RENTAL PROPERTY BOOTCAMP · Property Managers 100% Turnkey Why Rental Properties? Why Do We Choose Rental Real Estate As Our Investment Vehicle? Considerations Hard Asset (Intrinsic

RENTAL PROPERTYBOOTCAMP

name:

7/7/2020

1

Fortune BuildersRental Property Bootcamp


Code Of HonorCode Of Honor

1

2

7/7/2020

2

Be on time

Code of Honor

Code of Honor

Code of Honor

Don’t multi-task

Computers for NOTES only!

3

4

7/7/2020

3

Code of Honor

PARTICIPATE with the class!

Code of Honor

QuestionsQuestions

Code of Honor

Be POSITIVE

and

Give

5

6

7/7/2020

4

ENERGY!ENERGY!LEARNINGTAKES

The Cone of Learning

After 2 weeks we remember

When you’re greenyou grow….

When you’re greenyou grow….

7

8

7/7/2020

5

Who Is This Guy?

Who is John Blackburn?

WHYPassive Income?

YOUR WHY…

FinancialFreedom

Technician

Manager

Entrepreneur

Struggle, Confusion, Constant Work

Consistent Work with Payoff

Business Growth

9

10

7/7/2020

6

Rentals - Multiple Paths

Entrepreneur

Manager

Technician Marketing, Deal Sourcing, Negotiating, Rehabbing, Tenanting, Managing

Rehab Yourself & Hiring ProfessionalProperty Managers

100% Turnkey

Why Rental Properties?

Why Do We Choose

Rental Real Estate

As Our Investment Vehicle?

ConsiderationsHard Asset (Intrinsic Value)

LeverageControl Asset for 20%of it’s value Principle Pay-down

Equity & AppreciationCherry on Top - but its a big potential cherry!

Tax Benefits DepreciationDeduct Interest PaymentsImprovements & Expenses

High YieldAll Cash Purchase 6-10%Conventional Loan 8-15%*Non-Recourse

11

12

7/7/2020

7

Considerations

Lack of Liquidity

Subject to Market Risks (Economy)

Bad Property Management (Biggest Killer)

Problem Residents

Potential Risk Factors

Entity Structure for Rentals

FinancialEngineering

Property Management

EvaluatingMarkets

Passive Income

Club

Rental Bootcamp Outline

AnalyzingDeals

1 HousePortfolio

BecomingA Bankable

Investor

RenovatingRentals

BuildingYourPlan

The 1 House Portfolio

It All Starts With

ONE House!

It All Starts With

ONE House!

13

14

7/7/2020

8


LeverageLeverage


Time is

Everything

Rental Property Intensive

Feed The P.I.G.

15

16

7/7/2020

9

Rental Property Bootcamp

Doors To FreedomDoors To FreedomDoors To Freedom



Property Management

EvaluatingMarkets

Passive Income

Club


AnalyzingDeals

1 HousePortfolio

BecomingA Bankable

Investor

RenovatingRentals

BuildingYourPlan

1. Learn to Identify YOUR Investment Objectives

2. Outside in Approach to Evaluating Rentals

3. 6 Factors of a Great Rental Market

4. Ninja Tips

Our Objective:

Evaluating Markets

17

18

7/7/2020

10

Evaluating Markets

What’s Most Important To You?

Cashflow?Growth?Stability?Predictable?

What’s Your Risk Tolerance?

Volatility? Risk vs. Reward

What’s Your Time Horizon?

Money Now?Money in the Future?

Identify Investment Objectives:

Evaluating Markets

Outside in ApproachLaws & Legislation for the StateEconomic Metrics for for the CityEvery Market Performs Uniquely Match Market to Investment ObjectiveSocio-Economic AnchorsLocation, Location, LocationThe Right Property

Evaluating Markets

Resident Friendly

vs.

Investor Friendly

19

20

7/7/2020

11

6 Factors of a Great Rental Market

GMP - Gross Metro Product

RPR - Rent to Price Ratio

HAI - Housing Affordability Index

MSA - Metro Statistical Area

Percentage of Renters

Socio-Economic Factors


• A monetary measure of the market value of all final goods and services produced in a period (quarterly or annually)

• Used to determine the economic performance of a whole country or region, and to make international comparisons

