volume 6, issue 9 september 2013 reia bulletin - …files.meetup.com/1395453/columbia reia september...
TRANSCRIPT
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Nor th American REIA
T H I S M O N T H : R O B E R T W O O D R U F F
Volume 6 , Issue 9
September 2013
I N S I D E T H I S I S S U E :
Monthly Event Schedule 2
IRA or 401k? 3
Coaching Programs 4
REIA Sub-Groups 7
Form of the Month 9
Assess Cash Flow Risk 10
Sponsors/Partners 12
Upcoming Boot Camp 13
Membership App 14
REIA BULLETIN
Questions? Comments? Have an
article to submit? We appreciate
your feedback! Send email to:
Hello everyone, My name is Robert Woodruff. I just got back from 5 weeks
in Costa Rica and Panama to train the North American REIA Chapters how
to retire in record speed.
I retired at 32 years of age. The
experience that I needed to achieve
such a feat came from being a long
standing member of my hometown
REIA. Become a member of your REIA
today to ensure your own success in
life as I have mine. I travel the world
with my family living the life of my
dreams abroad. In my spare time, I
love guaranteeing you proven results
that will save you years in life.
I started investing when I moved south by unwittingly buying 2 mobile
homes and renting them out to pay for my college housing. "I was not
born with a golden spoon." I spent 7 years in college. While in college I
joined a few REIA's and learned how to flip houses, hold houses as rentals,
but what I learned "most importantly" was creative financing and the ne-
cessity of cash flow to set me free in life. Understanding the necessity of
cash flow allowed me to become a commercial business buyer instead of
just mobile homes, land, or houses. It truly set me free and gave me a
springboard to much larger investments.
I have many students from South Carolina and all over the country who
have achieved their financial freedom within 6-12 months using my no non-
sense strategies allowing them to become leaders of REIA's and devote
their time towards helping others succeed in life as we have.
I founded North American REIA. We are the FASTEST Adult Financial Litera-
cy Organization within our state, country, and abroad. What you need to
know about me as a professional is that I take care of my REIA Leaders,
Members, Employees, Assisted Living War Veterans, and Family. I take
your success and failure personally and l devote my time, my re-
sources, and organization to help ensure and guarantee that you succeed.
(Continued on page 5)
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Organizers
Terry Nation - [email protected] - (803) 807-8140
Lisa Cunningham - [email protected] - (803) 873-8897
Steve Cunningham - [email protected] - (803) 479-7197
Rick Renner - [email protected] - (803) 960-3849
Don Kelley - [email protected] - (803) 413-8081
Mission Statement Columbia Real Estate Investors
Association is an organization dedi-
cated to helping you learn, grow
and prosper as a real estate in-
vestor. We provide educational
and networking opportunities to
real estate investors at all levels.
Legal Disclaimer Columbia Real Estate Investors As-
sociation does not exist to render and
does not give legal, tax, economic
or investment advice and disclaims
all liability for the actions or inac-
tion taken or not as a result of
communications from or to it’s
members, officers, directors, employ-
ees, contractors. Each individual
should consult his/her own counsel,
accountant and other advisors as to
legal, tax, economic, investment and
related matters concerning real estate
and other investments.
Content Disclaimer The views & opinions expressed by
authors of articles contributed to
this newsletter do not necessarily
reflect those of the association, the
board of directors or the staff.
Copyright @ 2009
Monthly Event Schedule
The Columbia REIA Open Meeting
Wednesday at 6:30PM
(immediately prior to 1st Thursday)
Woman's Investment Networking
every 2nd Thursday at 12:30PM
Deal Maker’s Breakfast
every 3rd Wednesday at 8AM
CASHFLOW 101
3rd Tuesday at 6PM
Technology & Internet Marketing
every 2nd & 4th Tuesday at 6:45PM
The Night Owl Social
every Last Wednesday at 7PM
Sales 101 / Public Speaking
Every Last Thursday at 7pm
Beginning Investors Group / Investing 101
Every 1st & 3rd Thursday
To receive monthly email notifications,
join our Meetup Site at:
www.Meetup.com/ColumbiaREIA
Columbia
Real Estate Investors Assoc.
www.ColumbiaREIA.com
Meetup.com/ColumbiaREIA
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What’s Better for Real Estate Investors - an IRA or 401k? By Phil Pustejovsky
More and more creative real estate investors
are switching to the individual 401k and loving
their new plan.
