Posted on June 20, 2008 @ 10:36 pm - Written by BawldGuy
Man, the hucksters are out in force. Been gettin’ emails and phone calls from folks wantin’ me to help them retire in the next 2-4 years through ‘fantastic’ cash flow opportunities in such and such a region. What? Huh? First, let’s ask ourselves a few quick questions.
If we at Brown and Brown could get clients to retirement that quickly, don’t ya think we’d of been braggin’ about it before now? Ya think? Do these magic cash flow properties exist? Well, on paper they do. After that? A whole lotta ‘what the heck is goin’ on here’ is what’s after that.
Seriously, didn’t Grandma tell you about the whole ‘If it sounds too good to be true, it’s probably not’ thing? I’ve literally had over half a dozen conversations this month in which I’ve been questioned about why I won’t fess up about these properties with ATM-like qualities. Wow. What new seminar, Invest In Our Magic Property And Retire Next Tuesday did I miss?
BawldGuy Axiom: Listen to Grandma — she’s been there, lived that. Read the rest of this entry »
Posted on June 19, 2008 @ 10:26 pm - Written by BawldGuy
Had to write on this subject, as it’s been consistently coming up lately. And if clients bring it up, it needs to be addressed here. Asset protection, in my humble opinion, has become a racket — a huge cash cow racket — but a racket nonetheless. I’ll make use of the BawldGuy Disclosure:
The following opinion plus my Starbucks card will get us both some strong coffee and some really cool cookies. At least my opinion has been vetted by some pretty impressive attorneys.
(That last part is me saying, ‘Neener neener neener’ to doubters.) ‘Course I don’t actually say those words, I just refer to the bazillion dollar an hour attorneys I consulted. Gets the job done though, doesn’t it? Works for me. 
Been sayin’ this for years — at least since the mid-90’s. After nearly 15 years of Asset Protection seminars, infomercials, and Fred yer next door neighbor tellin’ you how everything you own is in danger, you should smarten up and spend thousands on LLC’s and new fangled limited partnership agreements, and they should all tie into the…Stop! My ears are bleeding.
Has anyone told you the cost of residing in California with a few LLC’s? Try about $800 a year just to file the LLC tax return. Unless you’re unfortunate enough to have established one of those Blue Light Special LLC’s for ‘Just $99 Today!’ a real live LLC drafted by a real live real estate attorney with more than five minutes experience, will cost you $2,500-4000 for the first one. He’s creating it for you, not the last dozen clients. That cost real money. From then on the price crashes to $250-500 depending upon the attorney, and/or their mood. Gonna buy half a dozen properties? You’ll be advised to initiate more than one LLC. Let’s say the first one costs $3,000, and the next couple are $250 apiece. That’s $3,500 right off the bat.
You hold the properties for five years. That’s $12,000 of filing fees. Geez. I’ve already posted before about the tax deferred exchange problems. They’re not nearly as bad as they used to be, but they still can present problems. Lenders are usually the catalysts. I’ll skip that part of the story, but suffice to say holding investment property in a way which might possibly weaken or, perish the thought, cause a 1031 exchange to be disallowed, ain’t the way to a consistent sleep pattern, know what I mean, Verne?
Look, liability is what yer trying to protect yourself from when all the smoke clears, right? Right. This ain’t rocket science people. I’m not the Lone Ranger when it comes to this school of thought. I’ve finally heard the LLC word one too many times. So here’s my thinking, and that of the three real estate attorneys queried on the subject. Read the rest of this entry »
Posted on June 18, 2008 @ 11:08 pm - Written by BawldGuy
Those of you who’re regular readers know I like using pictures to help illustrate points, while breaking up the text monotony. Some posts, (this series for sure) make it difficult to maintain photo/prose continuity. (Great phrase, eh?) Anywho, I mention all this so I can now warn you — today’s pics are more random than a soccer game in a league for five year olds.
Yesterday we got part way through the process a new investor experiences with Brown and Brown. What wasn’t discussed was the behind the curtain kinda stuff that goes on just before, after, and between steps. Info dumps one client calls ‘em. I like it.
First Info Dump
This comes more in verbal form. The newbie hears about the differences between the investment lending process vs buying the family home. They hear terms like declining market, rapid acquisition, and ‘Hey, no problem, we just need one more thing.’ (They mean well, but that last one is almost always a lie.)
They hear why this loan is better for them and their particular properties than that loan. Also, the nuts and bolts of real life investing are at this point beginning to become a part of the vision they have for their retirement. That’s an important moment, as it brings excitement to what is often a tedious process. Read the rest of this entry »
Posted on June 17, 2008 @ 10:06 pm - Written by BawldGuy
Let’s take a peek at what a shiny new real estate investor faces when entering this market. We’ll use a composite Brown and Brown client made up of several clients who’ve come on board this year. They’re early 40’s with two kids. (She’s 39, sorry.) They make $150,000/year between them. They own a home with a loan at around 70% loan to value. The investment capital available to them is $125,000 not including their cash reserves. They credit is very good, with both scores in the mid-700’s.
First we need to hear them say they wanna be our clients. We don’t make a big deal about it, we just need to hear the words. Once spoken we shift into gear and our V-12 power plant begins its throaty hum. Ever heard a V-12 idling? It’s been described by some as a small airplane. Very cool.
Here’s the chronology
1. A frank discussion is had between the us and the client. How old are they? Salary? Savings? Other assets? Credit? Retirement goals? The list goes on for awhile. The agenda is to establish a Purposeful Plan based upon the answers to these questions. This Plan is the foundation for our first moves on our client’s behalf. It’s importance can’t be under valued. Read the rest of this entry »
Posted on June 16, 2008 @ 9:15 pm - Written by BawldGuy
Alas, the pics for this post are random at best, and totally discombobulating at worst. I’m just sayin’.
Wanna know something helpful about this real estate market correction? There are folks, who after observing several diverse markets have concluded something’s up. Up you say? Is my property gonna start goin’ up? Not so fast rose colored glasses breath.
Something is up alright. As regular readers know, this ain’t my first time in the theatre. I’ve seen this movie, and its sequels. I know the ending. Don’t know when it’s comin’ or how it arrives, but I do know the ending. Oh, get to the punch line? Sure.
The ending is when those seeing this sequel, thinking it’s the first time in history real estate has taken a powder, begin to think the ‘arrow on the chart’ only heads downward. Of course, it’s the same folks who thought a few years ago the ‘arrow’ only went up. Go figure.
Before continuing, let me warn you in plain English. Any serious attempt to time a market is foolish at the least, and courting tragic and unintended consequences at the worst.
Read the rest of this entry »