GMP - Gross Metro Product

Ideal Measurement = 1 Year / 5 Year / 10-12 YearYear over year growth of 1-3%


RPR - Rent To Price Ratio

Annual Rental Income / Median Price

$1000 Monthly Rent X 12 Months = $12,000

$12,000 / $125,000 (Median Price) = 9.6%

Ideal RPR = Depends on the Objective Growth Market vs. High Yield Market

21

22

7/7/2020

12


HAI - Housing Affordability Index

$150,000 Median Price / $50,000 Median Income = 3

Ideal HAI = 4 or Lower

Median Home Price / Median Annual Income


MSA - Metro Statistical Area

Population = Tenants & Regional Stability

Ideal Measurement = 1 Year / 5 Year / 10-12 YearYear over year growth of 1-3%

6 Factors of a Great Rentals Market

Percentage of Renters

National Average 20-25%

Ideal % of Renters = 30-40%

23

24

7/7/2020

13

6 Factors of a Great Rentals Market

Socio Economic Anchors

Large Stable CompaniesMajor Manufacturers Health Care ProvidersTech CompaniesFinance Companies Fortune 500 Companies

Location of Those JobsTraffic PatternsNiche Down NeighborhoodsEtc…

Housing Markets Are Driven By Jobs

NINJA TIPS

High Traffic StreetsHighway NoiseSteep DrivewaysClose to Highway ExitsSloped Back YardsSmaller Square FootageIndustrial Areas

MASTERY RESOURCES

www.RPBDownloads.comPassword = RPI

25

26

7/7/2020

14

Evaluating Markets

Market Evaluation Chart

Evaluating Markets

Local MLS Data & REIA Groups

https://www.neighborhoodscout.com/

https://www.huduser.gov/portal/home.html

http://www.city-data.com/

https://libguides.princeton.edu/urbanstudies/data

https://www.census.gov/econ/geo-city.html

Resources

27

28

7/7/2020

15

Evaluating Markets

www.bea.gov - GDP/GMP-> Data -> By Place -> Metro -> Interactive Data ->

GDP by Metro -> Current Dollars -> Pick your Metro -> All Industries Total -> All Years

www.bestplaces.net - MSA / Income / Home PricesName of City -> Scroll down to “Metro” ->

Find the Data you are looking for

Resources

Evaluating Markets

www.deptofnumbers.com - Rental Data Right side of page ->

Datasets -> Rent -> Rent by Metro ->

Click on the Metro

www.forbes.com/places - Quick SummaryGoogle “Forbes name of city”

Resources



Property Management

EvaluatingMarkets

Passive Income

Club


AnalyzingDeals

1 HousePortfolio

BecomingA Bankable

Investor

RenovatingRentals

BuildingYourPlan

29

30

7/7/2020

16

1. Identify Core Numbers

2. Learn The Key Calculations

3. Learn The 4 Profit Centers of Rental Real Estate

4. Deal Analyzer for Rentals

Our Objective:

Analyzing Deals

1. Purchase Price (+Repairs)2. Monthly Rent3. Property Management Fee4. Insurance5. HOA6. Property Taxes 7. Mortgage (If Applicable)

Core Numbers:

Analyzing Deals

Key CalculationsKey Calculations

Net Operating Income (NOI)

Cap Rate

Cash On Cash Return (ROI)

Internal Rate of Return (IRR)

Analyzing Deals

31

32

7/7/2020

17

1. Purchase Price (+Repairs) - $100,0002. Monthly Rent – $10,000/Year3. Property Management Fee (10%) – $1,000/Year4. Insurance – $500/Year5. HOA – N/A6. Property Taxes – $1,500/Year7. Mortgage (If Applicable) – N/A

Core Numbers:

Analyzing Deals

Net Operating Income - NOI

Annual Rental Income - $10,000- Fixed Annual Expenses - $3,000

Net Operating Income (NOI)***Cash Purchase***

= $7,000

Formula for NOI:

Cap Rate

Formula for Cap Rate:***Assumption – We are purchasing the property

for CASH

NOI / Purchase Price = Cap Rate$7,000/$100,000 = 7%

***Purchase Price = $100,000 ***NOI with Cash Purchase = $7,000

33

34

7/7/2020

18

Analyzing Deals

What If We Use Leverage?

1. Purchase Price (+Repairs) - $100,0002. Monthly Rent – $10,000/Year3. Property Management Fee (10%) – $1,000/Year4. Insurance – $500/Year5. HOA – N/A6. Property Taxes – $1,500/Year7. Mortgage (If Applicable) – $4,000/Year

Core Numbers:

Analyzing Deals

Net Operating Income - NOI

Annual Rental Income - $10,000- Fixed Annual Expenses - $7,000

Net Operating Income (NOI)***Leveraged Purchase***

= $3,000

Formula for NOI:

35

36

7/7/2020

19

Cash on Cash Return (ROI)

Formula for COCROI

NOI / Down Payment = COCROI$3,000/$25,000 = 12%

***Purchase Price = $100,000 ***Bank will require 25% Down Payment***Cash in the Deal = $25,000***NOI with Monthly Mortgage Payment = $3,000

Cinderhill Cove Case Study

Purchase Price - $108,000

Monthly Rent - $975

Property Management Fees - 10%

Annual Real Estate Taxes - $1,620

Annual Insurance - $500

Monthly Mortgage (P&I) - $435

Dandy Case Study


Monthly Rent - $1,150





37

38

7/7/2020

20

Deal Analyzer for Rentals

LIVE WALK-THROUGH!

