Thoughts from the desk of Bob Repass…
This month’s edition of The Buyline is several days late due to the fact that Angie and I just returned from a long overdue summer vacation. We enjoyed six days of relaxation in one of our favorite locales the Cayman Islands. Each day was spent on the beach enjoying the sun, surf and serenity of the ocean breeze.
We actually found a way to “disconnect” (for the most part), from the daily grind which is harder than it might sound. As much emphasis as we put on staying connected it is always difficult to find a way to disconnect. We strive to find time during the week to disconnect whether it is in the evenings or on the weekends, but the truth of the matter is in today’s technology overloaded world it is almost impossible to do, unless you make it a concerted effort.
It feels good to be back, re-energized and ready to tackle the next several months which are full of loan acquisitions, various trade shows and conferences all leading up to our featured event of the year NoteExpo 2015. We hope to see all of you there November 6-7 at The Intercontinental Hotel in Dallas. For more information go to www.noteexpo.com
The Trading Corner
Why Masterminds Work
By Martha Speed
Last month we held the first Titanium Mastermind which was a great success! Students shared their strengths, weaknesses, thoughts and challenges. I believe both parties, Titanium Mentoring students and our NoteSchool team gained valuable information to put into action immediately.
Why do people invest time and money to participate in a mastermind? Because the benefits are enormous! Here are a few things that happen during the course of a Mastermind.
- You get to form lasting connections.
Everyone has the opportunity to give and receive business and build relationships with some incredible people.
- You receive feedback on how to solve your most pressing issues.
Each member of the group has a dedicated time to present an issue the facilitator & group help resolve. Receiving input and feedback allows each person to solve issues and move forward faster.
- You are held accountable for accomplishing your goal.
It’s energizing to know you’re not alone and other’s in the group will hold you accountable and help you accomplish what you set out to achieve.
- You are introduced to systems which help you save time & money.
Shared work ideas, tools, strategies, & processes to increase productivity or simplify work. Utilize the experience and education of others.
- Investing in yourself while Helping others achieve their goals!
Your future is in a large part determined by your willingness and ability to invest in yourself & others. Take time to figure out how to grow your investor base, business or self-directed retirement account while giving back to others. Investing in yourself increases your ability to earn!
Some of the best ideas come from brainstorming in Mastermind sessions. Growing in a group is effective, fun, helps you think Bigger and stretch beyond your boundaries. The collaborative efforts of the group allow everyone’s unique skills, experience and connections to help you resolve challenges. I’ll facilitate, help you make connections and we will hold each other accountable.
Bigger, Better, Faster Women’s Mastermind!
If you missed the webinar click here http://youtu.be/6HLcCi4905o to learn more about our next event the Women’s Only Mastermind!
You can Register Here www.NoteSchool.com/wmm
Cashing-In on Today’s Turn-Key Rental Demand
By Eddie Speed
There is no question that today’s market conditions have many investors preferring real estate to stocks, bonds, precious metal and cash. Over the past year, numerous articles and surveys have indicated this growing trend.
For example, Bankrate.com conducted a recent survey that stood out for me. Their Financial Security Index survey in July posed this question to investors:
This is not a short-term trend but rather a long-term play as investors seek to avoid stock market fluctuations, interest rate changes and world market influences. The survey indicates that in times of financial uncertainty, the safety and relative ease of rental property appeals to investors.
Throughout my 34 years of experience in the real estate market, I have seen cycles come and go. My years of experience have taught me to have a clear focus on business fundamentals and avoid short-term cycles but also to recognize and take advantage of long-term cycles. With that thought process in mind, I’ve created numerous techniques that went on to change the real-estate-backed note investment industry.
My latest technique was developed because I felt there was a growing and long-term demand for turn-key rental properties. Furthermore, I sensed that these passive investors would want to stretch their cash investment with financing, if the financing could be structured so that the tenant paid for it.
My “50-50” technique delivers this!
Imagine you were able to provide an investor with seller financed, tenant occupied turn-key rental property. The financing would be structured in a way that, after expenses, the tenant’s rent pays for the loan. The loan would be paid in full in 5 or so years, at which point the investor owns the property free and clear.
Is that something that would be attractive to passive cash investors today? Is that attractive to investors who are looking to invest money that they “wouldn’t need for more than 10 years”? Is that something that self-directed retirement investors would seek?
