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					    AMERICA’S GREATEST REAL ESTATE TRAINING
AMERICA’S GREATEST REAL ESTATE TRAINING

The James Smith Training Organization


         Retire in Style
 Creating Massive Passive Income

                 Turn a $ 1.00 Investment into
                     $ 5 Million Net Worth
                         Within Five Years


 Even If You Have
   ▪   No Job
                            Gary A. Barnes, MBA
                                                 Instructor
   ▪   No Money
   ▪   No Credit              gary@opmmentoring.com
   ▪   No Experience          platinumedge@comcast.net
             What is Retirement?

Retirement has nothing to do with how you spend your time.




    Sitting in a rocking chair all day
    watching life go by is not retirement –
    That’s death in slow motion.
        What is Retirement?


You can only spend so much time in leisure until it
becomes boring.
       What is Retirement?

Retirement is . . .

When you have enough passive
income coming in every day to
support whatever lifestyle you
desire . . . Whether you decided
to get out of bed that morning or
not . . .
              - That Is Retirement!
What Do You Do In Retirement?


Anything you want to do:

  Keep Working – for the sheer joy of doing your job
  Volunteer Work
  Philanthropic Work
  Travel
  Hobbies
  Education
How Do You Become Retired?


It is a 2-Step Process:

    1) Meet Your Current Cash-Flow Needs.
        Replace your current pay check with income
        from passive sources.

    2) Meet Your Long-Term Cash-Flow Needs.
        Generate continuing, on-going, passive income
        where your personal involvement is not needed
        to keep the money coming in.
         Creating Passive Income
Is some of the hardest work you will ever do!

              If It Was Easy
     Then everyone would be doing it!




                    It’s just like panning for gold!
Panning for Gold
It’s a lot of hard, back-braking work.
Panning for Gold



        Step # 1:

         Fill your pan with rocks, gravel,
         and sand.
           Panning for Gold




Swish and swirl away the lighter weight rocks, gravel and sand
Panning for Gold




Find the tiny flake or grain of gold
               Panning for Gold




When panning for gold you have to literally sift through tons and tons of
                 rocks . . . sand . . . gravel . . . silt . . . mud
to find just one tiny nugget. But when found, that nugget is so valuable
that it makes all the rocks, gravel, and sand worth the effort.
Real Estate Investing is a lot like that.
   Real Estate Investing is the
Perfect Passive Income Generator
Let’s examine eight scenarios for developing Passive Income.

     Assumptions we will make:
             1) Typical house costs $200,000
             2) Typical apartment rent is $700
             3) Appreciation Rate of 6.1%   (National Average)

             4) Annual rent increases of 5.3%    (National Average)

             5) Refinance at 60% - 80% LTV
             6) Debt-Coverage Ratio 1.2
             7) CAP Rate to Buy is 12%
             8) CAP Rate to Refi is 7%
           Step # 1
Replace Your Current Pay Check


 Don’t quit your day-job yet !
   Replacing your current pay check with Passive Income
   should be a well thought through, gradual transition.

   Begin the process on a part-time basis.

           5-hours per week is enough to start.
           Gradually increase the time allocation
           as your circumstances allow.
 How Are You Currently Paid?

          Annually             1 time per year
          Monthly            12 times per year
          Semi-monthly       24 times per year
          Every two weeks    26 times per year
          Every week         52 times per year


When you started your current job did you become angry when
they failed to pay you after working there for only one Hour?
 How Are You Currently Paid?

           Annually              1 time per year
           Monthly              12 times per year
           Semi-monthly         24 times per year
           Every two weeks      26 times per year
           Every week           52 times per year


When you started your current job did you become angry when
they failed to pay you after working there for only one Hour?

What about when they failed to pay you after two hours of work?
 How Are You Currently Paid?

           Annually              1 time per year
           Monthly              12 times per year
           Semi-monthly         24 times per year
           Every two weeks      26 times per year
           Every week           52 times per year


When you started your current job did you become angry when
they failed to pay you after working there for only one Hour?

What about when they failed to pay you after two hours of work?

What about when they failed to pay you at the end of the day?
  How Are You Currently Paid?


You did not say, “This job will never amount to
anything. I’ve been working all day and they still
haven’t paid me yet.”

You probably had to work there for two weeks or more
before you got paid. But you still kept working there,
because you knew that eventually you would get paid.
   Real Estate Investing is
    Much the Same Way

You put in the time first – Then you get paid.

  You probably won’t get paid the first day.
  You probably won’t get paid the first week.
  You probably won’t get paid the first month.
  You probably won’t get paid the first quarter.

           But you WILL get paid !
Don’t Give Up - It Really Works !

   What if you worked 5 hours per week?
   What if you worked 4 weeks per month?
   What if you worked 12 months per year?

   Take two weeks off for Christmas and
   Thanksgiving. That equals 250 hours.
Don’t Give Up - It Really Works !

   What if it took you an entire year to find,
   negotiate, buy, market, negotiate and
   close your first deal – and you made . . .


                $50,000

     Would it be worth it?
Don’t Give Up - It Really Works !

    Divide $50,000 by the 250 hours you
    worked and you will find that you earned
    $200 per hour.