Rental Property Bootcamp

BUY, RENOVATE, REFINANCE, REPEAT MODEL

40K Purchase+

30K Renovation= 70K Private Money Loan

100K ARVLong-Term Lender

will Finance 75% of ARV

Long-Term Lender

Pays Off PML

Deal Analyzer for Rentals

Deal Analyzer for Rentals Review!

39

40

7/7/2020

21

Deal Analyzer For Rentals

The 4 Profit CentersThe 4 Profit Centers

Cashflow

Increased Equity(Mortgage Pay-Down)

Tax Benefits

Appreciation

Analyzing Deals


Cashflow

Analyzing Deals

41

42

7/7/2020

22

Cash Flow Purchase Price: $108,000

Down Payment (25%): $27,000

Mortgage (75%): $81,000

Monthly Annual

Rent: $975 $11,700

Principle & Interest (5%): ‐$435 ‐$5,220

Real Estate Taxes: ‐$135 ‐$1,620

Insurance: ‐$42 ‐$500

Property Management (10% of Rents Collected):

‐$97.5 ‐$1,170

Total Cash Flow: $265.50 $3,186.00

NOI$3,182 $27,000

= 11.78%/

Down Payment ROI

Cinderhill Cove

*All income or earning statements are based on this property. There is no assurance your earnings or income will match this case study.


Increased Equity(Mortgage Pay-Down)

Analyzing Deals

Increased Equity

Cinderhill Cove


43

44

7/7/2020

23

Increased Equity

Cinderhill Cove


Increased EquityYear 1

$1,196 $27,000 =

4.4%Down Payment ROI

Loan BalancePrinciple Paydown

Total Increased

Equity

Original Loan: $81,000 $0 $0

Year 1: $79,804 $1,196 $1,196

Year 2: $78,548 $1,256 $2,452

Year 3: $77,228 $1,320 $3,772

Year 4: $75,840 $1,388 $5,160

Year 5: $74,381 $1,459 $6,619

/


Tax Benefits

Analyzing Deals

Tax Benefits

Cinderhill Cove


1. Mortgage interest 2. Depreciation3. Repairs4. Insurance5. Local travel6. Long distance travel7. Home office8. Employee’s or independent contractors

45

46

7/7/2020

24

Tax Benefits

Cinderhill Cove


Land Value$19,008

$88,992

= $3,236/

Building Value

DepreciationPer Year

$88,992 Building Value

27.5Depreciation Rate

Tax Savings$1,132 $27,000

= 4.19%

x

Down PaymentROI

$3,236 Depreciation Yr. 1

/

35%Tax Bracket

= $1,132Tax Savings


Appreciation

Analyzing Deals

Property Appreciation***

Cinderhill Cove


47

48

7/7/2020

25

Property Appreciation***

Cinderhill Cove


Appreciation @ 3% Annually

Property Value

TotalAppreciation

Purchase Price: $108,000

Year 1: $111,240 $3,240

Year 2: $114,577 $6,577

Year 3: $121,014 $10,014

Year 4: $124,644 $13,644

Year 5: $128,383 $17,383

Appreciation Year 1

$3,240 $27,000 = 12%/Down Payment ROI

4 Profit Centers

Cinderhill Cove


Profit Centers Profit ROI

1. Cash Flow (Year 1): $3,182 11.78%

2. Increased Equity (Year 1): $1,196 4.4%

3. Tax Savings Depreciation (Year 1): $1,132 4.19%

4. Appreciation (Year 1 @ 3%*): $3,240 12%

5. Maintenance Expense (5%): ‐$585 (2.16%)

6. Vacancy Expense (5%): ‐$585 (2.16%)

Total Return: 28%

Saving vs. Investing


1% 12% 24%

Year 1 $100,000 $100,000 $100,000

Year 3 $103,000 $143,000 $203,000

Year 6 $106,000 $204,000 $416,000

Year 12 $112,000 $419,000 $1,731,000

Year 24 $127,000 $1,756,000 $29,981,000

Saving Investing

49

50

7/7/2020

26



Property Management

EvaluatingMarkets

Passive Income

Club


AnalyzingDeals

1 HousePortfolio

BecomingA Bankable

Investor

RenovatingRentals

BuildingYourPlan

Financial Engineering

1. Learn Basic Passive Business Structure

2. Best Financing Options for Rental Properties

3. Learn How To Leverage Retirement Accounts

4. Learn to Accelerate Wealth Using C3X Calculator

Our Objective:


Fill 4 Buckets

Pay Yourself Back FB Education Investment

Pay Yourself! (W-2 or 1099)

Reinvest In Your Business

Save $$$ For Your Taxes

51

52

7/7/2020

27


Active IncomeLLC / S-Corp

Rehab$$$

Wholesale$$$

W-21099

Solo-KContribute up to 19K

EmployeeMatch up to 19K

Max Contribution 56K

Contribute up to 18K

+

Passive IncomeInvestments


Stay In Your Financial Swimming Lane

Personal Solo-K

Conventional Loans

Commercial/Portfolio Financing

Subject To or Seller Financing

Cash

Cash

Non-Recourse


CONVENTIONAL FINANCING

53

54

7/7/2020

28


COMMERCIAL/PORTFOLIO FINANCING


SUBJECT TO or SELLER FINANCING


NON-RECOURSE FINANCING

55

56

7/7/2020

29


Self Directed Retirement Account:

Hybrid Investment Strategy

NON-RECOURSE FINANCING SRATEGY


Hybrid Investment Strategy Use Inside Self Directed Retirement Account

Assume: Solo K = 150K

• Cash 100K • 50K Down• 50K NRC

Buy Property #1 Buy Property #2

$700 NOI $200 NOI+= $900 Month

Free & Clear in 4-5 Years


Hybrid Investment Strategy Use Inside Self Directed Retirement Account

Started With: Solo K = 150K

Buy Property #1 Buy Property #2

$700 NOI += $1400 Month

After 4-5 Years

$700 NOI

$1400 x 12 = $16,800 $16,800 / $150,000 = 11.2%Plus 50K Equity Gain

57

58

7/7/2020

30


Want To Pour Fuel On The Wealth Building Fire?

CONVENTIONAL FINANCING STRATEGY

C3X Strategy


$300

$300 $300

15-17 Years

15-17 Years

$300 $300

1st House 8-9 Years= $600+

$700 $300

2nd House 6-7 Years Later= $1,000+

C3X Strategy


C3X Strategy

= $3,000

$300

x 10

5-7 Years

Cashflow

Years To Free & Clear

59

60

7/7/2020

31


C3X Strategy

= $3,400x 10

4-6 Years

Cashflow



C3X Strategy

= $3,800x 10

2-5 Years

Cashflow



C3X Strategy

= $4,200x 10

1-2 Years

Cashflow


61

62

7/7/2020

32

C3X Calculator



Property Management

EvaluatingMarkets

Passive Income

Club


AnalyzingDeals

1 HousePortfolio

BecomingA Bankable

Investor

RenovatingRentals

BuildingYourPlan

Passive Income Club Consultation

YOURGOLDEN TICKET

63

64

7/7/2020

33

Your Real Estate Super Team

What is a Customized Investment Plan?

• Discuss Financial Goals• Define Financial Resourcesavailable to build Portfolio

• Short Term / Long Term Time Horizon• Cash Flow Now or Growth Focus• Level of Risk Tolerance

• Passive IncomeRentals • Passive Lending• Solo K Investing• How to use types of leverage

• Performance tomatch Objectives

• Education• Build a Criteria

• Turnkey Partner Education• Investment & Deal Review • Purchase Rental Properties from

Turnkey Inventory Provider

a

Feed The P.I.G.Feed The P.I.G.

65

66

7/7/2020

34



Dandy Case Study


Monthly Rent - $1,150





67

68

7/7/2020

35



Property Management

EvaluatingMarkets

Passive Income

Club


AnalyzingDeals

1 HousePortfolio

BecomingA Bankable

Investor

RenovatingRentals

BuildingYourPlan

1. Creating a Financial Portfolio

2. Learn How To Calculate Debt-To-Income

3. Creating a Personal Financial Statement

Our Objective:

Becoming a Bankable Investor

Personal Financial Portfolio

1. Have A Plan

2. Credibility

3. Credit

4. Financials

5. Introduce The Team

69

70

7/7/2020

36

1. Annual W2 or 10992. 2 Years of Tax Returns - Personal & Corporate3. 2 Months Bank Statements4. 1-2 Months Pay Stubs5. Credit Report6. Personal Financial Statement7. List of Existing Investments8. LLC Paperwork 9. Insurance Agent10.Lease Agreements

What will the Bank Need?

