The Creating Wealth Show Blogcast

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CW Blogcast 29 - Purchasing a property is S-I-M-P-L-E Apr 27, 2013

Show notes

After the preliminary interview process of discovering the best investment strategy for you, it usually starts with a three way conference between your Platinum Properties Investor Network™ advisor, the local market agent in the area of your choice, and you. This is where we go over the particular properties available and you decide which one you want.

Now it’s time to get you pre-qualified for a loan. Lately, more times than not, we’ve seen clients using a lender in the local area where the property is located. The advantage is that the lender knows the local appraisers, contractors, and inspectors. This choice is not set in stone though. You should feel perfectly free to go with the lender of your choice or ask us to help you find one.

Once you have the pre-qualification letter in hand, the local agent will send you the contract. You read it, sign it, fill out a few auxiliary forms (shouldn’t take more than 20 minutes) and mail it back to the local agent with your earnest money. If you haven’t heard the term before, earnest money is nothing more than a good faith deposit that insures you don’t bail out of the contract at the last minute for a silly reason.

Earnest money ranges from $1,000 to $5,000 on most single family home transactions. At that point, it’s a simple matter of letting the deal take its course. Once your offer is accepted, inspections will be done, title search, etc. When closing day gets here, you sign on the dotted line and celebrate the fact you’re now an income property investor.

CW Blogcast 28 - It costs you nothing to use Platinum Properties Investor Network Apr 27, 2013

Show notes

The look of incredulity usually pops up somewhere during the middle part of the process. We’ve been helping a client pick out a property, put them in touch with the local market specialist, we're working the phones and e-mail to help find the “deal” they’re looking for.

Then it sinks in. “We really don’t pay you anything for all this work you're doing?” The truth is, no, you really don’t. Which brings up the question of whether or not we’re in the charity business. Definitely not. We make money but not from nickel and diming the client to death.

As Founder and CEO Jason Hartman describes frequently, our business model as a referral service collects a fee from the agent in the local market where you decide to buy a property. Think of it from his point of view. He has a high volume and reliable source of qualified buyers from us. He doesn’t have to advertise locally, work the phones cold calling, or try to drum up business over the Internet. He’s glad to pay our fee for sending him buyers. Makes his life much easier.

An intended side effect of this arrangement is that our local agent is very responsive when a Platinum Properties Investor Network™ person, be it a client or staff member, has a problem. They do not want to do anything to screw up the goose that lays the golden egg. They will bend over backwards to fix the issue. There’s power in numbers and when you use our referral network the numbers have your back.

CW Blogcast 27 - Two little properties safer than one big one? Apr 26, 2013

Show notes

One of the most frequent questions we get is why we recommend clients initially purchase one or two single family residential units in different geographical areas than a 10 or 20 unit apartment building located (obviously) in one spot.

This is a perfect example of what we mean by diversifying your portfolio and it is VERY important in the beginning of your income property investing career. On a recent edition of The Creating Wealth Show, Jason Hartman recounted an experience from the early days of Platinum Properties Investor Network™. South Carolina had been targeted by us as a great area for income property purchases. We don’t miss the mark very much but in this case the local market didn’t exactly take off as anticipated.

If you had put all your eggs in that particular basket in the form of a 10 unit apartment building, your cash flow situation might not make you happy until the market righted itself. But if you had purchased a single unit residential unit in South Carolina and another in one of our other suggested markets, you’d still be in great shape. The protective portfolio diversity of having properties in separate markets would have saved your bacon.

This also goes to show the value of realizing that there is no national housing market. Real estate, perhaps even more so than politics, is local. One area of the country can be in the tank while another is hotter than fire.

CW Blogcast 26 - Find the bottom of the cycle. Apr 26, 2013

Show notes

You’re motivated to leave Wall Street investing for good and purchase an income property because, in a recent nightmare, you were visiting Bernie Madoff in prison to see if he had any hedge fund ideas. Good decision. Wall Street - bad. Income property - good. If you've been reading our blog, you already know the Platinum Properties Investor Network criteria for finding a good location.