$50,000 ÷ 250 hrs = $200/hr
Don’t Give Up - It Really Works !

    Divide $50,000 by the 250 hours you
    worked and you will find that you earned
    $200 per hour.


     Do You Currently Earn
        $200 Per Hour?

 Now do you think it would be worth it?
Don’t Give Up - It Really Works !

     I’ll make you an iron clad guarantee.



 You will succeed in NOT buying
      100% of the houses
  on which you make no offers !
  Don’t Give Up - It Really Works !


      You’ve got to take action.
          Go make offers !

Real Estate Investing is a Contact Sport
        Not a Spectator Sport !
      Step # 1


  Focus on replacing
your current pay check.
How To Replace Your Pay Check
     Could You Quit Your Job ?

  You now have $50,000 CASH in the bank.

  You have an entire year’s income in the bank.

  Wouldn’t you now feel more secure in quitting your job?

    I’m not suggesting that anyone quit their job. I’m just pointing
    out that at this point, if you wanted to, you could do so and not
    worry about how you were going to live.


And if you earned $50,000 part-time, don’t you think that you could
earn several times that amount if you did investing on a full-time
basis?
Now that Your Paycheck is Replaced
  Start Planning Your Retirement !

 The amount of money you have increases over time
 when it is put to work earning interest, or when invested
 in a project that appreciates.


 The amount of money you end up with is simply a
 function of the passage of time and the rate at which
 it grows.
3 Ways to Make Money Work for You
    With Real Estate Investing.

1) Buy/Sell, Buy/Sell, Buy/Sell


   Buy a property at a discount, sell it for a profit.
   Use the profits to buy more discounted property.
   Which will be sold for more profits.
   Repeat over, and over, and over, as needed.
3 Ways to Make Money Work for You
    With Real Estate Investing.

1) Buy/Sell, Buy/Sell, Buy/Sell:
     Buy a property, sell it for a profit, use the profits to buy
     more property, which will be sold for more profits, etc.


2) Buy and Hold:
    Buy a property and then never sell or refinance it. It will be paid
    off by the renters while its value increases due to appreciation.
3 Ways to Make Money Work for You
    With Real Estate Investing.

1) Buy/Sell, Buy/Sell, Buy/Sell:
     Buy a property, sell it for a profit, use the profits to buy
     more property, which will be sold for more profits, etc.


2) Buy and Hold:
     Buy a property and then never sell or refinance it. It will be paid
     off by the renters and its value increases due to appreciation.


3) Buy / Strip Equity / Leverage / Reinvest:
     Buy a property and hold it for a minimal period of time. Refinance
     it to strip out its equity which can be leveraged for reinvestment.
          Basic Retirement Strategy

The day you were born your parents should have created a
self directed Roth IRA for you and deposited $2,400 into it.

Your parents should have continued to deposit $200 per month.

Your parents should have taught you the time-value of money.

At age 18 you should have taken over depositing $200 per month.

At age 65 you could retire with $158,400    Parent’s Contribution $ 43,200
contributed to your IRA.                    Your Contribution     $ 115,200
                                            Total Contributions $ 158,400


          But after it’s been invested . . .
     How much will it grow to for your retirement?
     Basic Retirement Strategy
Time-Value of Money with 65-Years of Investment Growth
     Interest Rate         Total Retirement Nest Egg
          3%                $                502,000
          5%                $              1,200,000
          8%                $              5,000,000
         10 %               $             13,500,000
         20 %               $          2,100,000,000
         30 %               $       273,000,000,000
         50 %               $ 2,000,000,000,000,000

How many of you had parents that did that for you?
How many of you are doing that for your children?


 How much will you have for your retirement?
Retirement Strategy # 1



      30-Year Plan
No Special Training Needed
                     Strategy # 1

       30-Year Buy & Hold


Buy 1 house every year for each of 30 Years

   Never Sell them
   Never Refinance them



       End Up Owning 30 Houses
                Strategy # 1 30-year Buy & Hold

   Rental Income Vs Refinancing
Future Rent: *
   A home that rents for $1,200 per month today will rent for
   approximately $6,890 per month within thirty years.
   That is $82,721 per year.




          * Based upon 5.3% annual rent increases and 6.1% annual appreciation
                 Strategy # 1 30-Year Buy & Hold

   Rental Income Vs Refinancing
Future Rent: *
   A home that rents for $1,200 per month today will rent for approximately
   $6,890 per month within thirty years. That is $82,721 per year.

Refinancing: *
   A home valued at $200,000 today will be worth
   approximately $1.3 Million within thirty years.




           * Based upon 5.3% annual rent increases and 6.1% annual appreciation
                 Strategy # 1 30-Year Buy & Hold

   Rental Income Vs Refinancing
Future Rent: *
   A home that rents for $1,200 per month today will rent for approximately
   $6,890 per month within thirty years. That is $82,721 per year.

Refinancing: *
   A home valued at $200,000 today will be worth
   approximately $1.3 Million within thirty years.

Future Income:
  Thirty years from today, which would you rather have:
               $82,721 per month for life, or
           $1.3 Million in a lump-sum payment?