Personal Financial Portfolio

How To Calculate DTI

Debt-To-Income Ratio

Monthly Debt Obligations / Monthly Gross Income = DTI

How To Calculate DTI

Debt-To-Income Ratio

Monthly Debt Obligations / Monthly Gross Income = DTI

Monthly Debt ObligationsRent or Mortgage PaymentAlimony & Child Support PaymentsStudent Loan PaymentsAuto Loan PaymentsCredit Card Payments Other Monthly Debts…

Monthly Gross IncomeW-2 & 1099 IncomeBusiness IncomeRental IncomeOther Monthly Income…

71

72

7/7/2020

37

Personal Financial Statement

Personal Financial Statement

LIVE WALK-THROUGH!



Property Management

EvaluatingMarkets

Passive Income

Club


AnalyzingDeals

1 HousePortfolio

BecomingA Bankable

Investor

RenovatingRentals

BuildingYourPlan

73

74

7/7/2020

38

Successful Structures for Rental Properties

DisclaimerThe information presented is for educational and informational purposes only. Any and all of the information presented is not intended to be legal, financial or investment advice, or any other professional advice; instead it is intended to be general in nature and is not specific to you or anyone else.

Please consult with an attorney and tax advisors before implementing any of the following strategies.

What we will cover to build your Rental Portfolio

1. Active versus Passive

2. Tax Strategies

3. Real Estate Privacy Trusts

4. Buying Property with

Retirement Accounts

75

76

7/7/2020

39

Entity Tax Status

CORPORATION: Corporation = Tax form 1120 Corporation (s-election) = Tax form 1120S

LLC: Corporation = Tax form 1120 Corporation (S-election) = Tax form 1120S Partnership = Tax form 1065 Disregarded = No Tax Return

Investor Structure

Living TrustEstate Planning/Privacy

LLCDisregarded

Wholesales/Rehab Rentals/Passive

REPT

LLCS- Election

1120S

This information is a structure illustration, assembled by Harris Law Office, based upon a large sample of NCH clientele. Individual results may vary.

REPT

REPT

Passive vs. Active

Passive Income

Rental Properties

Interest Income (Lending)

Passive Income can only be offset with

Passive Losses!

Active Income – derived from “working” to

earn the money.

Short Term Investments

Wholesale & Rehabbing

Self Employed Income

Points (Lending)

77

78

7/7/2020

40

Passive Income

Rental Income is Treated as Ordinary Income

State and Federal Taxes based on your tax bracket

No Self Employment Tax!

Capital Gains Treatment When Property is Sold

15% Long Term Capital Gain

20% if over $400k (Single) $450k (Married Filing Jointly)

Depreciation Losses

One of the most valuable deductions in Real Estate

Requires no money to be spent, yet creates cash flow via tax savings! Depreciation losses (passive losses) offset Rental Income

Understanding the Difference in Deductions

Capital Improvements(Amortized Deduction)

adding an addition adding central air conditioning installing a security system installing brand new carpet replacing an entire roof replacing all existing plumbing replacing all existing electric renovating a kitchen replacing all windows

Repairs & MaintenanceFully Deductible ”This Year”

finishing a wood floor repainting a room repairing a roof repairing existing plumbing repairing existing appliances replacing a doorknob replacing a window replacing a broken smoke detector replacing rotted floorboards replacing cracked floor tiles

Depreciation Schedule 5-year property. This class includes computers and peripheral

equipment, office machinery (typewriters, calculators, copiers, etc.), automobiles, and light trucks. This class also includes appliances, carpeting, furniture, etc., used in a residential rental real estate activity.

7-year property. This class includes office furniture and equipment (desks, file cabinets, etc.). This class also includes any property that does not have a class life and that has not been designated by law as being in any other class.

15-year property. This class includes roads, fences, and shrubbery (if depreciable).

27 ½-years Residential rental property. This class includes any real property that is a rental building or structure (including a mobile home) for which 80% or more of the gross rental income for the tax year is from dwelling units. 39-years on Non Residential Property.

79

80

7/7/2020

41

Significant Tax Advantages

IRC Section 162 Designed for Business Owners

IRC Section 179 Designed for Growth Years

IRC Section 199A New savings for REI!

IRC Section 162

Allows business owners to deduct Ordinary and Necessary expenses:

Seminars Training Conventions Travel** Auto Marketing Management Equipment, Supplies Legal and other professional services

IRC Section 179

An immediate expense deduction that business owners can take for purchases of depreciable business equipment instead of capitalizing and depreciating the asset.

The Section 179 expensing method is offered as an incentive for small business owners to grow their businesses with the purchase of new equipment.

A great option for those Growth Years!

