How To Trade 18 Chicken Eggs For All of the Houses in Orlando

Saturday, May 19

BY INFLATION DEMYSTIFYER DAVID CAMPBELL- FOUNDER OF HASSLE-FREE CASHFLOW INVESTING

I was recently a faculty member on the 2012 Investor Summit at Sea, along with notable faculty members Robert Kiyosaki & Kim Kiyosaki (Rich Dad, Poor Dad), Rich Dad Advisors Ken McElroy and Tom Wheelwright and one of my favorite authors G. Edward Griffin (Creature from Jekyll Island). One of the topics we discussed on the cruise centered around currency devaluation as it relates to investing in leveraged real estate.

As we've discussed before, there are five ways to make money with Hassle-free Cashflow investment real estate:

1) Cash throw off - the amount of rental income left over after you pay all of the expenses and the mortgage on the property

2) Income tax savings - the amount of money you would have paid in income taxes if you did not enjoy phantom losses from real estate deprecation

3) Amortization - the portion of your mortgage paid by your tenant that makes your loan balance smaller

4) Inflation - the increase in the ratio between the intrinsic value of real estate and its value as denominated in a currency (price increase)

5) Appreciation - the increase in the ratio between the intrinsic value of real estate and its value compared to other objects with intrinsic value (value increase)

Many people lump appreciation and inflation and into the same basket, but to an investor these phenomena are very different.

It is possible for an item to appreciate and go DOWN in price. For example, if you bought a house for five Toyota trucks and sold it for six Toyota trucks, you have experienced appreciation because your house was sold for more trucks than it was purchased for. However, if the price of Toyotas has gone down, you may have experienced a monetary loss. If you bought a house for five Toyota trucks and sold it for four Toyota trucks, your house declined in value. But, if the price of a Toyota truck went from $25,000 to $40,000, you would have purchased a house for $125,000 and sold it for $160,000. Home appreciation is nice but it doesn't mean we will have made a profit. As an investor who borrows money to purchase houses, I need my assets to INFLATE in price regardless of whether they APPRECIATE.

I have been investing in real estate since 2000 and because of my hard work, tenacity, and skill I am now a multi-TRILLIONAIRE. As a reminder of this insane wealth, I carry a fifty-trillion dollar bill in my wallet. OK, so it's really 50 trillion Zimbabwe dollars which is not enough to buy a can of Coke (Z$50,000,000,000,000 = $0.40 USD), but it is still fun to say "I am a trillionaire". Carrying this bill around in my wallet is a great reminder to me of how wealth is transferred through inflation.  This Z$50,000,000,000,000 bill was also a gift from one of my mentors Ken McElroy so this bill has sentimental value to me (Ken is a very generous guy!).

Let me reiterate; inflation does not create wealth, it merely transfers wealth from lenders to borrowers.

Let's examine Zimbabwe's case of extreme inflationary wealth transfer in a whimsical real estate analogy. If you were smart enough and able to borrow Z$600 billion (Zimbabwe dollars) in 1980, the proceeds of the loan would have allowed you to purchase every single home in the city of Orlando, Florida (population 128,000). Twenty-eight years of inflation later, in 2008, you could have repaid the entire Z$600 billion debt with eighteen chicken eggs. Imagine how much real wealth was transferred through the inflationary actions of Zimbabwe's central bank. While extreme, this is an example of how inflation transfers things with intrinsic value to people who purchase them with debt denominated by an inflating (fiat) currency. Every government in the history of the modern world has radically devalued (inflated) its currency over time; the US dollar is no exception.

If inflation makes borrowers winners and lenders losers, why would banks continue to lend money?

The answer is shockingly obvious. Banks don't lend out their OWN money. Banks lend out YOUR money. Banks make a profit by lending money at a rate of interest higher than the miniscule amount of interest depositors like you have leant it to the bank for. Your savings account at a bank is an asset to you and a liability to the bank. The banks owes you your deposit back, right? That makes the bank a borrower. Banks are not adversely affected by inflation because they make the spread between the income and expense of your money. The risk of inflation is borne entirely by the depositor not the bank. In fact, banks prefer inflation because as inflation pushes up asset prices the percentage of loans that default is reduced and the size of their loans increases.

