators/founders/promoters have an ownership interest in the entity.  They may receive that without contributing any money, or they may contribute at least some money if having some “skin in the game” makes potential investors feel more secure.  The syndicators/founders/promoters may also be given salaries or a percentage of profits or revenues if they are also managing the venture, which is frequently the case.

All of this is driven by what the syndicator believes will be most attractive to the target investors.

Securities Exemptions

The types of offerings that are almost always used by California ventures are the federal Rule 506 exemption, the California 25102(f) and 25102(n) exemptions, and the California qualification by permit procedure.

(The federal Rule 504/SCOR exemption, federal Rule 505 exemption and federal Reg. A exemption are virtually never used, for reasons that will not be covered here.)

In choosing an exemption to use, the primary factors are: 1) whether the offeror is willing to limit its potential investors to California residents; 2) what investor qualifications (requirements) the offeror can live with; 3) what type of promotion the offeror believes will be needed; and 4) where the majority of the offeror’s business (real property) will be located.

Federal Rule 506 and Non-Public Advertising

With a Rule 506 offering, an unlimited number of “accredited” (based on high levels of assets or income) investors may invest, plus up to 35 non-accredited but “sophisticated” investors may invest.  This type of offering can be made in all 50 states (although New York requires filing in advance).

An “accredited” investor includes an entity with more than $5 million in assets.  It also includes an individual 1) whose net worth, or joint net worth with his/her spouse, exceeds $1,000,000; or 2) who either had income in excess of $200,000 in each of the two last years or joint income with his/her spouse in excess of $300,000 in those years and is reasonably expected to have the same income in the current year.  Unfortunately, as of the summer of 2010, the personal residence may no longer be included in the calculation of net worth.

A “sophisticated” investor is one who is sophisticated in terms of investments, either personally or with the help of a sophisticated and independent financial advisor.  This is somewhat subjective, but what is examined is the person’s investment experience, education, career, etc.

A Rule 506 offering cannot be made using “public” advertising but the offeror can send communications to specific persons and entities it reasonably believes meet the investor qualifications.  It can also distribute general information about itself and what it does (including on a web site and through educational seminars) so long as it does not refer to any specific past, present or future offerings.  Still, this should not be done without consulting a securities attorney:  It is easy to cross the line and violate the securities laws regarding public advertising.

With a Rule 506 offering, filings are made with the SEC and in state where the offering has at least one investor.

California 25102(f) Offering

A California 25102(f) offering is very similar to a Rule 506 offering.  It also allows an unlimited number of accredited investors and up to 35 non-accredited investors.  (As with a Rule 506 offering, no “public” advertising is permitted.)  But in addition to sophisticated investors a 25102(f) offering also allows a third class of investors:  Those who have a substantial preexisting relationship with one of the principals.  This is the so-called “friends, family and colleagues” category.  It can be useful if the principals want to allow investors of this type even though they are not accredited or sophisticated.

With a 25102(f) offering a filing is made with California.

California 25102(n) Offering

A California 25102(n) offering is unusual in that it allows some limited public advertising.  Specifically it allows the use of a brief “tombstone” ad.  (It’s called that because sometimes it feels like one has only as much space as is available for carving on a real tombstone.)  There are strict requirements for what the ad must contain, what it may contain, and what it cannot contain.  Basically the following is stated: The type of investment, its price, a very brief description of what the company does, and how to obtain more information.  Potential investors must complete an investor questionnaire and qualify before receiving any other information.  Still the ad can be run in newspapers and magazines and/or on a web site – and it can be mailed, emailed or faxed to anyone.

Investors are limited to accredited investors or, in the case of California corporations only (which frequently does not help with real-estate syndications), also investors that have roughly half the income or assets requirements for an accredited investor.

Filings must be made with California at both the beginning and end of the offering, and the offering may not be open for more than six months.

A California 25102(n) offering is exempt from federal regulation, and there are also about 30-35 states that have exemptions that can be used in conjunction with a 25102(f) offering (and which allow a tombstone ad) IF the offering is limited to $5 million and accredited investors only.  Still, the states’ exemptions for this are not identical, so care must be taken to make sure the requirements for all states are met (or at least the ones where investors are expected).

California Qualification by Permit

A California qualification by permit is not an exemption but a registration.  That means that a lengthy application must be submitted to the State (which makes the offering more costly) and the State must approve the offering before the offering can start, which usually takes two to three months after the application is submitted.

On the other hand, it allows full public advertising and investor qualifications are quite low.   All investors must be California residents, and must have 1) a minimum net worth of at least $75,000 and minimum gross income of $50,000 or (2) a minimum net worth of $150,000.  Net worth must be determined exclusive of the principal residence, home furnishings and automobiles and the investment must not exceed 10 percent of the net worth of the investor.

——————————

You are welcome to copy and distribute this document for non-commercial purposes, but all of the following must be left on it:

Methven & Associates

2232 Sixth Street Berkeley, CA 94710

Phone: (510) 649-4019 Fax: (510) 649-4024

bmethven@methvenlaw.com

Web Site: www.methvenlaw.com

Copyright 2011 Bruce E. Methven, All Rights Reserved.