Is it time to pull the trigger? Not so fast, Dirty Harry. There’s a little thing you should be aware of called timing. Even in the best of real estate markets there are cyclical swings. You want to time your purchase to get in as close to the bottom of the swing as possible. It just makes good sense. Why pay more for a property if you don’t have to? Plus you will be using the potential of leverage to it’s fullest.

Likewise, you want to be aware of the market cycle when it comes time to sell. While we discourage the practice of flipping (transaction costs and taxes can eat up your gains), there will likely come a time to sell your income property. Maybe your ready to do a 1031 Exchange and roll into a larger one. In any case, know where the market cycle is and try not to sell on a downswing. Once again, we’re just using plain sense here to maximize profit.

Wondering how to tell if the local market is swinging up or down? Call 714-820-4200 and ask us. We love to talk about it.

CW Blogcast 25 - Income property investing - find a good spot. Apr 25, 2013

Show notes

Should you decide to buy a particular income property because it feels right, it’s located next to your favorite bar, or you’re just tired of looking? Umm, the answer to all three would be a loud, “No!” Why would you approach the most important part of the property investing paradigm with a seat-of-the-pants approach?

At Platinum Properties Investor Network, we’ve chunked it down into a standard and highly successful routine. The first thing is still the first thing. Location! Never underestimate the importance of a good location. Look at it from a macro and micro level. To decide whether a local market is one we can recommend, in good conscience, to our clients, we look at the best growth rates as reflected through economic data, diversity of industry, population trends, and other demographics.

Once we find a broad local market worthy of attention, it’s time to roll up the sleeves and start looking under rocks. This is the micro level of our research. We’ll screen to find a local connection – an area manager with knowledge and, more importantly, has already purchased property there and can show us that the numbers work.

Then, and only then, do we send an alert out to our network that an almost guaranteed moneymaker is ripe for purchase. Yes, you could do all this yourself. We just told you how. Or you could put our 20+ years in the industry to work for you for free. Call 714-820-4200.

CW Blogcast 24 - Only invest in assets you control. Apr 25, 2013

Show notes

Have we pummeled you enough about the head lately regarding investing ONLY in things you control? Probably not, because it seems like there are still a few million crazies out there investing in Wall Street assets. Are they determined to lose their money? Let’s have a pop quiz. Investors who trusted the following people/companies were satisfied with the results – true or false?

A. EnronB. WorldComC. TycoD. HealthSouthE. Bernie Madoff

Our unofficial poll of absolutely no one related to any of these worldwide financial scandals returns a resounding “False!” And these are just recent examples. We could go on for pages but what is the point? Well, ladies and gentlemen, the point is that you are literally taking an extreme gamble when you give your money to a random Wall Street entity.

For example, Tyco was considered a blue chip company prior to the crash and burn to the tune of $450 million. What does this mean to the average investor? No one is innocent and your money is not safe unless you are in direct control of it. The few perpetrators who get busted might spend time in prison (maybe a long time) but that doesn’t help the investor who loses everything and will likely never recover a red cent.

Welcome to Wall Street. Keep both hands on your wallet.

CW Blogcast 23 - Non-dollar-based assets will rock your world. Apr 24, 2013

Show notes

We’ve been talking a bit lately about how, in our humble opinion, the dollar is poised for a headfirst plummet off a very high cliff. When it does, get ready for the cloud of dust slowly rising up into the sky, just like in the Roadrunner cartoon when Wile E. Coyote makes yet another serious error in judgment.

It doesn’t take much pondering to arrive at the conclusion that a good place to be when the currency crashes is - drum roll please - OUT of that currency. You need hard, tangible assets. Like commodities? Yes, but probably not what you think. Running out to buy gold and silver is better than Wall Street stocks and bonds but you can still do much, much better if you turn to income property investing.

After all, what is a structure on land besides a collection of basic commodities like copper, wood, brick, etc? We call it Packaged Commodity Investing™ and this is one (perhaps the only way) to survive the coming fiat currency implosion with your wealth intact. Can you imagine actually being able to create wealth while others around you, especially those who stayed in stocks, are being turned into paupers overnight?