Who are the biggest borrowers in the world? Governments and banks! The rules of the currency (inflation) game are made by the same people who have the most to gain from inflation - governments and banks!  Expecting the inflation game to change is like expecting the fox in the hen house to stop eating chicken dinners.

Inflation is an ingeniously evil way for governments and banks to steal wealth from the financially illiterate.

Inflation allows governments and banks to reach into your pocket and take your money without your consent. The only way to protect your family from this virtual home invasion robbery of your currency is to be a co-conspirator in the inflation game.

Borrowing at a low rate and investing at a higher rate is called arbitrage. Arbitrage is the best wealth preservation and wealth creation tool there is. Investment real estate whose income is greater than the cost of funds borrowed to purchase the real estate is my favorite form of arbitrage (CAP Rate > Interest Rate). Leveraged real estate generates profits as the asset price (purchase price) increases with inflation and the effective cost of the debt decreases with inflation.

You cannot escape inflation unless you are investing with other people's money the way that banks and governments do. To protect your family from inflation, you MUST be a borrower of good debt.

How can you make these concepts work for you? Ask us! Our integrated team approach to financial planning focuses on people and their unique resources.

Visit our website www.HassleFreeCashFlowInvesting.com to learn:

1) How to explore your access to Cash, Cashflow, Credit, Equity, Time, Skills, Knowledge, Credibility, Strategic Relationships, and Access to Deal Flow as they relate to real estate investing and your primary job or business

2) How to articulate your financial targets and personal investment philosophy

3) How to determine whether you need to be in wealth accumulation mode or redeployment mode for sustainable financial independence

4) How to customize an investment plan that is consistent with your financial objectives and personal investment philosophy

If you are struggling putting your real estate investment plan together, let's talk.  Our team believes that properties do not have problems, people do. We take a people-centered approach towards finding creative solutions for real estate investments and the people who own them.

Best Regards,

David Campbell
Real Estate Investor / Developer / Financial Mentor
Office: (866) 931-9149 Ext. 1

www.HassleFreeCashFlowInvesting.com

The Ultimate Tax SmackDown Event: Solo(k) versus IRA

Thursday, April 12

Would you like to maximize your retirement contributions as a Small Business Owner or Real Estate Investor?

Would you like to create tax free Roth money regardless of your income?

Would you like to invest in leveraged (financed) real estate inside your IRA and AVOID the hidden taxes UBIT and UDFI?

Would you like to access your retirement account TAX FREE & PENALTY FREE?

Would you like to recognize a retirement age younger than 59 ½ without paying penalties to the IRS?

If you answered YES to any of these questions, you should consider the Solo(k) as an essential part of your tax planning strategy. The Solo(k) has some unique qualities that make it a more powerful tool than a traditional 401k or a self-directed IRA.

Watch this free video for real estate investors and business owners taught by a world class faculty. Professional investor David Campbell, self-directed IRA company president Kaaren Hall, and tax strategist Amanda Han, CPA will help you learn:

* how the Solo(k) can be particularly helpful to real estate investors and business owners
* how a Solo(k) differs from other types of IRA accounts
who is eligible to own a Solo(k) and how to become eligible if you aren’t already
how to get more money into your Solo(k)
* how to identify and use your eight essential resources to use your IRA to legally earn more and pay less in taxes
* how to use financing and cash flowing real estate inside your IRA to produce higher profits with less hassle and less tax

This webinar is appropriate for both new and well seasoned investors. You can also download a free special report on IRA investing strategies written by our faculty: Eight Best Kept Secrets about Investing with your IRA

Do Your Investments Lower Risk While Increasing Profits?

Saturday, March 03

One of my most prized skills as a professional investor is my ability to sniff out amazing real estate investment opportunities and then engineer creative and lucrative deal structures to lower investment risks while increasing investor profits. 

While choosing a strong market and property are certainly important pre-requisites to a successful real estate investment, I view individual properties as pawns in a larger game of financial strategy; the financial and ownership structures surrounding a real estate investment have more impact on my bottom line than the sticks and bricks in the transaction.   Fortunately for you, I’ve simplified some of these strategies into sound bites to help you do this.   I call these sound bites Hassle-Free Cashflow Investing rules or “HFCF Rules” for short.

