The Money Masters book is all about making more money by learning from those who have made money in real estate rather than by selling seminars, home-study courses, books, and tapes. Although the single-family house is the foundation upon which each of our speakers has built his success, they are completely different people with different ways of going about making money. Consequently, some of the things they’ve done will be similar, but at the same time, because they come from different places, you’ll discover for yourself that they do many things quite differently.
You’ll hear the techniques our speakers have used to move away from the pack as they buy, fix, finance, sell, manage, lease and Option properties. You‘ll learn how they get others to help them find and finance deals; how they build equity and future wealth both by using today’s low interest rates as well as creative financing, leases, and Options to buy houses without personal liability. And you’ll see how they have paid off the loans on their houses with the profits they make “fixing” and “flipping” houses, lending money, and refinancing to create strong cash flow from rents.
One thing will probably stand out: Our speakers have developed their abilities in order to be able to do more than one thing.
• They buy and sell; buy and manage; sandwich lease; Option; do sale-lease-backs both as buyers and sellers; they both borrow and lend money; and buy discounted Notes.
• They have learned an array of financing techniques that both reduce their costs and enhance their profits.
• They are able to make money on houses they don’t own both as “fixers” and as “flippers” by wrapping leases, Options, and Notes.
• They have become knowledgeable about ways to avoid and reduce both income and capital gains taxes.
• They have worked closely with tax professionals to root out legal ways to use Trusts, corporations, and LLCs tax-free while maintaining a low tax audit profile.
• They’ve learned how to use tax-free Exchanges to shelter their profits.
• They have found ways to use their tax-savvy to attract high bracket investors to help fund their transactions.
We’ve mixed and matched our presenters in an effort to provide a rational flow of information. We’ll begin with some ideas on buying houses. Then we’ll move into high-volume marketing and selling techniques. You’ll see how to use “sandwich sales” to enable you to buy and sell quickly.
Next, we’ll look at ways in which financing can be used to increase profits, whether buying or selling. In this segment, we’ll consider both conventional financing as well as creative seller financing. We’ll explain how to use the seller’s credit to fund your purchase without any loan liability, and how to use sale-leaseback strategies in lieu of refinancing. All of these applications fall under the general heading of “debt” financing. Following this, you’ll be shown how to use investors to create low risk “equity” financing in which you share both risk and profit with investors.
. You’ll be introduced to ways in which the lowly mobile home can be exploited to produce high yields both from buying and selling the units, and as a means to generate high yielding “paper” which in turn can be used to buy houses at discounted values.
We’ll wind up this section on financing with a segment on the uses of leases and Options in lieu of debt to buy, fix, develop, sell, and then to trade tax-free. You’ll learn how to create much higher yields with less risk and with much lower taxes. You’ll find out how Options can be used to “season” loans under the new HUD regulations, and to be able to completely eliminate income taxes on sales of personal residences and income property.
To put tax strategies into their proper perspective, we’ve devoted a segment to the ways in which entrepreneurs can legally avoid, or drastically reduce income taxes on their profits. We’ll take the time to explain precisely how tax-free exchanging works, and ways in which the use of a Qualified Intermediary can increase after tax profits as you upgrade your portfolio. We’ll take a close look at the entire tax audit process from the criteria used to select returns for audit, to the way in which taxpayers can prepare for, and be represented at, audits to enhance their prospects for favorable rulings.
We’ll spend an entire day on asset protection. Commencing with ways in which to use Land Trusts to hold houses and to exchange them privately without the need for expensive closing costs and transfer taxes, we’ll move on to ways in which corporations, trusts, limited liability companies, and partnerships can be used to build an iron-clad fortress to protect wealth against the ravages of law suits and estate taxes.
The final segment of the day will be devoted to explaining the new Nevada Spendthrift Trust Act, and how is can be used to create an impervious barrier between your assets and those who would seize them. We’ll go over an actual trust that incorporates most of the Nevada asset protection trust strategies so you will be able to devise your own and start protecting your assets right away.
That is what the Money Masters seminar is all about. I hope you’ll get as much out of it as we all did putting this one-of-a-kind seminar together for you.
TEN BEST REAL ESTATE OPPORTUNITIES TODAY
1. Buy your own home with a small down payment. Get use, amortization and depreciation; or do the same by equity sharing with
live-in kids. At the end of two years, sell out for tax-free gains, then repeat the process.
2. Do the above, but have your corporation or LLC buy your home and take the tax write-offs as business expenses while you continue to live there.
3. Buy Single Family Rental homes and get all the benefits of income, depreciation, equity build-up, appreciation, and liquidity.
4. Buy fixer-uppers for cash flow to support yourself and use excess profits to pay off the loans on a growing portfolio.