           * Based upon 5.3% annual rent increases and 6.1% annual appreciation
        Strategy # 1: 30-Year Buy & Hold

    4-Ways to Make Money

Strategy # 1 – Four Ways to Make Money:

   1) Collect the Rent

     In 30-Years you will be able to collect annual rents of:
         31 Years     $ 1,400,000
         32 Years     $ 1,600,000
                                          Get a $200,000 raise
         33 Years     $ 1,800,000
                                          every year after you
         34 Years     $ 2,000,000
                                          Retire.
         35 Years     $ 2,200,000
         36 Years     $ 2,400,000
        Strategy # 1: 30-Year Buy & Hold

    4-Ways to Make Money

Strategy # 1 – Four Ways to Make Money:

   1) Collect the Rent
   2) Refinance One House per Year

     In 30-Years you could start refinancing each house as it
     becomes totally paid off. Your annual income would be:
                   31 Years    $ 2,700,000
                   32 Years    $ 3,000,000
                                               Get a $300,000 raise
                   33 Years    $ 3,300,000
                                               every year after you
                   34 Years    $ 3,600,000
                                               Retire.
                   35 Years    $ 3,900,000
                   36 Years    $ 4,000,000
         Strategy # 1: 30-Year Buy & Hold

    4-Ways to Make Money

Strategy # 1 – Four Ways to Make Money:

   1) Collect the Rent
   2) Refinance One House per Year
   3) Sell 10 Houses and Pay off the Other 20
     All of your properties would be owned free and clear.
     Your annual rental income would be:
                                          31 Years    $ 2,250,000
         Get a $150,000 raise             32 Years    $ 2,400,000
         every year after you             33 Years    $ 2,500,000
         Retire.                          34 Years    $ 2,650,000
                                          35 Years    $ 2,800,000
                                          36 Years    $ 3,000,000
              Strategy # 1: 30-Year Buy & Hold

         4-Ways to Make Money

   Strategy # 1 – Four Ways to Make Money:

       1) Rent
       2) Refinance One House per Year
       3) Sell 10 Houses and Pay off the Other 20
       4) Refinance All of the Properties Every 5 years

             Your CASH-BACK at closing each time would be:
                         31 Years   $ 37 Million
Get a $5 to $7 Million
                         35 Years   $ 28 Million
raise every year
                         40 Years   $ 46 Million
after you Retire.
                         45 Years   $ 69 Million
Retirement Strategy # 2



      10-Year Plan
No Special Training Needed
                     Strategy # 2
       10-Year Buy & Hold



Buy 2 houses every year for each of 10 Years

   Never Sell them
   Never Refinance them



       End Up Owning 20 Houses
     Strategy # 2
10-Year Buy & Hold


                    You may buy as many
                    properties as you desire
                    for meeting your cash
                    flow needs, but buy two
                    properties per year that
                    are held in reserve for
                    your retirement
                    program.
                          Strategy # 2
              10-Year Buy & Hold
                    Common Excuses
Property Won’t Cash-Flow:
   If you live in an area where you cannot rent out a property for enough
   to cover the mortgage payment then simply buy two for one.

   Example:

        FMV         = $ 600,000       It won’t take many of these
        Mortgage    = $   4,500       kinds of deals to destroy
        Rent        = $   3,200       you financially.
        Monthly Loss $    1,300


 Buy a property at 10% under FMV and then resell it at 5% above FMV.
 Use the profits to subsidize the mortgage payments on a second house
 bought 60-days later. You have no money involved in the deals.
                           Strategy # 2
             10-Year Buy & Hold
                     Common Excuses
Property In Negative Appreciation:
   If you live in an area where property values are declining at
   a rapid rate then buy a property in Short-Sale, sell it and
   reinvest the profits into another Short-Sale for retirement.

   Example:
        FMV               =   $ 600,000
        Short-Sale Amt    =   $ 400,000
        Resell for        =   $ 475,000
        Total Cash Profit =   $ 75,000


 Buy a property at 40% under FMV and then resell it at 15% under FMV.
 Use the profits to subsidize the mortgage payments on a second house
 bought 60-days later. You have no money involved in the deals.
Retirement Strategy # 3



     10-Year Plan
Becoming a True Investor
                      Strategy # 3
  10-Year Multi-Unit Investing

Equity in a property does you no good.

    Equity is like money stuffed in your mattress.
       It will always be there for a rainy day.
       But it never works to earn you more money.

Strip the equity out, Leverage it and put it to work.