The foregoing article constitutes general information only and should not be relied upon as legal advice.

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Mt. View CA | Tue. 10/4/11 | 7PM | RSVP

You, Real Estate and Tax Implications

Bellevue (Seattle) WA | Tuesday 10/11/11 | 6PM  | RSVP

2 Lectures: Real Estate Investing Basics & Real Estate and Tax Implications

Mt. View CA | Thu. 11/10/11 | 7PM | RSVP

5 Steps to Prosperity Paradigm

Mt. View CA | Tue. 12/8/11 | 7PM | RSVP

Year-End Event: Learn From Your Peers: A Panel of Investors

Recently Recorded Events

Atlanta Turn Key Rentals under $60,000 – [listen]

5 Steps to Prosperity Paradigm– [listen]

Interesting Readings

Suze Orman is Wrong About California Short Sales by Jeffrey H. Lerman, Esq. – [read]

Where is America moving? 2010 Migration Patterns – [read]

Investment of the Week

	Atlanta$49,500 Rent is $750/month Rehabbed & Rented Financing available* ROI: 15% * Good/bad/no credit, LLC can get financing.
3 Beds, 2 Baths, 1331, Sq. Ft., 1986 Built, 2011 RehabbedInterested to learn more about this property? – email

Optimizing Your Portfolio

How I helped an investor to save more than $30,000 a year. 

Several months ago I had a meeting with an investor. This investor had accumulated 40 properties over the years. He had asked for a meeting to evaluate his portfolio’s performance and to pick my brain about several issues he is having with few of his properties.

Through a series of questions we have reviewed his properties and his portfolio altogether. This session had provided him with an expert’s fresh eyes on his performance and portfolio.

By the end of the meeting he had an action items list of items he needs to complete to improve his performance, i.e. to create a  safer and better ROI. In addition and through a series of suggested changes, I have illustrated to him how he can save over $30,000 every year. After a long silence his reply to me was “That means I can buy a new beamer every year!”

If you own multiple properties and have not held a portfolio review for some time, I suggest you hold one, soon. Feel free to contact me to schedule a meeting.

Dani

Payoff the House or Keep the Mortgage?

By Bhupinder Shergill

Mortgage payoff use to be very common for our past generations and they usually didn’t wait to pay the home off for 30 years. Times have changed for our generation, now growing older and retiring with a mortgage is the norm.

For those of us who are 10, 20, 30… Years away from retirement, should we pay down extra towards the principle and pay off the mortgage off early?

Why should I pay the mortgage off early, what about my tax deduction?

Can I find another investment that pays more than interest I am paying to the bank?

Tax Deduction:

Let’s do a trade – I’ll pay you back 35 cents for each dollar you pay me. Would you like to make this trade? If so, I’ll gladly be the counterparty and take the dollar. Joke aside, that’s what mortgage tax deduction is doing for an average family. [Read more]

Atlanta Market Rental Factors

The metro Atlanta population has grown by 2.4 million in the last 20 years, and the region is now home to more than half the state’s population.

Metro Atlanta is expected to add nearly 2 million people – greater than the population of metro Austin, Texas, moving here – and 1 million jobs by 2030.

From the Metro Atlanta Chamber of Commerce Chamber 101 report:

Population Growth

2000-2008 72,000 per year

2008-2010 20,000 per year

2011-2020 projected at 90,000 per year

Job Market

2000-2008 63,000 jobs a year

2008-2010 loss of 200,000 jobs

2010-2020 projected 60,000 jobs added per year

[Read more]

More articles, infomation, videos, recordings, events and properties are available on www.simplydoit.net

Upcoming Events

Mt. View |  Tuesday 10/4/11 | 7 PM | RSVP

You, Real Estate and Tax Implications

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Two Lectures: Real Estate Investing Basics & Real Estate and Tax Implications

Atlanta: Investors Rental Buying Event

Recorded Tuesday 9/27/11 7PM PST [10PM ET] 

Topics

• Learn why Atlanta, Georgia, is a smokin’ hot market for rentals
• Earn fantastic, positive cash flow from 10-15% NET annual ROI
• Perfect for passive or IRA/401K investors
• Be ready to buy, limited supply of properties—many leased, all with property management
• Easy Qualify Financing. Down payments as low as $15,000
• $25,000 to $75,000 purchase price
• $500 to $900/month rental income

In this event we will take the time to understand, analyze learn more about this investment opportunity with extensive Q&A.

Live Video (presentation starts at minute 11:25)

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Mortgage payoff use to be very common for our past generations and they usually didn’t wait to pay the home off for 30 years. Times have changed for our generation, now growing older and retiring with a mortgage is the norm.

For those of us who are 10, 20, 30… Years away from retirement, should we pay down extra towards the principle and pay off the mortgage off early?

• Why should I pay the mortgage off early, what about my tax deduction?
• Can I find another investment that pays more than interest I am paying to the bank?

