Cash Flow is What Matters

I had a nice chat last week with one of my investors from the Midwest. He invests in Atlanta and has many associates who only invest in their local markets. I had to ask, WHY? If you are a Real Estate Investor, why would it matter where you invest. Shouldn't you be looking at cash flow, cap rate, equity, stuff like that? He told me that they felt they had to be able to put their hands on it and touch it. That concept confuses me. Why would you want to do that? We hire property managers to manage the properties. We have contractors to handle any maintenance issues. We have video to be able to see the property. If you own stock or a mutual fund, do you go to the front door of the company to see it? No, you look at the prospectus and look at quarterly reports. You're only interested in the bottom line, is the fund or stock performing. That is the same way to look at Real Estate. It is an investment, you invest because you expect it make you money. You do not invest so you can drive by and say "look, I own that." I see investors every day looking at deals in California or New Mexico spending $150-250k on deals that rent for $1200-1500 per month. They look at these deals because they feel comfortable because they know the street the home is on and live in the area. We have deals in Metro Atlanta that are literally $35-55k that rent for $900-1100 per month. Do the math. You can triple your cash flow by simply investing in the Metro Atlanta area. I urge you to treat Real Estate Investing just like any other type of investing you may do. Look at the deal. Look at the numbers. If you do that, take the emotions out of it, you'll make a ton of money and be successful. There's never been a better time to get in the game and expand or start your Real Estate portfolio. Find an experienced agent to find you deals and get started. We find money making deals everyday. They are definitely out there waiting for you to pull the trigger and start making money. Good luck and please feel free to contact me with any questions you may have., I'd love to help you.

Obama

So much has been said about Obama. I sense that many that got duped into voting for him are starting to realize the mistake they made. I believe he was elected for a reason. I believe the reason is to open our eyes before it is too late. Maybe God wanted this so we can step back and take a look at the direction the Country is headed. We need to get back to our roots. This Country was founded on Freedom. This Country was founded as a Christian Nation. It seems that with everything that is going on, we are headed in the opposite direction of both. The purpose of our Government is not to own companies like General Motors, not to run our Health care System and not to control over 50% of the GDP. Government, Federal Government was intended to be small. Instead of being small, Obama seems bent on making it as large as possible. He wants Power and Control of as much as he can get his hands on. Why do you think he always attaches a dire sense of urgency to everything. He wants legislation passed without it being read. He got away with the Stimulus being passed that way, I pray that will be the only item passed that way. Thank God some Democrats are actually beginning to see where he is trying to lead us. We are on the verge of bankrupting the United States and he wants the Senate to pass the Cap and Trade and wants to commit Trillions more to Health care reform. We do not have the money to do it. When Obama urges citizens to tighten their belts, he should include the Government as well. Our deficit this year is going to be more than quadruple what the previous record was. Quadruple. That's right, it is projected to be over $1.4 Trillion. Do you know what a Trillion dollars amounts to? We need to cut the budget, lose all the Pork. We need to cut taxes and encourage small and medium businesses. All these bailouts have amounted to nothing but wasted tax payer dollars. Let capitalism work. When a company fails, let it go away. If there is a need for what they provided or produced, another company will jump in and take its place and operate more efficiently and be profitable. The Government does not need to waste taxpayer money on poorly run companies. That is how capitalism works, supply and demand at its best. Survival of the fittest, not survival of who gets the most Stimulus money. The Obama administration is trying to make companies that earn a profit look like the bad guys. Are you kidding, where would we be without profitable companies? Profitable companies create jobs, they spend on Research and Development. Profitable companies are what has made this country great. Why would we want to make the Government any bigger? What has the Government ever been in control of that has been run efficiently? The IRS? The United States Postal Service? Medicare? Social Security? Everything they have their hands on is a financial mess. If anything we need to get rid of some of the things they have control of. I think UPS and FEDEX would be more than capable of delivering the mail. As far as the IRS, can you say Fair Tax. That is an entirely different issue. With all the issues we hear about Medicare and even the VA hospitals, why on Earth would we even consider a Government run Health care System? How stupid does he think we are? I like it the way it is. Don't get me wrong, it may need some tweaks here and there, but those tweaks need to be in the form of legislation, not control. Legislation directed at Insurance Companies may be what is needed, not the creation of a Federally controlled monster.
I do not see how small businesses can be expected to provide Health Insurance to all their employees. Most small Mom and Pop businesses have a hard enough time keeping their doors open at all. Minimum wage just went up to over $7 an hour. I used to own several small businesses and I'll tell you first hand, payroll is a killer. Add benefits on top of that and what's left? If Obama had his way, everyone would work for monster companies like Walmart, GM, Bank of America and Home Depot. They would all belong to Unions, all be on Federalized Health care and all be as dependant on the Government as possible. He doesn't want entrepreneurs to be successful. He wants us to be like Europe. Look at Europe. They have no population growth, they have no religion. Their centralized medicine has not worked. Heck, look at Canada for that matter. Canadians cross the border to get the medical care they need. They come here, why would we want to create a system like they have? It makes no sense. We need to change our focus. Our Economy will only thrive if fueled by low taxes and interest rates. We need to trim the deficit and cut spending. We need to pass smart legislation that helps the private sector, not that tries to destroy or control it. The Middle Class needs to stand up and demand this from Government. The Middle Class has the Power to elect Candidates that share their ideals and will represent their best interests, not the best interests of a large Government. I pray we take a hard look in the mirror and open our eyes before it is too late. It's not too late, we've already seen a glimpse of hope in the response to the Health care debate. Let your voices be heard. Your elected officials will listen if enough speak out.

