Investment
Getting Started in High Return Real Estate Investing
Monday, March 23rd, 2009 | Investment, Money, Real Estate, Safety | 1 Comment
From my years in consulting with small businesses, I know the most important part of building any type of business is to identify your destination. Another word for this starting point is write down where you want to go and what you are willing to do to get there.
This destination must be specific and have a date attached to it. I suggest looking ahead five years. Put yourself there and write down what you see. If you are not familiar with this concept, there are a host of resources available to fill in any blanks you might have. Score, Brian Tracy, Ziglar, or any resource on writing a business plan will give you more than enough material to complete this task. One famous quote should help you with this starting point. “What the mind can conceive and believe the body can achieve.”
Put this vision in your head with reminders in key places to help your mind work out the details for you. If you believe what the movie “The Secret” describes, do what the movie suggests.
Why Use Trusts?
Friday, January 9th, 2009 | Investment, Money, Real Estate, The Economy | No Comments
Estate Planning – Bypassing Probate
1. Assets held in trust are not part of an individual’s estate; therefore, those assets would not be included in probate because they are already held in trust for the benefit of another individual. If a beneficiary dies, the beneficial interest in a trust may be part of their estate; however, this would not affect the asset or the trust, unless dictated by the Declaration of Trust and Trust Agreement.
2. The best example if this is Anna Nicole Smith. This was the 20-Something model that married the 90-Something Texas oil billionaire. The billionaire left Smith several million dollars and his children contested his Will. Although the Will was modified several years prior to his death, the children contested on the grounds that the billionaire was not competent to make the change. The children said the Will was not valid and a judge agreed and entered a different judgment.
a. The Billionaire’s wishes were not honored
b. He was found incompetent after his death
c. The children were granted the majority of the estate
There are several version of what “really” happened … either way, if these assets had been placed in Trust for Smith, they would not have been part of the Billionaire’s estate and very difficult to contest. The title to any such assets would be held in trust and a Trustee would have ultimately made the decision as to the disposition of them; in accordance with the Billionaire’s wishes.
3. Probate is the publicizing of an individual’s Last Will and Testament. A Probate judge makes the Will a matter of public record in order to determine if there are any outstanding debts which should be settled prior to the disposition of the assets. In other words the Court says this; “Hey, this guy has assets. Is there anyone who has reason why this Will should not be recorded? Does this person owe you any money? Is there anyone who’d like to screw this guy?” If no one comes forward, the judge allows the heirs to have the proceeds of the Will.
4. Since assets held in trust are not part of anyone’s estate, these assets bypass probate and continue to be held in trust for the benefit of another person. The trust can hold these assets for up to 20 years, as directed by the Grantor or creator of the trust. After 20 years, a new trust would have to be created or the assets liquidated.
Privacy – Avoiding Becoming a Target
1. Since trusts are private documents created by individuals they may be kept from public view. In fact, most trust documents forbid anyone from disclosing the documents to a third party or anyone who is not a party to the trust; Trustee, Director, Beneficiary, Etc. Disclosing the documents would be a breach of contract and any disclosing party would be liable for damages.
2. The assets of a trust are likewise, private and may not be disclosed to anyone outside the trust. The members of the trust are the only individuals who know what assets the trust holds. Land, vehicles, ATVs and other items which have a “Title” can become part of the public record; however, only the “Owner” or “Title Holder” may be made public. If a Trust holds title to an asset, the name of the Trust is public, but the Declaration of Trust, the Trust Agreement, any Beneficiaries and other information about the Trust remains part of the private agreement.
3. If an individual is sued and they don’t “own” anything, it will be difficult for liability to attach to an asset. Trusts are not “Owned” by anyone. Trusts have Trustees who handle the legal affairs of the trust and its assets (Trusts can’t be liable for the actions of a Trustee). Trusts have Directors who tell the Trustee what actions to take with regard to Trust assets (Trusts are not liable for the actions of the Directors). Trusts have Beneficiaries who may have the right to receive proceeds, avails, dividends and other funds produced by the assets; however, Beneficiaries to NOT have any ownership in the asset of the Trust (Therefore, Trusts may not be held liable for the actions of a Beneficiary).