81

82

7/7/2020

42

IRC Section 199A

The basic deduction is 20% of net qualified business income which is huge. If you are married and make $200,000, the deduction is $40,000 times your marginal tax rate of 24% which equals $9,600 in your pocket.

Income Limits

– Based on taxable income including all sources (not just business income). Also limited to 20% of taxable income.

– Single is $157,500 completely phased out by $207,500 (adjusted for inflation)

– Married filing jointly is $315,000 completely phased out by $415,000 (adjusted for inflation)

Who Benefits from 199A?

Pass-thru entities and structures for real estate include:

• Disregarded entities (Single member LLCs).

• Multi-member LLCs. (Partnerships)

• Any entity; LLC or Corporation taxed as an S corporation.

Who Will Not Benefit from 199A?

Anyone in a specified service business or trade:

• Traditional service professions such as doctors, attorneys, accountants, actuaries and consultants.

• Performing artists who perform on stage or in a studio.

• Paid athletes.

• Anyone who works in the financial services or brokerage industry.

• And now the hammer... “any trade or business where the principal asset is the reputation or skill” of the owner.

83

84

7/7/2020

43

Passive Loss Limitations

Concern for both people making more than $150,000 yearly and those making less than $150,000.

Strategies to “side step” these loss limitations.

Real Estate Professional

By meeting the IRS requirements to be a treated as a real estate professional, you’re able eliminate the passive loss limitations regardless of income

Allows you to use depreciation losses to offset active income!

Dealer vs. Investor

How to Qualify as a Real Estate Professional

You must be an eligible Tax Payer Not eligible are limited partners, C-Corps, Irrevocable

Trusts

You must be in the real estate business: Rental Properties, Management, Development,

Construction Acquisition, Conversion, Leasing, RE Brokerage

751 Hours per Year (spouse hours count)!

Property Management - Material Participation

85

86

7/7/2020

44

1031 Exchange

Two Simultaneous Requirement 1 – have 45 days

to identify replacement property

Requirement 2 – 180 days to close on replacement property

Beware of Exchanges starting October 15th!

Reverse Exchange “Starker Exchange”

Allows you to “defer” taxes on the sale of property by exchanging like-kind property for like-kind property

Your CPA is only as good as …

The details of your accounting make a significant difference in the tax liability.

The details provided regarding your rental properties. Discuss the specifics with your accountant to ensure you’ve properly accounted for expenses related to your rental.

Discussion

87

88

7/7/2020

45

Investor Structure


LLCDisregarded


REPT

LLCS- Election

1120S


REPT

REPT

What is a Real Estate Privacy Trust (REPT)?

The REPT can conceal ownership of rental properties.

The REPT can create separation between properties.

The REPT eliminates probate fees when used in conjunction with a Revocable Living Trust.

The REPT allows for the transfer of beneficial interest which will avoid Transfer Taxes.

Eliminates concerns of Due on Sale

“When to use an REPT”

It is best to have the trust already in place

Submit offer using the name of the trust

Sell Beneficial interest of trust

89

90

7/7/2020

46

Garn Act

The Garn–St. Germain Depository Institutions Act of 1982, enacted October 15, 1982, is an Act of Congress that deregulated savings and loan associations and allowed banks to provide adjustable-rate mortgage loans.

An important consumer change was to allow anyone to place real estate in their own trust without triggering the due-on-sale clause that allows lenders to foreclose on a current loan upon transfer to another.

The bill states "... a lender may not exercise its option pursuant to a due-on-sale clause upon ... a transfer into an inter-vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.”

Passive Partnership

Living Trust (Partner B)

Living Trust (Partner A)

LLCPartnership

1065


REPT REPT REPT

Self-Directed Strategies

Self-Directed Solo 401k:

Wholesale Rehab Long Term Rentals Private Money Lender

91

92

7/7/2020

47

SD IRA LLC vs. SD 401k LLCIRA LLC SOLO K LLC

Protection NV Veil Protection NV Veil Protection

2019 Contribution Limits$6,000

$7,000 if you’re age 50 or older

$56,000$62,000 if you’re age 50 or older(Employee:$19,000/$25,000 if

age 50 +)(Employer: 25% of earnings up

to $37,000)

Allows for Loans

No! 50% of account value up to $50,000

U.D.F.I.Yes! 37% Exempt

RothContributions

Phases out at:Singles – $122,000-$136,999

MFJ – $193,000-$202,999 No Phase out!