5 Great Investments Other Than Stocks????

I just read an article that suggests five investments other than stocks that the author considers great. She thinks that junk bonds, commodities, currency, hedging Treasuries and cash are great investments. What is her definition of great? These all seem like safe investments to me. I don't think you can expect any double digit returns from any of those any time soon. Cash is paying what, 2.5%? Last year commodities rose only 5.8% despite corn and wheat setting record prices. Currency trading is very risky and very complicated, something I would not recommend to a novice investor. Besides with all the government bailouts we're seeing worldwide, how is money a good bet. These governmennts are going to print more money, whenever that happens you can bet inflation will follow and your money will be worth less. Junk bonds, hmmmmm, we've been there before. All the government stimulus/spending will not make a bad company into a good one. I'd stay away from junk and municiple bonds, too risky for me. To me the only Great Investment out there right now is Real Estate. She does mention Real Estate in the article but says it is too risky because she thinks there are too mnay homes on the market right now. That is why it is such a great investment. Prices are so low due to all that is on the market. People need to live somewhere. We find deals every day that have over a 20% cap rate. When you can get in for around $40,000 and receive over $1000 a month in rent, isn't that a great investment? What is it going to take for these people to realize that this is the best Real Estate market for investors that we've seen, period. You can buy for pennies on the dollar and the rents have not gone down. We rent section 8 all day. We get paid by the government direct deposit every month on time. What else could you ask for? Invest in Real Estate today, you won't regret it. It really is the only GREAT Investment out there right now, especially in Atlanta.

Questions to Ask Your Investor Agent, Part 1.

There are many things you should take time to ask your Investor Agent. Investing in Real Estate can be a complicated endeavor if you choose to do it on your own. Take the guess work out of it and hire yourself an Agent. The first question you should ask is one to ask yourself. Should I use an Agent? Sometimes Realtors get a bum rap. Most of these situations arise when you do not have your own agent or you choose an inexperienced agent or maybe just a bad agent. That is why it is so important to take time and due your due diligence to choose the right agent for you. My question to you is, why wouldn't you hire an agent? Did you know that the seller pay all the commission. The seller pays the same commission whether or not you are properly represented. Using a buyer's agent is free. If you choose not to use one you are paying the Listing Agent double. They love customers like you. By doing this you are definately at a disadvantage. Who do you think would have your best interest in mind? The Listing Agent? Guess again. The Listing Agent has a contractual agreement to work for the seller. They sign a legal document called a Listing Agreement. Their duty is to get the seller the best price in the least amount of time for their property. How can they do that and at the same time get you, the buyer, the best price? It doesn't work. Never go into a subdivision or an open house without an agent of your own. You are putting yourself at a distinct disadvantage by doing that. If you were going to court for whatever reason, would you use the same attorney as your opponent? Of course you wouldn't. This is the same thing. Have a professional on your side with your best interest in mind. Best of all, remember that it is FREE! Using a Buyer's Agent is the best deal you can find anywhere. It could end up saving you thousands of dollars in the long run.