4. As beneficiary, an individual may “control” an asset without the liability of ownership. The fact that an individual is a beneficiary is private and their interest in the trust is private. An individual may control hundreds or properties without appearing on title.
Asset Protection – Avoiding Liability
1. Private Jet Crash with Signer
a. To be completed
2. Victoria A. – Lost properties due to fire at property
a. To be completed
3. John R. – Charlotte, NC
a. Imagine you leave for the weekend and a well-deserved vacation. When you return, through no fault of your own, you are embroiled in what you think is a baseless lawsuit? You have insurance, right? Of course you do. The problem is your insurance doesn’t cover All Terrain Vehicles and that is what your neighbor borrowed while you were out of town.
John R. is a Realtor and investor from Charlotte, NC. Last year John became the victim of our litigious society and is realizing the difficulties faced by someone with large assets. John carries a large “Umbrella Insurance Policy” in hopes that no judgment will exceed $5 Million. He’s covered at home, work, the car and everywhere he travels. His home is covered. His rental properties are covered; however, his 4WD ATV is expressly NOT covered by his liability policy and that is what his neighbor was riding when he struck a tree and was paralyzed from the waist down.
John left for Myrtle Beach, SC on Friday May 26, 2006. The neighbor, and friend, agreed to watch the house and feed the dogs. John agreed to let the neighbor and his son borrow his ATV. The neighbor had used the ATV on several other occasions and was an experienced rider; however, at some point on Saturday the neighbor was riding with his son and struck a tree. The neighbor’s son was knocked unconscious and the neighbor broke his spinal cord and became paralyzed from the waist down.
When the family returned from the beach, they were informed on the accident (which didn’t even occur on John’s property) and John visited his friend in the hospital. Within a few weeks an attorney filed suit against John for negligence in the maintenance of his ATV. The suit stated that the neighbor was an experienced rider and would not have struck the tree if the ATV was properly maintained (the ATV was a Christmas present 5 months prior).
John’s insurance company immediately informed him of the clause which specifically excluded motorcycles, scooters, 4-wheelers and ATVs or any kind.
It has taken almost 18 months to reach a conclusion and John has liens against the equity in all his investment property, stocks and other assets, which are owned by him and his wife. The neighbor has begun proceedings to seize the property in order to satisfy the judgments. Not only has John lost the equity of his real estate, he has spent more than $125,000 defending the case.
The bright spot is that John’s personal residence is held in a Land Trust for his children. The family’s home is owned free and clear with no mortgages or liabilities and is the family’s most valuable single asset. The liability of the judgment has not attached to the home. Since the home is held in trust for the benefit is their children, it is no longer titled to John and his wife and may not be seized to satisfy any judgments.
John and I spoke at several REIA meetings over the past few years about the need for him to place the rest of his property in trust. This could have significantly impacted the neighbor’s ability to receive any satisfaction to the judgment, while John could have maintained control and tax benefit from the mortgages on the properties.
Greg@WeBuyHouses.ME
We Buy Houses Internet Trust
Asset Investment Trust
112 S. Main St
Clover, SC 29710
877-567-2513 (Ext 101)
Here we go again.
Tuesday, September 23rd, 2008 | Investment, Money, Real Estate, The Economy | No Comments
As Congress sits around throwing accusations, people are being hurt. The only thing that I see that could be worse is that Congress does something about the economy. I was watching our Phoenix market begin the turn around. Sales were increasing, inventories were beginning to decline and BOOM! The rug gets pulled out from the buyer’s plans with the dramatic changes in seller participation.
The lower priced properties are the most important sector of the housing market. Putting people in properties with monthly payments at or below rent payments is a winning program. The average rent in Phoenix is over $800 per month. Moving into a $100,000 home makes both social and economical sense. But NO! These folks must have at least $3,500 additional money sitting in the bank for 90 days or borrowing only from family members. Remember, there are significant costs involved with moving in.