Tax Deduction:

Let’s do a trade – I’ll pay you back 35 cents for each dollar you pay me. Would you like to make this trade? If so, I’ll gladly be the counterparty and take the dollar  Joke aside, that’s what mortgage tax deduction is doing for an average family.

Assuming $100,000/year taxable income, single person in 28% federal* bracket. For a loan amount of $500,000 at 4.5%, $22,500 is the amount of interest per year you will be paying to the bank. Since mortgage interest is tax deductible, you can write off all $22,500, which will give you $6300 in federal tax refund.

If your mortgage is paid off, you don’t get $6300 tax deduction, but you also don’t pay $22,500 in interest in the first place!

I am not advocating that there are no benefits to mortgage tax deductions. It has a place, especially where a buyer has to take on a mortgage in order to purchase the home and they can certainly use the much needed extra cash for paying that interest to the bank. However, keep paying the interest for 30 years when you can weigh in the difference for your situation is question you can ask yourself – what route should I take for my financial well being?

Not paying off the mortgage:

Certainly there are advantages to not paying off your mortgage early. It is a personal choice when you look at all options. The tax break can be used to your advantage when you can invest in some other vehicle, where the return is higher than the interest you are paying on the mortgage.

*Source www.efile.com

Bhupinder Shergill | Avise Capital, LLC | www.avisecap.com

Recorded: Wednesday, September 21, 2011, 7:00 PM

In this webinar you will learn:

• How to get out of debt in 6-12 years (including mortgage).
• Changing banking habits, NOT spending habits to improve your financial standing.
• How to use cash-flow re-positioning to achieve desired results.
• Purchase multiple properties by spending same amount of money.
• How to provide total protection for your income and assets, without spending anything extra!
• Participating in this webinar will provide you with access to Software and Process, absolutely FREE of Cost.

THIS WORKSHOP IS FOR YOU if:

• Own a home?
• Want to be a homeowner?
• Saving for down payment?
• Want to create a passive
• Income stream?

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“About 15 minutes into her latest public television program, “The Money Class”, Suze Orman advises that if you have a home equity line of credit (HELOC) and you do a short sale, you have a big problem. She explains the HELOC is recourse and that even if you do a short sale, the HELOC lender can still come after your personal assets. Suze is wrong…at least in California. And her mistake could make all the difference in whether or not you decide to do a short sale.

I’m going to give Suze the benefit of the doubt and assume she recorded this program before California law changed on this important issue back on July 15, 2011. But it is essential that anybody considering a short sale get an accurate understanding of this new law (if you want to find out how you can get legal help on your short sale at no charge, please contact me at jeff@lermanlaw.com).

Click here to read my article published in today’s North Bay Business Journal about this important new development affecting all California residential short sales and why every homeowner whose home is “under water” must understand the short sale option.“

Currently 5 duplexes out of 12 have been sold. Only 7 more left.

The “Group Power” Factor

1. Price reduction by $10,000 per duplex

2. Negotiated management fee of 5% instead the typical 8%-10%

3. Negotiated leasing fee of 50% instead the typical 65%-100% of the first month rent

4. $1800 towards title policy should you chose to work with preferred lender

5. One month of PITI (principal, interest, taxes and insurance) if property is not fully leased in the first 30 days following completion 

Property Specification

New construction duplex (two doors)

High End Finishes and Fixtures w/ Complete Appliance Package

Builder Warranty

Financial Information

Average Unit Size: 1298 square feet per side

2596 square feet in total

Sales Price: Plan 2596 = $259,900 per duplex

Projected Rent/Month: $1,400 per unit

$2800 total per month

Taxes: Williamson County: 2.959%

Travis County: 2.913%

H.O.A.: $63 per duplex monthly

Insurance: $75 per duplex monthly

Leasing Fee: 50% first full month’s rent

Management Fee: 5% gross collected income

Utilities: All utilities are paid for by the tenant

Projected cash-on-cash return*: 11.16%

* Based on 25% down-payment and 5% interest rate

Intimidate Area

Gulf course community

Easy access to large employment centers

7 minutes from Dell’s Round Rock Headquarters

Right off of TX-130

Less than 20 minutes from Downtown Austin

About Austin-Round Rock

#1 Best Big Cities for Jobs

#1 America’s Fastest Growing Cities

#1 Next Biggest Boom Towns in the U.S.

#2 Best Cities for Finding Employment

#3 America’s Biggest Brain Magnets

#7 Best Places for Business and Careers

#11 Next Decade’s Fastest Growing World Cities

Next Step

Interested in more details or to be a part of this group purchase?

Contact Dani Beit-Or: dani@simplydoit.net or 650-440-5544

Well, a new reported has emerged from Atlas Van Lines.

As always very interesting to see the migration patterns, from the trenches and not from some study.

On an easy note check out Atlas Van Line Most Interesting Things Moved by Atlas Movers just for laughs.

Moving Patterns and Reasons by Atlas Van Lines