HFCF Rule: Buy what tenants want. It’s a lot easier to purchase a real estate investment your tenant wants to live or do business in than it is to convince a tenant to want to live or do business in a property you already own. 

In today’s buyer’s market, there are a lot distressed commercial properties that need to be repurposed to a higher and better use.  The economic collapse of the community banking business model as well as technological advances in online banking have resulted in a slew of vacant bank properties and very few banking tenants looking to lease them.   

My partners and I recently closed escrow on a vacant bank property we are converting to a large Class A medical office building. My team brought the active management / sponsorship resources to the project and several of my clients provided the passive equity for the project.

HFCF Rule: Start with a real estate investment business plan not with a property. 

Our business plan is to purchase vacant (bank) buildings and convert them into medical office.  My real estate investment strategy is to identify a strong primary care physician group to be the anchor tenant and then go shopping for a desirable property together.  The anchor tenant physician located a vacant bank building in a fantastic location where he would love to locate his business.   The property is on a major thoroughfare with good signage visibility, close to a hospital and in a large population center.These are promising attributes for any medical office, but there were positive attributes about this particular property that appealed to the tenant which I would have never thought of.  First, the tenant needed a property that could easily accommodate ambulance access.  Second, the tenant wanted a property in a “health professional shortage area” (HPSA) with a specific HPSA score that increased the amount of government subsidies doctor tenants in this building would receive. If your HPSA score isn’t strong enough you may have difficulty attracting doctors to your building and you may have to lower your rents to do it.  HPSA scores change street by street based on census data.  In effect there is an invisible line down the street that says “this property is more valuable as medical office than the property next door” because of where the line is drawn.  

HCFI Rule: It’s essential for a prospective landlord to know what his tenants value most.

I steer new investors towards owning houses as their first investment because it is fairly intuitive to understand the amenities residential tenants will pay for and what they won’t pay for (number of bedrooms, proximity to jobs, etc.).  When you are in the world of commercial real estate, prospective tenants are fewer and their needs are more exact.   Instead of starting with a property, it can be much more lucrative to go shopping for a property with a prospective tenant or buy a property with a strong anchor tenant in place and fill up the surrounding vacancies with those types of tenants who have a proven history of success co-locating with your anchor.

HFCF Rule: For a real estate investment partnership to be successful each partner needs to offer a resource the other does not possess.

The basis of my value proposition to the primary care “anchor tenant” looks like this:  “You become the anchor tenant in my multi-tenant office building and convince the doctors who receive your patient referrals to lease additional space.  I’ll put up most of the money as well as the real estate skills needed to purchase a vacant property, redevelop it into a large multi-tenant office, and then manage the mechanics of the property and a complex financial transaction.  We each bring something unique to the partnership and we’ll co-own the property in partnership together.”   By partnering with my anchor tenant (whom I convinced to sign a personal guarantee on the real estate mortgage), I am fairly confident our building will have higher rents and a higher rate of occupancy than if I were trying to do this real estate investment on my own.

HFCF Rule: Privacy can be a valuable tool in your real estate investment arsenal.

My anchor tenant physician located the property he felt was perfect for his practice.  It became my team’s job as the real estate professionals to negotiate a favorable price and terms with the seller.  We put on our best poker faces and made sure the seller did not know the identity of our high profile physician tenant by writing the offer in the name of an entity my team controlled.  We knew the seller was distressed because the property was vacant and the seller’s prospects for finding another bank tenant were slim to none, but if the seller knew who our tenant was our intended use of the property the price would have surely gone up.  It was easier for my team to negotiate aggressively with the property seller because we were not emotionally involved that specific property, as our anchor tenant was

Although we had a property identified and an anchor tenant in our pocket, there were still miles and miles to go before we had a viable project.  It took a lot of time and resources for my team to develop financial forecasts based on rental income, operating expenses, redevelopment costs, availability and costs of capital, etc.   It took months to create architectural drawings and use those drawings to entice prospective tenants to sign binding leases in our property.  It took weeks to get our building permits and change of use permits approved by local government.  And then there was the financing!  A huge risk in purchasing any property in this economy is the availability of conventional financing.  A lot of banks that issue attractive terms sheets for commercial loans only to back out at the closing table, leaving you scrambling.