What to do with your 401K?

2/9/09
I just read an article that completely shed light on why more people aren’t using their IRA/401K money to invest in Real Estate. The article was from MSN Money and was titled “Lost Your Job? 5 Things to do with your 401K.” The author goes on to suggest five options for your 401K money. Not one of them is to roll it into a self-directed IRA and invest in Real Estate. This just shows how afraid people are of the Real Estate market today. It blows my mind. A favorite quote of mine, I believe it is Warren Buffet, is “when people are afraid, millionaires are made.” This is so true today. There is such an amazing opportunity out there and the few that take advantage now are going to be filthy rich. I know that for a fact. I plan on being a part of it. Christa and I already rolled our IRA’s, 401K and Roth to Equity Trust and have three separate self-directed accounts. We have several properties under contract and have partnered with another seasoned investor to take advantage of all the phenomenal deals out there. The 5 options the author suggested were not mind boggling. He suggested first to cash it out and take the 10% penalty the IRS will hit you with when you do. His thought was that you might need the money now to pay for your mortgage or utilities. That could be true, but it wouldn’t be the most prudent move you could make. Another option was to do nothing. Once again, probably not the most prudent move. You have limited investment options, and a lot of times when you are no longer employed the company will require you move the money out. Third option was to roll it over to a ROTH, take the tax hit now and keep it in Mutual Funds. Not a bad option, probably the best one he gives. Problem with it is that so much has been lost over the past year in most people’s accounts that it would really take years of double digit returns to just gain back what was lost. It could take 10 years just to get even. That’s the reality of where the market is and what to expect it to do in the future. His other option was to roll it over to a traditional IRA, once again depending on your age maybe not a bad idea, but expect a long wait for it to regain all its losses. The final suggestion was to roll it into the new employers 401K, assuming you find a new job, that would be an option just like putting it in a Roth or Traditional.
My suggestion is to roll it to a traditional self-directed IRA and invest in Real Estate. In today’s market Real Estate offers the best bang for your buck. Using your IRA allows you to invest in this amazing market without capital gains. Talk to your CPA about all the tax advantages. We plan on taking some of the gains we make in Real Estate and then reinvesting in the stock market. If you do that, you can take advantage of the great real estate deals and also get back into the market when it is low. I always suggest to diversify, just do it the right way. All the money that is in the market now has already taken a huge hit, its time to get it out now and find ways to recoup it. Once you start seeing results from your Real Estate deals, then slowly and methodically (dollar-cost averaging) get back into the stock market.
Let’s invest wisely and make some real money! Do not rely on the crooks on Wall Street or the government. The government wants you to believe it is the end of the world so they can spend more of your money for you. Wall Street cries for bailout money then they pay themselves Billions of dollars in bonuses for being failures, all with your hard earned money. I’d like to have that job. Can you believe the moxey of these people. They lose a ton of money, and then reward themselves with bonuses. I thought a bonus was for a job well done. The only job well done they have accomplished was convincing the government to bail them out. It’s unbelievable. I’ll stick with Real Estate. You buy a home severely undervalue . It is tangible, you can touch it. You can rent it out and have positive cash flow (remember you paid cash for it with your self-directed IRA, there is no mortgage). Since you bought it undervalue you have an equity stake in it, plus when the retail Real Estate market rebounds you should have significant appreciation. To me it’s a no-brainer. I hope the light clicks on for you too.