5. Buy, sell, and hold discounted mortgages for high yields, sheltered within limits by depreciation on rental houses.
6. Buy in the distress markets via foreclosures, tax sales; and from poor money managers, amateur landlords, bankruptcy trustees, IRS seizures and sales, tax certificates, fixers, estates, etc.
7. Use Leases and Options to control equities and cash flow.
8. Buy small fixer-upper apartment units that you can improve and use to exchange up into larger complexes tax-free.
9. Buy, fix up, finance, sell, rent, or lease/Option Mobile Homes.
10. Create lifetime income with your own leveraged mortgage portfolio by buying, fixing up, selling and carrying the loan on
wrap-around financing.
FIVE WAYS HOUSES CREATE WEALTH
A. High Leverage Opportunities with minimum personal liability and risk via Seller-financing, Leases, Options; alone or in any
combination.
B. Via tax-free sale of personal residence; or as a vehicle to use to move into larger investment properties through the use of
tax-free exchange techniques.
C. Tax-Free cash flow from equity financing coupled with fully deductible interest and, under certain circumstances, depreciation.
D. Use, possession, occupancy by owners, and other entities.
E. Low capital gains tax treatment when some houses are eventually sold.
TAILOR YOUR ACTIVITIES TO FIT YOUR TALENT AND AMBITION
Each of us is different because of: different ages, different income and tax levels, different goals, different personal and financial and obligations, different comfort levels and risk tolerances, different locations, different skills, knowledge and levels of experiences. So we each react differently when observing the same phenomenon.
Just to make things more complicated, properties are different too. Some create cash flows but require more management skills. Some are more risky, but offer larger rewards. Some are slow burners with little risk, cash flow and management that require less effort and expertise. Some produce large taxable yields; while others produce lower non-taxable yields. Some offer swift amortization of loans with low interest and cash flow. Some offer high tax benefits, but at the cost of high interest.
The task of the Entrepreneur is to assess the differences between properties and people and to resolve them to the satisfaction of the parties. He thus has to understand the variables that make one property attractive to certain people, and other properties appealing to others. One major difference between people is their time frames. Another is the degree of risk they will tolerate. And still another is their personal ability as financiers, negotiators, marketers, or fixers. Where people live has a lot do to with how they use houses to make money. Also, the amount of money they have, or can borrow, dictate the kinds of properties they can buy, and the deals they can make.
Some people are turtles who are willing to wait patiently for years without much income from property while their investment builds equity and amortizes its debt and eventually becomes free and clear. They pay very little tax on their income for years, and then are able to either pay only capital gains when they finally sell, or they avoid taxes entirely through tax- free exchanging.
For these investors, the selection process should focus on those properties that offer long-term profits by virtue of their construction quality, style, neighborhood amenities, cash flow appreciation potential, financing and curb appeal with the least risk to the entrepreneur. Then they should also be located in the market at a point in price and proximity to jobs so that management can extract attractive cash flow.
The ideal property should produce a net, after tax management yield that will compete with other forms of savings. Appreciation should represent the speculative “icing on the cake” at the point of liquidation of the investment. Bear in mind that price appreciation is only a fantasy until a property is sold, then it’s reduced by selling costs and taxes as well as the loss of purchasing power that’s occurred because of inflation. In the meantime, any negative cash flow re experience comes out of life style and financial security.
Many people are in a hurry to make money. They buy only to sell quickly at a profit, and then continue to repeat the process. They usually make a lot of money, but they also have to invest a lot of time and energy and are subject to more financial risk because of market fluctuations. The tax code treats buy/sell speculators a lot more severely than it does long term investors. The income they earn is treated as earned income at ordinary income tax rates, and they are denied depreciation and the ability to exchange tax-free.
Some people in areas that have enjoyed consistent high growth for many years like highly leveraged properties and are willing to risk signing promissory notes with full recourse that require high monthly payments in return for being able to take advantage of high yields from appreciation rather than from cash flow. Others prefer no debt at all. They are willing to settle for lower, but safer, cash flow yields even though the amount of appreciation denominated in dollars between comparable leveraged and free and clear houses is the same.
People who have access to a lot of cash or credit can buy houses at deep discounts to market value at tax sales, foreclosures, from estates, auctions, etc. They can also buy discounted mortgage notes, and also earn high yields by lending money to other entrepreneurs. In the opposite circumstance, those with neither cash nor credit must resort to being able to find and negotiate with motivated sellers who will provide the financing they need to buy houses.
BUYING AT A PROFIT
Most of the profit created buying and selling single family houses is made at point of purchase, yet, amazingly, serious investors still leave the delicate task of final stages of negotiation of a purchase up to brokers and attorneys.
Learn more with Jack MIller’s book THE MONEY MASTERS — Fast Track to Financial Success.