HFCF Rule: Shift as many financial risks as possible from the Buyer (you) to the Seller who is almost always the most motivated party in the real estate investment transaction. 

In our project, we were able to negotiate a four month escrow with the ability to extend the escrow an additional three months if required by our lender.  We used this extended escrow to complete all of our pre-development activities.  Architectural plans were drawn, leases were signed, permits were approved, guaranteed maximum price bids were solidified with our construction contractors, and we had time to shop the debt and equity we needed for this project.  Our long escrow period shifted all of our pre-development carrying costs onto the seller and more importantly we drastically reduced investor risk.  In the event we were unsuccessful leasing the building during the escrow period, we structured the purchase contact such that we could cancel with no penalty and thus dodge the bullet of purchasing a vacant, unleaseable building.   We eventually closed escrow on the property without ever putting a dollar of earnest money at risk and all of our architectural fees were paid at closing after we’d raised all of the capital through syndication!

This business plan worked out well which is why I can write this newsletter with a smile on my face, but not every real estate investment is smooth sailing.  I invest a lot of resources into real estate investment projects that never go anywhere; that is just part of the cost of doing business.  As a professional investor, it is my job to forecast where the hurdles of each real estate investment might be and determine the probability of clearing them while putting the least amount of capital at risk.

HFCF Rule: Novice investors will make mistakes and that’s OK as long as you’ve started small. 

Investing in new construction, entry level single family homes purchased from a developer who offers a builder’s warranty and investor-friendly terms is a great place for new investors to start. The process is not complicated, you can do your due diligence while putting little or no capital at risk, and the opportunity to learn from the experience is high while the risk is low.  This is not (just) a shameless plug for my (awesome) homebuilding company in Dallas, Texas! I really want you to take this paragraph to heart and not overextend yourself on your first few deals.

As you grow and diversify your real estate investment portfolio into more complex commercial transactions, consider becoming a passive investor in group investment with sponsor who can mentor you through the process.  You can read about real estate investing all you want, but until you’ve jumped in with both feet, you’re still a newbie who doesn’t know what he doesn’t know.  If you want to lower your real estate investment risk while simultaneously venturing into potentially more lucrative ventures, let’s talk.  I am a teacher at heart and I love mentoring new and part-time investors.  If you are looking for a real estate investment to work hard so you don’t have to, my team can help you become more of an armchair investor.

Regardless of your real estate investment style.  If you’d like help investing your capital in ways that lower your risks while increasing your profits, please reach out to me and I’d be happy to help you.

To your success!

David Campbell
Professional Real Estate Investor
(866) 931-9149 Ext. 1

CLICK HERE to schedule a no cost phone consultation with the author David Campbell by using his online calendar.

Keyword: real estate investment

Falling in Love with Real Estate Bookkeeping

Friday, February 03

Falling in Love with Real Estate Bookkeeping (or at least learning to make your life easier)

While we can't guarantee you'll fall madly in love with bookkeeping, we do hope to share some ideas that will make your life easier.

In this sixty minute, no cost webinar with professional investor David Campbell ( www.HasslefreeCashflowInvesting.com) and Certified QuickBooks Consultant Renee Daggett ( www.AdminBooks.com) attendees will learn how to:

1.      Simplify your records and receipts using this simple organizational technique

2.      Avoid the ten most common organizational mistakes real estate investors make

3.      Use a "Chart of Accounts" to simplify your accounting

4.      Manage and forecast your  real estate investing cashflow

FACULTY INTRODUCTIONS:

Renee Daggett is the president of Administrative Bookkeeping Co., Inc. She received a bachelor's degree from San Jose State University in 1989 and is an Enrolled Agent tax preparer (enrolled to represent tax payers before the IRS). Renee is also the author of Your Financial Flight Plan: Pilot Your Business To Profitability. In her book, she demonstrates in a creative way the reasons why every business owner needs to be a better manager of his/her business.