The Self-Directed IRA has been the standard vehicle
for alternative investments in retirement accounts.
As many creative real estate investors know, mutu-
al funds aren’t the only investing options for your
nest egg. You can buy real estate, tax liens, notes,
and even become your own private money lender.
Most people set up a Self-Directed IRA with an IRA custodian, then have learned to jump
through the hoops that go along with it. But did you know that there is a better way?
You’re about to discover what most real estate investors will never know about investing in real
estate in a retirement account. Introducing…
The Solo 401k
The Solo 401k, also known as an individual 401k or i401k, can be a great alternative to a Self-
Directed IRA for creative real estate professionals. Here are some of the benefits:
The Checkbook: With an individual 401k, you are creating a 401k plan for your own busi-
ness. You can elect yourself as the administrator. The administrator (you) is the one that
write the checks. Having the checkbook is much more efficient than going through the cus-
todian intermediary. For example, if you find a fantastic deal and want to get it under con-
tract with earnest money on the spot, you can do that with the solo 401k. With the self-
directed IRA, you have to wait for your custodian to cut the check, which could cause you to
lose the deal.
No UBTI: With both the self-directed IRA and the solo 401k, you can use borrowed money
to help with the purchase of real estate as long as the loan is non-recourse. However, with
the solo401K, you will avoid the Unrelated Business Taxable Income (UBTI) issue that is
triggered with a self-directed IRA.
Higher Contributions: The total contributions to a solo 401k can be larger per year than a
self-directed IRA. Plus, there are no income limits for Roth contributions.
Mistake Forgiveness: If you do a prohibited transaction, you have a chance to adjust your
(Continued on page 6)
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AR E YO U LO O K I NG FO R T H AT FI NA L PI EC E O F T H E P U Z ZL E?
REIA Bulle tin Page 4
Do you have all the tools needed to
succeed, but lack the motivation or
need better time management skills?
Would you find it helpful to work one-
on-one with someone who has already
„been there and done that‟?
How could brainstorming with other
investors on a regular basis help you?
Your REIA has programs available for
investors at all levels!
For more details on coaching levels
and tuition, send an email to:
WANTED: Good Speakers!
The Charleston REIA is
always looking for good
speakers who are willing to
share their knowledge. If
you know of a good speak-er that would like to speak
at one of our upcoming
meetings, please email:
newsletter @reiaconsultant.com
The Mastermind can be summed
up in two words: mutual bene-
ficiaries. Members of the mas-
termind group will not only pro-
vide others with sound feedback
and advice, but will also receive
these benefits from the group.
Some of the qualities we look for
in a participant include:
1. Drive and Commitment.
2. Diverse skills & experience.
3. Problem Solvers.
The conference call begins at
Noon and lasts for 1 hour. You
MUST RSVP on Meetup to receive
the number and pin. For rates &
availability, email:
mastermind
@reiaconsultant.com
MA S T ER M IN D CO N FER ENC E C A L L
In our continuing effort to pro-
vide the most value to our
members, the mastermind call
is now available only as a sub-
scription service. We do offer
one open call each month lim-
ited to 6 RSVP’s as a free trial.
Hassle-free Homes Project Management
hassle-freehomes.com
Take your R.E. investing
business to the next level
with a mentor, one-on-one
coach, or with one of our accountability programs!
5
A great place to ex-
change contacts, deals,
knowledge and recharge
your motivation with like-minded investors. -
Curt-
I love the fact that oth-
er like-minded and suc-
cessful investors are
willing to come togeth-er and share not only
what they are doing
but how and why as
well. This is infor-
mation that is invalua-ble to your continued
success as an investor.
-Ryan-
(Robert Woodruff page 2)
I invest into the Medical field and have owned many medical business over
the last 10 years that relieve people of their pain and increase their Health
and wellbeing. I hire and fire Doctors. I work tirelessly to protect and enhance
the lives of everyone I come into contact with; Patients, Employees, REIA
Members, Leaders, and Coaching Students. I do my absolute best to ensure
that we have the best quality speakers who will transform your lives with
guaranteed results every-single-month. I hire and fire National Speakers.
When and if they get out of line, as a "Sheepdog," it is my job to run them off
& save you hardships from dealing with them.