   Make your money work for you.
                          Strategy # 3
    10-Year Multi-Unit Investing

Simple Leverage:
   Pull the equity out and reinvest it Laterally:
       Example – Buy a Similar Property

             FMV of property $ 200,000 Current Equity $ 50,000.
             Use the equity as a down payment to buy another
             property valued at $ 200,000. (25% Down Payment)
                          Strategy # 3
    10-Year Multi-Unit Investing

Simple Leverage:
   Pull the equity out and reinvest it Laterally:
       Example – Buy a Similar Property

             FMV of property $ 200,000 Current Equity $ 50,000.
             Use the equity as a down payment to buy another
             property valued at $ 200,000. (25% Down Payment)

Power Leverage:
   Pull the equity out and reinvest it Vertically:
       Example – Buy a Bigger and Better Property
             FMV of property $ 200,000 Current Equity $ 50,000.
             Use the equity as a down payment to buy a commercial
             property valued at $ 1,000,000. (5% Down Payment)
                           Strategy # 3
    10-Year Multi-Unit Investing

Year # 1 - Buy House:                                  FMV =      $ 200,000
                                                       Buy for    $ 180,000
     Buy a house at 10% Under FMV.
                                                       Sell for   $ 220,000
     2 years later resell for 10% above current FMV.   Profit     $ 40,000
                           Strategy # 3
    10-Year Multi-Unit Investing

Year # 1 - Buy House:                                  FMV =      $ 200,000
                                                       Buy for    $ 180,000
     Buy a house at 10% Under FMV.
                                                       Sell for   $ 220,000
     2 years later resell for 10% above current FMV.   Profit     $ 40,000

Year # 3 - Buy 8-Unit Apartment:
     Use equity from house as down payment
     On a 35-Unit apartment house.
                           Strategy # 3
    10-Year Multi-Unit Investing

Year # 1 - Buy House:                                  FMV =      $ 200,000
                                                       Buy for    $ 180,000
     Buy a house at 10% Under FMV.
                                                       Sell for   $ 220,000
     2 years later resell for 10% above current FMV.   Profit     $ 40,000

Year # 3 - Buy 8-Unit Apartment:
     Use equity from house as down payment
     On a 35-Unit apartment house.

Year # 5 - Buy 35-Unit Apartment:
     Two years later refinance the 8-Unit, Power-Leverage the equity
     as a down payment on a 35-Unit apartment. Refi at 60% LTV.
                           Strategy # 3
    10-Year Multi-Unit Investing

Year # 1 - Buy House:                                  FMV =      $ 200,000
                                                       Buy for    $ 180,000
     Buy a house at 10% Under FMV.
                                                       Sell for   $ 220,000
     2 years later resell for 10% above current FMV.   Profit     $ 40,000

Year # 3 - Buy 8-Unit Apartment:
     Use equity from house as down payment
     on a 35-Unit apartment house.

Year # 5 - Buy 35-Unit Apartment:
     Refinance 8-Unit, Power-Leverage the equity
     as a down payment on a 35-Unit apartment. Refi at 60% LTV.

Year # 7 - Buy 135-Unit Apartment:
     Refinance 8-Unit and 35-Unit, Power-Leverage the equity
     as a down payment on a 135-Unit apartment. Refi at 60% LTV.
                     Strategy # 3
   10-Year Multi-Unit Investing

Year # 10 – Refinance ALL UNITS: (at 60% LTV)

  Pull out Cash Back at Closing in the amount of:


                $ 5,500,000

          Go and enjoy your retirement.
And all this was done on a $1.00 initial investment.
    Retirement Strategy # 4



         10-Year Plan
   Combining Strategies 2 & 3
Compounding Multi-Unit Properties
                         Strategy # 4
 10-Year Compound Multi-Unit

Combine Strategies # 2 and # 3:

   Buy one house every year for the next 10 years (Strategy # 2)

   2 years later sell the house and buy an 8-Plex apartment.

   2 years later refinance the 8-Plex and buy a 35-Plex apartment.

   2 years later refinance the 35-Plex and buy a 135-Plex apartment.

              Always Refinancing at only 60% LTV.


You will end up owning 10 of each of these property types.
                                           Strategy # 4
       10-Year Compound Multi-Unit
                                                                                                  Cash
Year     A        B        C        D         E        F        G        H        I        J
                                                                                                  Back
 1      H-1
 2               H-2
 3      8P-1              H-3
 4               8P-2              H-4
 5     35P-1              8P-3               H-5
 6              35P-2              8P-4               H-6
 7     135P-1            35P-3               8P-5              H-7
 8              135P-2            35P-4               8P-6              H-8
 9                       135P-3             35P-5              8P-7              H-9
10                                135P-4             35P-6              8P-8             H-10
 11     Refi                                135P-5            35P-7              8P-9              6.7 M
12               Refi                                135P-6            35P-8             8P-10     7.4 M
13                        Refi                                135P-7            35P-9              8.1 M
14                                 Refi                                135P-8            35P-10    8.9 M
15                                           Refi                               135P-9             9.8 M
16      Refi                                          Refi                               135P10   23.7 M
                                   Strategy # 4
       10-Year Compound Multi-Unit
       Each year you can refinance a different grouping of properties.
       Your annual income continues to climb. (60% LTV)
                                                                               Cash
Year    A      B      C      D        E      F     G       H      I      J
                                                                               Back
17            Refi                                                             26.1 M
18                   Refi                                                      28.7 M
19                          Refi                                               31.8 M
20                                   Refi                                      34.7 M
21     Refi                                 Refi                               41.8 M
22            Refi                                 Refi                        45.9 M
23                   Refi                                 Refi                 50.3 M
24                          Refi                                 Refi          55.4 M
25                                   Refi                               Refi   61.0 M
26     Refi                                 Refi                               67.0 M
27            Refi                                 Refi                        73.7 M
28                   Refi                                 Refi                 81.0 M
29                          Refi                                 Refi          89.2 M
                         Strategy # 4
     10-Year Compound Multi-Unit

         Apartment Houses are only an Example:

 You can invest in any aspect of real estate you desire. Variety
 can make your investing more enjoyable and diversified.