People will still need a place to sleep at night and you will own the pillows. This is how to position yourself to become wealthy in the future. Own something of real value, like real estate. Companies come and go with frightening regularity off the stock market indices. Terra firma beneath your feet? It’s probably going to stay.

CW Blogcast 22 - Why it's good to be a borrower in inflationary times. Apr 24, 2013

Show notes

The worst person to be with inflation looming is the bank! The catbird seat is occupied by, you guessed it, the borrower. Why do we say this and are we just full of rotten beans when we do? No. It all comes down to purchasing power and the decreasing real value of the dollar over time.

Here’s a quick, and hopefully clear, example.

Today, in 2009, your banker loans you $1 million dollars to buy income property. From his perspective, your banker could also take that $1 million and buy one million candy bars at a buck apiece. Let’s also say inflation will be 10% the year after the candy bar purchase. This means the real world purchasing power of that $1 million will decrease by 10% during the coming year so that, at the end of 2010, the $1 million in 2009 dollars will only buy about 900,000 candy bars.

The real world result is that the banker loses purchasing power when he lends you money! It’s better to be a borrower because then it’s your mortgage debt that is losing real value as time passes. That's a good thing.

But don’t just run out willy-nilly and borrow for the sake of borrowing. You should only incur good debt attached to income producing property. If more people really understood what a great investment strategy this is, the banks would be in serious trouble.

CW Blogcast 21 - "We are out of money now." Apr 23, 2013

Show notes

We don’t mean to scare you – well, actually we do. The words above were spoken by President Obama at a recent press conference. Ouch. Does that mean the U.S. economy is a car with a bone dry gasoline tank still rolling slightly from 233 years of inertia?

Maybe.

A better analogy might be the economy is a car with a bone dry gasoline tank still rolling slightly from 233 years of inertia heading off a cliff! What can we, as law-abiding citizens, expect when our government continues to bankrupt itself and devalue our currency? Seriously. The federal government is a Ponzi Scheme that makes Bernie Madoff look like a piker.

Here’s a glimpse into the future after the dollar collapses.

1. An explosion in prices as Americans scramble to buy basic necessities.

2. Sparse grocery shelves and long gas lines.

3. Failed businesses and a breakdown in commerce as long term transactions vanish due to worthless currency.

4. Rampant crime and unemployment.

5. Disappearing government services.

Sound like fun? What can you do to protect your wealth? The simple answer is to own income producing property. It’s the only investment liable to have any value when the fiat currency collapses. The time to act is now. There may still be time before the greenback dies as the major player on the global currency market. But there may be less time than you think. Wall Street is already coming apart at the seams from greed and incompetence. Make it a point to explore history’s best bet when it comes to investing. Platinum Properties Investor Network offers free educational services for any investor interested in weathering the coming storm. Check us out at http://www.JasonHartman.com.

CW Blogcast 20 - Maryland learns a hard lesson in fleecing the rich. Apr 23, 2013

Show notes

Last year, politicians in Maryland could not figure out how to balance the state budget. As most good public servants do, they thought, “Instead of making tough choices for the amount of money we have, let’s squeeze the wealthy for more because they don’t really deserve it anyway.”

Presto! A brand new millionaire tax bracket was created with a top rate of 6.25%. And if you happened to be a millionaire with the misfortune of living in Baltimore or Bethesda, they’re going to toss more local income taxes on top of that to bring your rate as high as 9.45%.

The always prescient newspaper, The Baltimore Sun, predicted taxpayers would “grin and bear it.” One year later, the pundits and politicos are saying “Oopsie.” One third of millionaires have disappeared from the Maryland tax roles, some of whom moved out of state or re-designated themselves as residents of more tax friendly states where they might own a second home, like Florida, Delaware, or Virginia.

The end result is the state government in Annapolis has $100 million LESS to play with this year, rather than the $106 million additional booty they were counting on. With the millionaire exodus in full force, the burden of paying for bloated government falls squarely on the middle class.

Redistribution. It fails every time it’s tried.

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