Professional investor David Campbell has been a principal or key advisor in over $800 million of real estate transactions since 2000. Believing that properties don't have problems, people do.   David takes a people first approach to coaching real estate investors towards their financial goals.  David is the owner of a commercial property management and syndication company as well as a production home building company.

Register for Free Webinar

Tax Planning Strategies For Cashflow Real Estate Investors

Saturday, January 21

It's not about how much cashflow you earn.  It's about how much you keep!

Learning how to legally avoid or defer the payment of income taxes is essential to your financial success.   Our world class faculty will show how real estate investors can legally earn more cashflow while paying less in taxes.  This webinar recording is suitable for experienced and novice real estate investors.

You will learn:

1) Urgent year-end tax moves every cashflow real estate investor must be aware of
2) How to take advantage of special 2011 tax deductions before they expire
3) How to get the IRS and your tenants to pay for a healthier retirement than you thought possible
4) Ways to ensure your self-directed IRA stays tax deferred
5) Which investments you should own personally and which investments you should own inside an IRA to optimize your tax advantages
6) How to identify and use your eight essential resources to legally earn more cashflow and pay less in taxes
7) Strategies to produce cashflow real estate profits without the hassle and without the tax
8) Time sensitive legal considerations that could have a huge impact on your taxes and cashflow

MEET OUR WORLD CLASS FACULTY

David Campbell - professional investor / developer
www.HasslefreeCashflowinvesting.com

As a real estate developer, investor, syndicator, and broker, David Campbell has been a principal or key advisor to over $800 million of real estate transactions including apartments, office, retail, hospitality, winery, condo-conversion, and production home building.  Believing that properties do not have problems, people do, David takes a people first approach towards finding creative solutions for properties and the people who own them.  David has a gift for implementing creative financial solutions.

Kaaren Hall  - president of uDirect IRA Services
www.uDirectIRA.com

Kaaren has helped hundreds of people self-direct their retirement savings. A native of California, she has a 16-year background in Real Estate, Property Management and Mortgage Lending. She has worked at such companies as Bank of America, Centex Homes, Pulte Homes and Indymac Bank. She's held a real estate license in Washington, Texas and California and a Life & Health license in California. Her company, uDirect IRA Services, LLC, offers self-directed education and services to investors, providing excellent customer service.

Amanda Han, CPA - tax strategist
www.KeystoneCPA.com

Amanda Han is a tax strategist who specialize in creating cutting-edge tax saving strategies for cashflow real estate investors. As a real estate investor, Amanda has an in-depth understanding of the various aspects of investing including taxation, deal structuring, entity structuring, and money-raising. Amanda is a frequent speaker and educator on tax strategies especially for real estate investors and has recently been selected to be the Lead Instructor for the National REIA Organization teaching investors all across the nation on how to use taxes to significantly increase monthly cash flow. Amanda has also appeared on NBC News Radio as well as Realtor Magazine.

Jeffrey H. Lerman - real estate attorney
www.realestateinvestorlaw.com

One of the things clients say they most appreciate about Mr. Lerman is his ability to take complex legal concepts and information, synthesize it and present it in a way that allows an investor to make a good decision quickly. Mr. Lerman handles acquisitions and sales, entity formation, syndication, commercial leases, loan documents, construction documents, loan work-outs and litigation. Mr. Lerman frequently lectures on various real estate and litigation topics, has written numerous articles and has been featured in national news.

Michelle C. Lerman - estate planning attorney
www.lermanlaw.com

Michelle C. Lerman is at the forefront of current developments in estate planning design strategies. A highly sought-after speaker in the community, Ms. Lerman has been helping clients with their estate planning needs for more than 20 years. She serves on many boards and mentors upcoming attorneys as well. At ease on the air or in the courtroom, Michelle C. Lerman has helped hundreds of California clients with her creative solutions and solid advice about estate planning.

Our world class faculty will show how  real estate investors can legally earn more cashflow while paying less in taxes.

Investing Strategies for Recessionary and Inflationary Times - Part 1

Wednesday, January 18