I own several million dollars worth of real estate and small business and
train you proven strategies to do the same. I created our coaching programs
for North American REIA, I appoint our executive directors, treasurers, presi-
dents, vice presidents, subgroup organizers of the subgroups that you love so
much and ensure that you have a safe environment to learn NEW strategies,
fundamentals, and business concepts to propel you and guide you safely into
your desired future. Our Organization will truly handle all of your educational
needs no-matter your level of growth or development. (We also have
coaching programs for flipping houses, wholesaling, commercial in-
vestments, business management, and more...)
The Keys to Cash Flow was my first system to improve the lives of others.
AND WOW!!! What a Massive Success it has been! The Keys has been prov-
en to get You out of the rat race within mere months and provide you a
springboard to commercial investing and business management fundamentals
that will earn you millions of dollars passively.
Here' what you will learn at the Keys to Cash Flow Event:
*Creative Financing; Buy and sell using; Lease Options, Rent-to-Own, No
Money Down, 0% interest, Subject-to, and more.
*Creative Marketing; Save tens of thousands learning how not to market, and
earn up to a 30-50% response rate learning how to market correctly.
*How to analyze and negotiate a profitable deal
*How to not spin your wheels doing unnecessary things
*How to build enough passive income to retire within 6-12 months.
*How to fix and manage your own property
*How to pay NO TAXES legally!
*How to control other peoples property without the need for ownership or
bank qualifying
*How to live life on your own terms in record speed.
* How to begin a path to massive wealth & self-worth immediately.
.....and still far too much to mention. This event provides over
50+ proven benefits.
Visit: ColumbiaREIA.com Robert’s upcoming events!
6
(What‟s Better for RE Investors page 2)
mistake in an i401k. With a self-directed IRA, a prohibited transaction usually ends up in a
liquidation of the plan. And liquidation has significant penalties and tax consequences.
Long-Term Cost Savings: The fees to set up an i401k may be more, but the costs to
maintain it are much less than having to pay a custodian each year. IRA custodians charge
as a percentage of the amount in your account, so the more successful and larger your self-
directed IRA becomes, the more you have to pay. With the solo 401k, the nominal ongoing
fees to maintain it typically just deal with keeping your plan up to date with the right paper-
work.
Be Your Own Bank: The feature that attracts a lot of people to the individual 401k is that
the ability to borrow up to $50,000 from it. And you can spend that borrowed money on
whatever you want. Just be sure to you pay yourself back.
You may be thinking, “How come I’ve never heard of this?” Four reasons:
First, it only came into existence in 2001, and a lot of people don’t know about the solo 401k.
Second, financial planners and advisers typically stick with what they know and many aren’t ed-
ucated on the i401k. Third, IRA custodians can earn more fees from self-directed IRA accounts
since individual 401ks require less interaction. Finally, the solo 401k is only an option for people
who have their own business. And that’s important to know–the requirements.
Individual 401K Requirements
Meeting the requirements for an individual 401k was tailor made for creative real estate inves-
tors:
Operate a Business: You must operate a business, since this is a 401k plan for your com-
pany. You don’t need to incorporate or file documents with the Secretary of State to have a
business. It can be as simple as a sole proprietorship or partnership, but you at least have
to have a small business, and that’s exactly what most creative real estate investors have.
Some Earned Income: Your income in this business must have at least some earned in-
come (or the intent, if you just started it), even if the majority is passive income from rental
property. Most creative investors can generate some earned income from a wholesale, an
assignment, or a flip.
No Full-Time Employees: Although you can have 1099 independent contractors as well as
part-timers, you can’t have any full-time employees outside of a spouse. Most creative in-
vestors fit this bill, as well.
i401K Drawbacks
Yes, there are a few drawbacks to be aware of, too.
(Continued on page 8)
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Great group of people!
Very welcoming to a
newcomer and very obvi-
ous that they care about each other's success... I
feel that I can learn a lot
and get a great deal of
knowledge to help me
achieve my goals.
-Renee-
Columbia REIA Sub-Groups
This group is a literal
treasure house of
knowledge and experi-
ences with people who are genuine and unself-
ishly willing to offer as-
sistance. It's a great
thing to know you're
connected to such a powerful network.
-Mark-
All Things Real Estate
StopPayingRent
Columbia.com
Lieve Enterprises, LLC
Property Investors
(803) 223-9109
“Night Owl Social”
Columbia REIA‟s monthly member mixer. Meet and Net-work with local investors, discuss the latest topics. You
can literally save thousands by learning from other inves-
tors' successes & mistakes.