Billboards            Pre-Construction       Office Buildings
Storage Units         Condo Conversions      Strip Malls
Mobile Home Parks     Tax Liens/Deeds        Businesses
Section 8 Housing     REO’s/Short-Sales      Raw Land Development
Warehousing           Spec-Homes             Hard Money Lending
Airports              Restaurants            Golf Courses
R.V. Parks            Probate                Adverse Possession
   Strategy # 5



    - Don’t Buy -
Lease / Option Instead
                           Strategy # 5
  10-Year Multi-Unit Lease / Option
Lease / Option a 40-Unit Apartment Building:
Seller must be willing to sell for ALL CASH,
NOT a 1031-Tax Free Exchange.
                             Strategy # 5
  10-Year Multi-Unit Lease / Option
Lease / Option a 40-Unit Apartment Building:
Seller must be willing to sell for ALL CASH,
NOT a 1031-Tax Free Exchange.

  Retirement:
      Average apartment building owner became an owner at about
      age 40. At age 65 to 70 they want to retire and do some traveling
      while they still have their health. (1 in 30 owners qualify)
                              Strategy # 5
  10-Year Multi-Unit Lease / Option
Lease / Option a 40-Unit Apartment Building:
Seller must be willing to sell for ALL CASH,
NOT a 1031-Tax Free Exchange.

  Retirement:
      Average apartment building owner became an owner at about
      Age 40. At age 65 to 70 they want to retire and do some traveling
      While they still have their health. (1 in 30 owners qualify)

  Frustrated Investor:
      Tired of being a landlord – it’s a lot more work than they thought.
                              Strategy # 5
  10-Year Multi-Unit Lease / Option
Lease / Option a 40-Unit Apartment Building:
Seller must be willing to sell for ALL CASH,
NOT a 1031-Tax Free Exchange.

  Retirement:
      Average apartment building owner became an owner at about
      Age 40. At age 65 to 70 they want to retire and do some traveling
      While they still have their health. (1 in 30 owners qualify)

  Frustrated Investor:
      Tired of being a landlord – it’s a lot more work than they thought.

  Medical Emergencies / Other:
      Whatever their reasons for selling – They just want ALL CASH.
                           Strategy # 5
 10-Year Multi-Unit Lease / Option
Step # 1: Show them the After-Tax income stream they will
           have if they sell their property for ALL CASH.


                      Selling For All Cash
               (Original Purchase Price of $ 1,250,000)

       Asking Price                                   $ 2,100,000

       Selling Price                                  $ 2,000,000
       Less: Mortgage Pay off                     -   $ 1,000,000
       Less: Commissions & Closing                -   $ 200,000
       Less: Capital Gains Tax (15%)              -   $ 112,500
       Net Cash Amount Received                   -   $ 687,500
                              Strategy # 5
 10-Year Multi-Unit Lease / Option
Step # 2:
   Ask the seller what he/she is going to do with the
   $687,500 they received from the sale of the property.

            Stick it in a jar and place it on the fireplace mantle?
            Stuff it in their mattress?
            Burry it in the backyard?
            Invest it:
                Stock Market?
                Bank CD’s?
                Gold Bullion?
                Other?
                           Strategy # 5
  10-Year Multi-Unit Lease / Option
Step # 3:   Show them the tax consequences of ALL CASH.
                      Selling For All Cash
               (Original Purchase Price of $ 1,250,000)

       Asking Price                                   $ 2,100,000

       Selling Price                                  $ 2,000,000
       Less: Mortgage Pay off                     -   $ 1,000,000
       Less: Realtor Commissions                  -   $ 200,000
       Less: Capital Gains Tax (15%)              -   $ 112,500
       Net Amount Received                        -   $ 687,500

       Invested at 7% Per Year                      $     48,125
       Less: Capital Gains Tax (15%)              - $      7,219
       After Tax Annual Cash-Flow                   $     40,906
                           Strategy # 5
   10-Year Multi-Unit Lease / Option
Step # 3:    Show them the tax consequences of ALL CASH.

        They are trading their apartment house
               for a Cash-Flow stream.

     They will receive an annual dividend check of $40,906.
                 ($3,409 per month on average)

Do they really want to trade their apartment house for only $40,906?
 What if you could give them $100,000 After Tax per year instead?