Investor Structure with Solo K


LLCDisregarded


REPT

LLCS- Election

1120S


REPT

REPT

Solo KLLC

WifeHusband

Solo KLLC

Solo K

Prohibited Transactions(A few examples of prohibited transactions)

The self-directed IRA or Solo 401k account holder may not:

Sell a property that he/ she owns personally to the Solo 401k or self-directed IRA

Lend money from the self-directed IRA or Solo 401k to his or her parent, child, or other disqualified person

Personally guarantee a loan for a real estate purchase by the Solo 401k or self-directed IRA

Use any property owned by the self-directed IRA or Solo 401k Receive a salary or fee for managing one’s self-directed IRA or

Solo 401k Receive a commission on a property purchased or sold by one’s

Solo 401k or self-directed IRA

(This is only a sample of prohibited transactions, we recommend that you seek professional advice to address specific questions regarding your individual situation)

93

94

7/7/2020

48

Prohibited Transactions(A few examples of prohibited transactions)

The self-directed IRA or Solo 401k account holder may not:

Hire a business owned by oneself or other disqualified person to provide a service to a plan asset

Personally purchase a property owned by one’s Solo 401k or self-directed IRA

Lend money to one’s self-directed IRA or Solo 401k Allow a son or daughter to live in a rental unit owned by their self-

directed IRA or Solo 401k, even if he or she pays fair rent Pay oneself, or other disqualified person, for performing work to a

property owned by one’s Solo 401k or self-directed IRA, (similarly, performing that work for free would be considered a non-cash contribution to your self-directed IRA or Solo 401k which is also not allowed.)

(This is only a sample of prohibited transactions, we recommend that you seek professional advice to address specific questions regarding your individual situation)

Disqualified PersonsEvery IRA/Solok has a list of persons and entities that are considered disqualified from interacting in certain ways with the IRA/Solok. IRS rules prohibit the IRA/Solokfrom dealing with these people and entities. These prohibited parties are called Disqualified Persons.

Disqualified Persons to Your Plan are:

You Your Spouse Your Ascendants Your Direct Descendants Your Direct Descendants' Spouses Entities owned or controlled by Disqualified Persons Certain Fiduciaries (CPAs, Attorneys, Financial Planners, etc.)

Disqualified Persons

Disqualified Persons Cannot:

Buy an asset from the retirement plan Sell an asset to the retirement plan Live in any property owned by the retirement plan Rent property owned by the retirement plan Personally use the retirement plan's asset (for example, living in

or renting out an IRA's property) Use personal finances to pay an IRA asset's expenses Handle money related to any IRA asset Make improvements to an IRA asset (for example, cannot

personally work on an IRA's real estate property) Take a commission on the purchase/sale of the IRA's assets

95

96

7/7/2020

49

What’s Next?

Text the word CONSULTto

31996

For a FREE 30 minute Consultation from NCH

Thank You!



Property Management

EvaluatingMarkets

Passive Income

Club


AnalyzingDeals

1 HousePortfolio

BecomingA Bankable

Investor

RenovatingRentals

BuildingYourPlan

97

98

7/7/2020

50

1. Understand The Importance of High Quality Property Management

2. Understand The Fortune Builders Philosophy

3. Learn The 4 Pillars of Property Management

Our Objective:

Property Management

Property Management

Blake Street

Cinderhill Cove

VS.

Importance of Property Management

99

100

7/7/2020

51

FortuneBuilders Philosophy

Entrepreneur

Manager

Technician Marketing, Deal Sourcing, Negotiating, Rehabbing, Tenanting, Managing

Rehab Yourself & Hiring ProfessionalProperty Managers

100% Turnkey

1. Property Manager2. Real Estate Attorney3. Rental Attorney4. Contractor5. Handyman6. Bookkeeper7. Real Estate Agent or Leasing Agent8. Great Software!

Team Members:

Building Your Team

Property Management

1. Resident Selection

2. Money In

3. Money Out

4. Consistency and Stability

4 Pillars of Property Management

101

102

7/7/2020

52

Property Management

Resident Selection

Marketing Systems For Residents:

- What is your marketing strategy to find quality residents?

- Internal Leasing Staff or Outside Rental Agents?

- What Percentage of Applicants do you Approve?

Property Management

Resident SelectionResident Application Screening Process & Requirements:

- Criminal Background Check

- Employment & Income Verification

- Rental History

- Credit Reports

Lease signing:

- Where does lease signing take place?(kitchen table/coffee shop isn’t professional)

Property Management

Resident SelectionExpectation Setting:

- What is expected of the Resident?

- What is expected of the Property Manager?

Communication Is KEY!

103

104

7/7/2020

53

Property Management

Money InDecide What Money Is Import To You?:

- Rent Increases Vs. Vacancy

Alignment of Interests:

- PM Fees - How do you make your money?- Average Resident Length of Stay?