This change is only putting a band-aid where there is no cut. The band-aid is cutting off economic blood flow to the real estate market body. Of course Congress could do much more to really trash the economy. There were four significant economic downturns between 1890 – 1929. The downturns rebounded quickly and the country was stronger. In the early 1930s, Congress did the opposite of what should have been done, And the whole world felt the pain. We could still be in that depression if we hadn’t put our men to work on the battlefield. War is definitely the worst way to manage economic down turns.
Let’s put the seller and other assistance programs back in our real estate market.
Homes are biggest bargain since 2004
Wednesday, May 28th, 2008 | Investment, Money, Real Estate | No Comments
Falling prices opened up home buying for many more Americans.
By Les Christie, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) — With prices crashing around the nation, home price affordability has improved dramatically in many U.S. cities.
As a result, 53.8% of all new and existing homes sold nationwide during the first three months of 2008 were affordable to families earning the median household income of $61,500, according to the latest Housing Opportunity Index released Tuesday by Wells Fargo and the National Association of Home Builders (NAHB).More .
Here is a great place for great financial information
Friday, May 16th, 2008 | Investment, Money, Real Estate, Safety, Statistics, The Economy | No Comments
If you have read some of my earlier posts you probably asked yourself where do I get some of the data I use. As an example, the statistics in the article “Why haven’t your mutual funds made you rich.” I found on the net. I gave Crestmont their credit and even linked their web site on this post.
I was back there again today and was amazed at some of the great stuff these folks have compiled. Using their information and by adding in costs and inflation, I came up with the realization that the money I put in mutual funds in 1997 has generated NO wealth for me in more than ten years!
I admit that some of the information at their site is a little deep. But they have some great graphs that help a lot. One place I looked today was the volatility of the market and another great chart was “Interest rates and inflation.” Now that was an eye opener!
Most of us think we are so busy that we don’t have time to do any research. We don’t pay any real attention to our IRA or 401k. We think that the professionals are doing a better job than we can. We just glance at the numbers when we get in our quarterly report. Most of us don’t know where to start even if we were interested. That is one of the reasons I have this blog. If I find something I want to share it.
While you are watching “Dancing with the stars,” go to Crestmont – http://www.crestmontresearch.com/ and have a look around during the commercials. As an older person I want to make sure I put my money where it is safe and work HARD for ME!
Cheryl moved her retirement funds into cash last November. She is just getting back into mutual funds and missed a 25% drop in the value of her nest egg. The real estate market has some exciting places where I can meet and exceed my financial needs. I feel this is the most exciting time to invest in the last 30 years. “Buy low sell high!”
Sunny side of the street
Tuesday, April 22nd, 2008 | Investment, Money, Real Estate, The Economy | 1 Comment
Seventy-seven percent of the wealthiest people surveyed think real estate presents a “real opportunity” right now. In the survey, “wealthy” meant having discretionary household income of more than $500,000 a year.
And these high-income earners are putting their money where their mouths are:
Article
Why Haven’t Your Mutual Funds Made You Rich?
Monday, April 7th, 2008 | Investment, Money, Real Estate, Statistics | 3 Comments
I hear, just like most of you, that you can put your money in a good mutual fund and watch it grow at 12% a year. The only thing about that is I have never really seen that happen to me. Then as I looked around I noticed that I didn’t see it happen to many others either. So, as inquisitive as I can be sometimes, I started looking around.
I went to a New York Life presentation where they said that the average net gain for a mutual fund investor was less that 3% if you adjusted for inflation. New York Life probably wants the numbers to look like their investments were better. So I doubted their entire premise. But me being me, I started looking for verifying reliable information. Wow! Did I find a great place to see that actual numbers. Here is the link –
1997 – 2007 – 5%,
1998 – 2007 – 3%,
1999 – 2007 – 1%,
2000 – 2007 – 0%,
2001 – 2007 – 4%,
2002 – 2007 – 8%,
2003 – 2007 – 11%,
2004 – 2007 – 9%,
2005 – 2007 – 10%,
2006 – 2007 – 13%.