   Wouldn’t $100,000 per year make them happier than $40,906?
                                 Strategy # 5
 10-Year Multi-Unit Lease / Option
Step # 4:
        Show them the calculations for their current NOI
                   (Net Operating Income)

                               Current NOI
                        (40-Unit Apartment Building)

      Annual Rental Income                             $ 360,000
        ($750 per unit per month times 40 units
         times 12 months per year)

      Less: Annual Expenses (40%)                      $ 144,000
      Net Operating Income (NOI)                       $ 216,000

  The owners then must pay the $96,000 annual mortgage payment
                        Strategy # 5
 10-Year Multi-Unit Lease / Option
Step # 5:   Don’t Sell me the building - Lease it to me
                   with a 10-Year Lease Option

Owner No Longer Responsible For:       Owner Can Now:

     Maintenance                         Retire
     Repairs                             Receive Passive Income
     Vacancies                           Pay Mortgage Payment
     Rent Collection
     Bill Paying
     Advertising
     Tenant Headaches
     Taxes
     Management
     Responsibility
                           Strategy # 5
 10-Year Multi-Unit Lease / Option
Step # 6:     Show Owner How Much He Will
                 Be Paid to Lease to You.


My Lease Payment each year will be 80% of his current NOI

            Net Operating Income     $ 216,000
            Times 80%                 X     .80
            Annual Lease Payment     $ 172,800
            Less Annual Mortgage     $ 96,000
            Before Tax Earnings      $ 76,800


     That’s a lot better than the $ 40,906 from an All Cash sale.
                       But it gets even better.
                                Strategy # 5
    10-Year Multi-Unit Lease / Option
  Step # 7:         Show Owner His AFTER TAX
                            Earnings
          Original Purchase Price                   $ 1,250,000
          Depreciation Rate                            X 3.6 %
          Annual Depreciation Expense               $    45,000

          Before Tax Income                         $   76,800
          Less: Depreciation Expense               -$   45,000
          Less: Interest Expense (Mortgage)        -$   74,800
          Net Loss                                 -$   43,000
                                                Cash             $ 76,800
Losses applied against other income resulting
                                                Tax Savings      $ 15,050
in a tax savings of $15,050 on other income.
                                                Total Income     $ 91,850

                 That is 2.25 times as much After Tax Money
                        compared to the All Cash sale.
                             ($40,906 Vs $91,850)
                                         Strategy # 5
    10-Year Multi-Unit Lease / Option
  Step # 8: Show 10-Year After-Tax Comparison

After Tax From Cash Sale                                 After Tax From Lease/Option

Annual Earnings                  $    40,906             Annual Earnings            $     91,850
                                 X        10                                         X        10
10-Year Earnings                 $ 409,060               10-Year Earnings            $ 918,500
Initial After Tax Income         $ 687,500               Net Option Pmt.             $ 1,413,062
Total 10-Year After Tax          $ 1,096,560             Total 10-Year               $ 2,331,562


            That is 2.13 times as much After Tax Money
                   compared to the All Cash sale.
         Which do you think the owner would prefer?

    Net Option Pmt calculated by after tax gain on sale added to the 10-Year principal pay down.
                              Strategy # 5
 10-Year Multi-Unit Lease / Option
What’s in it for the Investor?
1) No Money Down.
    You won’t even need to pay a security deposit because
    all of the tenants already paid security deposits.
                               Strategy # 5
 10-Year Multi-Unit Lease / Option
What’s in it for the Investor?
1) No Money Down.
     You won’t even need to pay a security deposit because
     all of the tenants already paid security deposits.

2) Immediate 1st Year Salary of $43,200.
     The difference between the NOI of $216,000 and the rent
     you pay to the owner of $176,800.
                               Strategy # 5
 10-Year Multi-Unit Lease / Option
What’s in it for the Investor?
                                                               Annual Salary
1) No Money Down.                                               $    43,200
     You won’t even need to pay a security deposit because      $    61,200
     all of the tenants already paid security deposits.         $    80,100
                                                                $    99,950
2) Immediate 1st Year Salary of $43,200.                        $ 120,780
     The difference between the NOI of $216,000 and the rent    $ 142,660
     you pay to the owner of $176,800.                          $ 165,630
                                                                $ 189,750
3) Annual Pay Raises of 5.3% of Total Rents.                    $ 215,080
                                                                $ 241,680
                                                                $ 1,360,030
                                Strategy # 5
 10-Year Multi-Unit Lease / Option
What’s in it for the Investor?
                                                                Annual Salary
1) No Money Down.                                                $    43,200
     You won’t even need to pay a security deposit because       $    61,200
     all of the tenants already paid security deposits.          $    80,100
                                                                 $    99,950
2) Immediate 1st Year Salary of $43,200.                         $ 120,780
     The difference between the NOI of $216,000 and the rent     $ 142,660
     you pay to the owner of $176,800.                           $ 165,630
                                                                 $ 189,750
3) Annual Pay Raises of 5.3% of Total Rents.                     $ 215,080
                                                                 $ 241,680
4) $2,650,000 Cash Back upon Refi in 10-Years.                   $ 1,360,030

       Total Salary    $ 1,360,030
       Cash Back       $ 2,650,000      Not Bad for a No Money Down Deal!
       Equity          $ 1,170,000
       Total Profits   $ 5,180,030      That’s 2.22 times what the seller got.
              Strategy # 6


  Why not retire in only 5 Years ?

The time value of money and the effects of compound
interest will not generate as much passive income
because you don’t have as much time working in your
behalf, but it’s still great.
                   Strategy # 6
 5-Year Multi-Unit Apartments

Step # 1 – Buy 2 Houses per year for 5 years.