The answers to those questions are, of course, YES!
The issue, however, is that these investors have a tendency to be passive. They do not have the time to find properties, fix them up, load them with tenants, manage the property and deal with the daily duties.
So how do we capitalize on a strong market demand? We provide the supply solution.
What if the investor didn’t have to find the property or fix it? He didn’t have to find or qualify the tenant. What if the property is already managed and the rent is already being paid? What if he or she only needs half in cash and the rest is seller-financed over a short loan that costs less than the net rent?
All of those solutions can be provided by a combination of financing and investment skills.
Recently, for example, one of my students purchased a non-performing note on a 3 bedroom, 1 bath single-family home for $10,500. After acquiring the property through a Deed in Lieu, he rented the property for $675 per month.
After collecting 6 months of rent, he sold the property to a cash investor for $49,493. This price was higher than what the BPO indicated as he offered attractive terms to this turn-key investment. He allowed the investor to hit the “easy button”.
He took $25,000 down and financed the $24,493 balance at 7% for 60 months. The rent easily paid for the $485 monthly payment.
Since my students rehab was minimal and he was able to acquire the property at pennies on the dollar, the $25,000 down essentially doubled his money and he owned the note for free!
If you can supply turn-key rental property with seller-financing, your real estate and note investing will produce huge returns over the next 10 years.
Special: In the News
Click here to listen to Eddie Speed’s recent podcast interview with RE Entrepreneur Cory Boatright.
Capital Markets Update
Asset Allocation – What is it?
by Ryan Parson
Have you heard the term asset allocation in conversations with your financial planner? Typically, when you sit down with your planner and they have you fill out applications, one is about asset allocation and what it means to you.
Let’s take it a little further and break it down. In its purest form, it’s a mix of different types of assets that help you mitigate risk to achieve specific financial goals.
You can think of it as insurance planning for your investment choices. For example, in the traditional sense, most financial planners are going to say you need a mixture of stocks, bonds, and cash to have an investment portfolio that is successful. You have bonds that are more secure because they’re backed by the U.S. government. Cash is still something that is liquid and can be accessed. It allows you not to have your portfolio impacted 100% by market movements. Essentially, it follows the saying “don’t put all of your eggs in one basket.” All of us as investors have a real need for balance.
Asset Allocation is a Moving Target
Asset allocation will change over the course of time. In our 20s and 30s, we have a greater risk tolerance and are willing to risk more in hopes of a greater return. The mindset at that age is that there is time to recoup a bad investment choice if retirement isn’t so close. However, if retirement is within 5-10 years, you’ll move to more conservative types of assets like cash and bonds.
Time is a huge factor in determining how to allocate your assets. When you have a smaller amount of it, you have to ask yourself, “What do I need more of? A greater return with greater risk, or do I keep it conservative and play it safe?” Today we’re all living longer, and we need our money to last us a greater length of time.
Where Traditional Models Fail
Where asset allocation falls short with traditional financial planning is that you typically have no access to non-traditional asset classes via traditional outlets. Therefore, most traditional allocation models do not take into account either the need for or results of such assets. Private equity-type vehicles aren’t accessible to most Americans via their accountants, insurance agents or financial planners.
While you may be using a traditional financial planner, you, as the investor, ultimately have the responsibility to your own portfolio to seek out other types of alternative investments as a hedge against unpredictable market forces and for further diversification.
No Substitute for Self Reliance in Wealth Building
It may be difficult for your financial planner to tell you how these fit into your asset allocation model, but there are other ways to make that determination.
The first one is to listen to your gut. If you have a general understanding of how wealth is created in this country (take gas, oil, and real estate for example), then you are already 80% of the way there. If you recognize that you need them, then you’re even closer. You may already have a limited amount of these assets in your portfolio in order to see how they perform. This is a great way to help yourself determine just how much of these types of assets truly should be in your portfolio, not because of what some model tells you but what you understand needs to happen in order to achieve the degree of financial independence you are striving to achieve or maintain.
The last time you heard about asset allocation either through your financial planner or perhaps something you read, did you stop to consider how much of your portfolio is allocated to alternative investments? Give it some thought… chances are alternative investments will be very important for your financial future.
Quote of the Month
“Trust, but verify.”
– Ronald Reagan