Since only one year average was at or above 12%, why expect 12%? The years from 1986 – 1995 gave a 9% annual return. Not only that, but INFLATION, FEES and TAXES are not figured in the calculations! This really isn’t a BAD investment if your employer matches your deposits. But it sure isn’t the “safe retirement” fund that I hear touted by all the gurus.
9% annual return
25% of the 9% for state and fed tax -2.25%
3.5% inflation and fees
9% – 2.25 – 3.5 = 3.25% annual return cash in pocket
Let’s figure you put $3,000 year away which means that with 3.25% return that year’s deposit gives $3,097.50. Using the same calculation multiply it by the 20 years $3,000 in and 20 years out, $4,195. Even if you do some significant compounding, the net – net is not going to provide a wonderful quality of life because the annual returns are just too low.
If you are like most of us, your mutual funds just took a significant decrease in value since December 2007. You are probably looking and another very low return year at best. Maybe you might want to get a little more proactive with the money that is supposed to keep you in your later years.
Housing rescue: What you need to know
Thursday, April 3rd, 2008 | Investment, Money, Real Estate | 2 Comments
Article from CNN Money
Washington in crisis mode
Washington is awash in plans to attack the foreclosure crisis and mortgage meltdown. With both foreclosure rates and the election season heating up, politicians and policymakers are feeling pressure to find solutions to housing problems.
Some community advocacy groups charge that 2 million Americans could lose their homes to foreclosure over the next two years. That would not only have a huge impact on neighborhoods and towns but also damage the economy.
Finally Some Good Phoenix Real Estate News!!!
Thursday, March 27th, 2008 | Investment, Money, Real Estate, Statistics | 1 Comment
Existing-home sales climbed unexpectedly in February, as home buyers took advantage of low interest rates, falling home prices and foreclosure bargains.
The uptick in resales ended multiple-month losing streaks both nationally and in metro Phoenix and is prompting speculation that the housing market is close to hitting bottom.
National figures for February show U.S. resales climbed 2.9 percent from January, according to the National Association of Realtors. Valley existing-home sales climbed 10 percent in February, according to figures released earlier this month from realty studies in the Morrison School at Arizona State University.
Ideas to Keep Your Home
Saturday, March 22nd, 2008 | Investment, Money, Statistics, The Economy | 3 Comments
If you are struggling with your financial situation, especially with your monthly mortgage and other fixed expenses, here are a few ideas that might help.
There was some statistics that were recently published saying the the average American is living on 110% of his income. Most of us have listened to so many commercials that we feel we need a lot more that we actually do need to survive. The “Get it now and pay later” attitude is prevalent in much of our society. Things like how to do a budget is rarely tough in our education system. So basically, we are ignorant in important financial matters and can use a little guidance.
Fortunately, we live a society that has unlimited ways of overcoming economic challenges. The proof is the exponential rise of millionaires attaining wealth in our country. This article will give a few bandages to help stop the financial blood loss. These band aids may not all fit every need or even be convenient. They are designed to slow or stop the digging of a larger financial hole. Then we can address some longer term solutions to get on a strong financial path.
First things first – track your money! Many of us, especially those of us spending more than we make, spend a lot of money in areas that we shouldn’t be spending. Things like fast food, cigarettes, alcohol, sodas, movies, and a host of other non-essential expenses burn our money at an enormous rate. Write down the absolute essential expenses and try to minimize each expense. Vegetables, fruits, dried beans, rice and pastas are cheap food. A good sized serving of beans costs about $.25, rolled oats are even less when you buy in bulk. That cost beats the fast food value meals and the food is better for you. We have been sold the story that we deserve to have it better. So we have the tendency to spend money on a lot of things could be used in much better ways.
After we become for efficient with our money and are not as ready to squander what we get, it is now time to bring in some more cash! Could you use an additional $6,000 per year? Take in a boarder!. A roommate can be a pretty inconvenient alternative, but $6,000 of $500 per month is a lot of cash to most of us.
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