Step # 2 – Sell each house after 2 years.
           Buy an 8-Plex.

Step # 3 – Refinance each 8-Plex after 2 years.
           Buy a 35-Plex.
                             Strategy # 6
5-Year Multi-Unit Apartments
                                                                    Cash
 Year      A           B           C           D           E
                                                                    Back
  1      H 1&2
  2                  H 3&4
  3      8P 1&2                  H 5&6
  4                  8P 3&4                  H 7&8
  5     35P 1&2                  8P 5&6                 H 9%10
  6     Refinance   35P 3&4                  8P 7&8                  $ 1.2 M
  7                 Refinance   35P 5&6                 8P 9 & 10    $ 1.3 M
  8                             Refinance   35P 7&8                  $ 1.4 M
  9                                         Refinance   35P 9&10     $ 1.6 M
 10                                                     Refinance    $ 1.7 M
  11    Refinance                                                    $ 4.8 M
 12                 Refinance                                        $ 5.3 M
 13                             Refinance                            $ 5.8 M
 14                                         Refinance                $ 6.4 M
 15                                                     Refinance    $ 7.1 M
       Strategy # 7


Lazy Man’s 5-Year Retire Plan


     Can you fall off a log?
      It really is that easy
                           Strategy # 7
       5-Year Lazy Man’s Plan
                                                                    Cash
Year       A           B           C           D           E
                                                                    Back
 1      House 1
 2                  House 2
 3      8-Plex 1                House 3
 4                  8-Plex 2                House 4
 5      35-Plex 1               8-Plex 3                House 5
 6      Refinance   35-Plex 2               8-Plex 4                $ 600,000
 7                  Refinance   35-Plex 3               8-Plex 5    $ 650,000
 8                              Refinance   35-Plex 4               $ 700,000
 9                                          Refinance   35-Plex 5   $ 800,000
10                                                      Refinance   $ 900,000
 11     Refinance                                                     $ 2.4 M
12                  Refinance                                         $ 2.6 M
13                              Refinance                             $ 2.9 M
14                                          Refinance                 $ 3.2 M
15                                                      Refinance     $ 3.5 M
             Strategy # 8


What About a 1-Year Retire Plan

Who wants to be fully retired in just 1 Year?
                        Strategy # 8
   1-Year Multi-Unit Lease / Option
        Find A Property Under Bad Management

High vacancy rate and expenses produces NOI of only $192,000.
Based upon a CAP Rate of 12 you could buy or lease option it
for only $1,600,000.
                              If it is really poorly managed, you
                              could get it for a CAP Rate of 15 and
                              pay only $1,2800,000.



                              These properties will take some work
                              to find. You sometimes have to kiss a
                              lot of toads to find a prince.
                        Strategy # 8
  1-Year Multi-Unit Lease / Option
       Find A Property Under Bad Management

 High vacancy rate and expenses produces NOI of only $192,000.
 Based upon a CAP Rate of 12 you could buy or lease option it
 for only $1,600,000.

You Provide Good Management
   Decrease Vacancy Rates
       Decrease Expenses
           Raise Rents
                        Strategy # 8
  1-Year Multi-Unit Lease / Option
       Find A Property Under Bad Management

 High vacancy rate and expenses produces NOI of only $192,000.
 Based upon a CAP Rate of 12 you could buy or lease option it
 for only $1,600,000.

You Provide Good Management         New NOI of       $ 300,000
    Decrease Vacancy Rates          New CAP Rate of            7
        Decrease Expenses           Sell or Refi for $ 4,285,714
            Raise Rents
                             Strategy # 8
      1-Year Multi-Unit Lease / Option
           Find A Property Under Bad Management

     High vacancy rate and expenses produces NOI of only $192,000.
     Based upon a CAP Rate of 12 you could buy or lease option it
     for only $1,600,000.

   You Provide Good Management           New NOI of         $   300,000
       Decrease Vacancy Rates            New CAP Rate of              7
           Decrease Expenses             Sell or Refi for   $ 4,285,714
               Raise Rents

           You just made $ 2,685,714 in ONE YEAR.
   How long will it take you to earn $2.6 Million at your current job?
Now that you know the Cookie Cutter – Repeat it over and over
There’s only 2 reasons you will not
     Retire a Multi-Millionaire

 1) Ignorance: No One Ever Showed You How To Do It.
       You have now been shown a few ways to do it, so
       you can no longer use this excuse.
There’s only 2 reasons you will not
     Retire a Multi-Millionaire
1) Ignorance: No One Ever Showed You How To Do It.

        You have now been shown a few ways to do it, so
        you can no longer use this excuse.

2) Laziness: You Did Not Apply What You Were Shown.

             Will you use these new tools to accomplish your
             dreams or will you continue to make excuses for
             your failure and not take personal responsibility
             for your situation?


   Your future is in your own hands – Seize the Day !
         Net Worth Accumulation
                   Vs.
             Equity Stripping

 There are two schools of thought amongst investors
 as to the best way to acquire wealth:

       1) Net Worth Accumulation

       1) Equity Stripping


The two views are pretty much in opposition to each other.
               Net Worth Accumulation
  This school of thought employs the “Buy & Hold” philosophy:
           ▪ Buy property and never sell or refinance it.
           ▪ Let the renters pay off the mortgage.