Rent Collections:

- What % Collected by Each Day of Month?- What day is rent considered late?- Partial Pays vs. Eviction

Property Management

Money OutMaintenance & Repairs:

- Systems?- What % of Gross Rents are Allocated to Maintenance?- What is communicated to the Investor & Resident?

Vendors:

- Are They Licensed? Bonded? Insured?- Systems?- Are the Vendors also Inspectors?

Property Management

Money OutVacancy:

- Average Length of Tenant Stay?- Average Time to Re-Rent?- Average Turn Over Cost?

Evictions - Know The Law?:

- Eviction %?- What’s the Timeline?- Systems - What day is rent late? When do you file?

105

106

7/7/2020

54

Property Management

Consistency & StabilityLease Agreements:

- Do You Offer Multi Year leases?- 2 & 3 Year Leases Are Ideal!

Renewal System:

- When Do You Start Renewal Process?- Proactive or Reactive?

Communication:

- Consistent Communication w/ Investor & Resident?

The Quick & Dirty…The Phenomenon of the “2 Year PropertyManagement Company”

Get What You Pay For!

The 2 Minute Test

- Phone Interview- Track Record and Experience- How Many Properties? 500-700+

Alignment of Interests and Expectations

Property Management

Property Management

107

108

7/7/2020

55



Property Management

EvaluatingMarkets

Passive Income

Club


AnalyzingDeals

1 HousePortfolio

BecomingA Bankable

Investor

RenovatingRentals

BuildingYourPlan

LIVE WALK-THROUGH!

Renovating Rentals



Property Management

EvaluatingMarkets

Passive Income

Club


AnalyzingDeals

1 HousePortfolio

BecomingA Bankable

Investor

RenovatingRentals

BuildingYourPlan

109

110

7/7/2020

56

Building Your Plan

BEGIN YOUR PLAN BUILDING PROCESS BY ANSWERING FOLLOWING THE SLIDES

BELOW!

Building Your Plan

BEGIN YOUR PLAN BUILDING PROCESS BY ANSWERINGFOLLOWING THE SLIDES

BELOW!

List in order of importance for you (#1 - #7)…

___ Stability of Rental Income.

___ Consistent Growth of the Value of my Investments.

___ Prepare for Retirement.

___ Aggressive Growth.

___ No headaches.

___ Highest ROI possible (from monthly cash flow).

___ Highest growth amount possible in the value of my Investments.

Building Your Plan

Building Your Plan

1.) How much monthly Cash Flow ($) would you like for retirement?

- What will this cash flow allow you to do/gain?

2.) What is your time horizon to use this cash flow? (Ex. 5yrs)

3.) How would you describe your risk tolerance? (Check One) ___ High Risk & High Reward ___ Middle of the Road ___ Low Risk & Consistent

- Please tell us anything additional about your risk tolerance that will helpus serve you better:

111

112

7/7/2020

57

Building Your Plan

4.) What are your biggest fears about holding real estate?

5.) Do you want to invest in Rentals Actively or Passively?

6.) Is there any other information you would like us to know in order to build you a customized investment plan?

7.) Complete the following Asset Outline…

Building Your Plan

Rentals:Current # of Rental Properties Owned: __________________ Net Cash Flow per Month from Rentals: _________________

Retirement Accounts:Total Value Self Directed Ret. Accounts: _________________Total Value Ret. Accounts NOT Self Directed: _____________

Personal:Current W-2 Income Level: ______________Current 1099 Income Level: _____________Personal Cash/ Savings: _____________Non-Retirement Accounts Investments: _____________Credit Score: ___620 or below ___ 620-700 ____ 700+

What’s Next?

113

114

7/7/2020

58

PIC Consultation Request

Text “PIC” to 33222

MASTERY RESOURCES

www.RPBDownloads.comPassword = RPI

C3X CalculatorDeal Analyzer for RentalsProperty Management QuestionnaireBuy & Hold Market Evaluation ChartAnd Much Much More…

FB SUPPORT IS HERE!!

Teachers - Mentors - Coaches - Trainers

115

116

7/7/2020

59

Fortune BuildersRental Property Intensive

Fortune BuildersRental Property Intensive

117

118

What would you like to talk about in your consultation with NCH?

Full Name

Email

Cell Phone(Where we can text you for your appointment during the event)

Partner(s) / Spouse Name

Consultation RequestEmpowering Your Purpose Through

Financial Education

Full Name

Email

Cell Phone(Where we can text you for your appointment during the event)

NCH Client: Yes / No

RENTALPROPERTYBOOTCAMP

Documents

RENTAL PROPERTY BOOTCAMP · Property Managers 100% Turnkey Why Rental Properties? Why Do We Choose Rental Real Estate As Our Investment Vehicle? Considerations Hard Asset (Intrinsic