Hosted by Terry Nation
“Deal Maker’s Breakfast”
Keep your week going strong with a motivational & pro-ductive morning meeting. There is no better way to start-
off a morning than in the company of other investors
sharing deals and ideas.
Hosted by Rick Renner
“CASHFLOW 101 Game Night”
Learn the basic philosophy of cash flow with like minded investors. For those who want to enjoy learning in a fun
and interactive atmosphere. You can practice investing
without the real-world risks!
Hosted by Lisa Cunningham
“Women’s Investment Networking”
Come meet with other women entrepreneurs & real es-tate investors from the Lowcountry. Meetings will cover
women specific topics for todays' real estate market, and
provide networking opportunities.
Hosted by Lisa Cunningham
“Tech Night” (Webinar)
This webinar you teach you the practical tools, tips, and techniques to help you incorporate technology into your
real estate investing business.
Visit our Meetup site for details!
Sales 101 / Public Speaking
Come out and meet with other entrepreneurs & real es-tate investors. These meetings will cover basic selling
techniques and presentation skills.
Hosted by Steve Cunningham
Beginning Investors Group
Investing 101: Learn all the benefits of your local REIA,
and also the basics of real estate investing. Get you questions answered by a “REIA veteran”!
Hosted by Don Kelley
8
(What‟s Better for RE Investors page 3)
Competent Counsel: Very few advisers or IRA custodian companies really have experience
and a deep understanding of how to correctly set up and educate creative investors on the
nuances of real estate investing in a solo 401k.
Opening a Bank Account: Your favorite bank where you hold all of your other accounts
may not be able to open an i401k bank account. Some bankers will look at you with cross
eyes when you try to open one. But if you are a creative investor, you are probably used to
people being puzzled by your out-of-the-box thinking.
Obtaining Title Insurance: Getting title insurance issued on solo 401K purchases can
sometimes be a challenge. Title insurance underwriters don’t always know how to handle
them.
Self-Discipline: Perhaps the biggest drawback to the i401k is also its biggest strength, giv-
ing you the purse strings and having no person in the middle to hold you accountable. Out-
side of borrowing from it, you can’t use your retirement money for personal use, even
though you might have the checkbook in your possession. In fact, commingling personal
with retirement funds on any investment is not allowed. So if you have no self-discipline,
perhaps you are better off letting a third party custodian protect you from yourself.
The best way to overcome these drawbacks is to work with someone who has significant expe-
rience in setting up and administering these plans for creative real estate investors. They
should be able to set it up right with the proper paperwork, help you open the bank account,
provide materials, so you can educate title insurance underwriters on solo 401ks and assist you
along the way, so that you avoid any mistakes.
Much like any aspect of creative real estate investing, you have to work with the right people.
Solo 401K Investing
Investing in your real estate business using retirement money can be a great opportunity for
you. The individual 401k might be a better option for creative real estate investors, but every-
one’s situation is different.
For example, some self-directed IRA people don’t want to change and to acquire checkbook ac-
cess; they set up an LLC in conjunction with their IRA. This technique works, but the costs of
the set up and the annual fee for an LLC can be costly, and you still miss out on all the other
great benefits of a solo 401k.
More and more creative real estate investors are
switching to the individual 401k and loving their new plan!
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Form of the Month “Limited Power of Attorney”
(This form is available at our Meetup site in the Files section)
This month we have a limited power of attorney to use when tying up property.
As always, these forms are for informational purposes only. Please have your at-
torney review and modify them as needed. If you have any questions regarding
this form, please email them to: [email protected].
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How to Assess Cash Flow Risk by Robert Woodruff
Hi, this is Robert Woodruff, President of the Charleston REIA and author of, “The Keys to
Cash Flow.” Whether it’s the members of my club, or the students from my course, the big-
gest thing I see most investors do not have is a clear understanding of cash flow risk. As a
matter of fact, I often meet investors who build large & small real estate portfolios and
subsequently lose “everything” because they had no clue on how to assess the risk of each
investment. Please pay close attention. In this article, I will show you how to determine the
cash flow risk of several investments.
But first, we all know that there are plenty of gurus with courses on how to buy property
using a plethora of no money down strategies. Each of these courses should carry a dis-
claimer that reads, “Warning, if used too often, this strategy will bankrupt you!” Although
these courses have disclaimers to protect the guru, they do not come with disclaimers like
this to protect you.