      Advantages:
           ▪ Builds true wealth through equity accumulation.
           ▪ No matter what happens with the economy you can live off the rents.

      Disadvantages:
           ▪ Very Slow Growth . . . Requires 30 years to pay off property.
           ▪ First decade of ownership produces very little positive cash flow.
           ▪ Must wait many years to enjoy the fruits of your labors
           ▪ Requires massive capital for down payments.
           ▪ Hard to build large portfolio due to huge capital requirements.

- Tried and tested through centuries of application – it works, albeit slowly -
                    Equity Stripping
The “Equity Does You No Good” philosophy:
      ▪ Refinance regularly to pull out equity that sits dormant.
      ▪ Leverage equity to make it work for you.

   Advantages:
      ▪ Builds wealth through leveraged debt.
      ▪ Multiplies your efforts by stretching your initial investment.
      ▪ Eliminates need for huge personal capital investments.
      ▪ Builds massive real estate empires quickly.
   Disadvantages:
      ▪ If LTV is too great you could be upside-down if market drops.
      ▪ Produces minimal operating cash-flows.
      ▪ You receive advanced payment on future cash-flows.
      ▪ Can be somewhat risky if not properly managed.
       Comparative Cash Withdrawal
                Analysis
                      Net Worth                      Equity Stripping
                       Theory                            Theory
Strategy                                                                        Years

               Cash          Net Worth            Cash          Net Worth

   1       $ 1,400,000       $ 46,522,000     $ 36,700,000      $ 10,000,000     30
   2       $    66,700       $    2,628,500   $ 1,200,000       $   1,428,500    10
   3       $   213,600       $    8,839,000   $ 5,500,000       $   3,339,000    10
   4       $   976,800       $ 24,223,200     $ 6,700,000       $ 18,500,000     10
   5       $ 1,360,00        $    3,810,000   $ 4,000,000       $   1,170,000    10
   6       $   141,600       $    4,658,400   $ 1,200,000       $   3,600,000     5
   7       $    70,800       $    2,329,200   $   600,000       $   1,800,000     5
   8       $   108,000       $    2,492,000   $ 2,600,000       $   0,000,000     1
   9       $   550,000       $    6,230,000   $   780,000       $   6,000,000     5


       Well managed, leveraged, Equity-Stripping
always out performs Net Worth Accumulation’s Cash-Flow.
       Planning Your Retirement

What does all this mean to YOUR retirement program ?

Establish Your Personal Retirement Goals:
   Discuss your retirement goals with your spouse and then write down
   the following information:

       ▪ When do you want to retire?
              Date or event.

       ▪ How much passive income have you created right now?
              Social Security.
              401-K and other investments.

       ▪ How much do you want in passive income when you retire?
       ▪ How do you get from where you are to where you want to be?
             Example – Strategy # 2

Retirement Strategy # 2:             Buy 2 Houses per year – Buy & Hold


 ▪ What is your “Closing Ratio” ? For most beginning investors it is 1:10.
       If you make 10 offers every 5 months you should buy 1 house.


 ▪ How many houses do you have to look at before you make an offer?
       Most beginners look at 2 (one appointment per week).



 ▪ How many phone calls do you have to make to set up an appointment?
       Most beginners make 15 – 20 (3-4 phone calls per day).
            Focus on the Daily Goal

Retirement Strategy # 2:                Buy 2 Houses per year – Buy & Hold

 When you wake up in the morning:
     If the sun is shining - jump out of bed and make 3-4 phone calls.
     If it is raining         - jump out of bed and make 3-4 phone calls.
     If it is snowing         - jump out of bed and make 3-4 phone calls
                   (You can make the calls any time during the day)
             Focus on the Daily Goal

Retirement Strategy # 2:                     Buy 2 Houses per year – Buy & Hold

 When you wake up in the morning:
     If the sun is shining         - jump out of bed and make 3-4 phone calls.
     If it is raining              - jump out of bed and make 3-4 phone calls.
     If it is snowing              - jump out of bed and make 3-4 phone calls
                        (You can make the calls any time during the day)


  ▪ 3 phone calls per day                           =     1 appointment per week
  ▪ 1 appointment per week                          =     2 offers per month
  ▪ 2 offers per month                              =     1 purchase every 5 months
  ▪ 1 purchase every 5 months =                           2 purchases per year
  ▪ 2 purchases per year                            = 20 in 10 years.
           Focus on the Daily Goal

Failure is NOT an option!
    Focus on the Daily Goal and then do it religiously.
    Do not let anything prevent you from completing your daily goals.
    Doing this will automatically force the ultimate goal to be accomplished.


    Be specific about your ultimate goal.
    Break it down into realistic sub-goals:
         Monthly
         Weekly
         Daily             Focus exclusively upon the Daily Goal.
                         The rest will automatically take care of itself.
Question and Answer Session
• Send questions via “chat”
• I will answer live on the phone
    How to Contact Me




- Gary Barnes
    platinumedge@comcast.net
    gary@bluespringpress.com

				
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