Let’s discuss the cash-flow risk associated with no-money-down deals on houses. Most of
the time, these properties were bought by sub-prime borrowers. Which means their credit
wasn’t the best. This also equates to them having a slightly higher payment than someone
with good credit. Which means one thing, upon renting the property to a tenant-buyer; we
will have a hard time making a decent cash flow off of this investment. We are taught by
Gurus through no money down strategies that we are to collect as many of these houses as
possible in order to build wealth and become rich. (Which is False.) Make no mistake, this
is a fools’ errand. I’ll show you why.
Imagine acquiring just 10 properties no money down. Each has $30,000 in equity giving us
a combined net-worth of $300,000 in real estate. Sounds nice right? Well, each property
has an average mortgage payment of $800 per month including taxes and insurance. We
can rent each property for $1,000 per month. This now means we have a combined total
cash flow of $2,000 per month IF all of our properties are filled and our tenants are paying.
But, “WHAT IF” they stop paying?? What if half of your tenants stop paying at the same
time? If half of your tenants stop paying, than you still get $1000 in cash flow from your 5
properties that are filled. Only now, you have to pay $4,000 per month for the ones that
opened-up. Not to mention the cost of fixing each property, AND the cost of marketing
each until they are filled. My question is, “Where do you plan on acquiring that money?”
Surely it will not be from your 5 houses that are filled. The 5 you have filled only bring you
$1,000 dollars per month. So where are you going to come up with the additional $4,000
PLUS what you’ll need to fix and refill your properties? I call this, “The Storm.” Warren Buf-
(Continued on the next page)
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(How to Assess Cash Flow Risk page 2)
fet calls it, “When the tide goes out.” Either way, it happens to ALL of us. As sure as day
turns to night, you will get hit by the storm. It’s just a matter of time before it happens. No
Investor is immune to this type of scenario. Although, there are things we can do to protect
ourselves from losing everything we fight so hard to accumulate. Let’s evaluate another
popular strategy, multi-family investments.
Multi-family investments are not very different from buying houses no money down. If you
buy a multi-family property at 70% of value, you will still have the same cash flow scenar-
io. When you add taxes and insurance to the payment for your 4-plex multifamily invest-
ment, you will have to make sure 3 of the 4 units are filled just to make your monthly pay-
ment. There is one helpful thing about this however. The big difference between multifami-
ly housing & single-family residential housing is that it takes more than one family to move
-out before you have to start making the payment. On the other hand, if your tenants stop
paying, you stand to lose 3 times more than you make on a good month. As you can imag-
ine, paying the full payment on a multi-family investment will most likely put you in a state
of emergency.
My last example is something that is rarely looked upon by new investors as being good
deals. Often, they are too worried about “other people’s perceptions’” of their socio-
economic status.
In this example, I will show you how to assess the cash flow risk of mobile homes or low-
risk investments. (AKA: RV’s, Trucks, Heavy Equip, Land, etc.) When someone purchases a
mobile home investment, they usually do it with cash. There is absolutely no mortgage
payment to speak of. However, if the home is in a park, instead of having a mortgage pay-
ment, you have lot rent. Lot rent is usually half of what you can rent the mobile for. So on
a good month, you make twice as much as what you would lose on a bad month.
See what I mean? The examples I gave you for cash flowing off houses & multi-family are
clearly upside-down. That means you stand to pay 3 to 4 times as much on a bad month
compared to a good one. Mobile homes on the other hand, are the complete opposite. You
make nearly double or more off a mobile home investment on a good month versus a bad
one. (For example: you make $3-400 on a good month, and only have to pay lot rent when
your tenant stops paying. Lot rent may only be $150-200 dollars.)
If being a successful investor is important to you, you must first consider and assess the
cash flow risk of your investments. “You must pay close attention to the numbers.” Not do-
ing so means the difference between brilliant success and utter failure.
Visit: ColumbiaREIA.com Robert’s upcoming events!
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“A good blend of begin-
ners to very active and knowledgeable investors
like minded and inter-
ested in the success of
everyone.” -David-
“Lots of people that
are willing to share
their knowledge if you
are willing to share some of yours. The
members really do
want to help YOU!!! “
-Brian-
Through partnership with Community Buying Group,
all REIA members can now save from these
suppliers and more! See an Organizer for details.
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