Flipping America 175, Investor Spotlight: Ken ArnoldFlipping America

Expected Air Date: 8/9/18

Opening

Roger interviews Ken Arnold from Fairfax Virginia who has been flipping houses since Jimmy Carter was President. He bought his first house when he was nineteen and never looked back. Hear how Ken survived the ups and downs of the past 40 years and what he’s up to now – private lending. And when you hear Roger ask Ken the “private lender questions” you’ll have a template for meeting your own private lenders out there.

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Announcements:

Lunch with me every Wednesday.
Thursday August 9th, speaking at Flipping Atlanta “Investing in Real Estate with Your Self-Directed IRA”
Tuesday August 14th, speaking at Catalyst, “Contractor Impossible”
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News!

Guest: Ken Arnold

Comment Line calls and Questions

Call 404-369-1018, press 1 and leave your message!

Emails:

Questions@flippingamericaradio.com Tell us where you’re from!

Meredith, Pittsburgh, PA, “I want to invest in real estate, but I don’t want to own rental properties and I don’t want to do flips. I want passive investment. I know about REITs and I’ve done some checking into crowdfunding sites. The REITs don’t have great returns but they seem relatively safe. The crowdfunding makes me leery. I know they are probably doing just fine but it seems a little dicey to me. How should I be thinking about where to put my money?”
Sydney, Lancaster, PA, “I’m confused about getting my business set up. I own three rental houses and a duplex, all titled in my own name. I just watched a webinar on asset protection. I heard that I needed to form a Nevada Corporation, which they were willing to set up for me — for a fee of course. Since it was a webinar I looked up what it cost and they were adding about $1000 to what it would really cost. So I passed. But the logic seemed compelling. So I think I need to do something. I would like your input.”
Ellen, Villages of Ocala, FL, “We are trying to maximize the returns on our self-directed IRA. We started a little late in the game and don’t really have enough money in there to buy and flip a house. Any suggestions?”
Karenza, Long Beach, CA “I want to dive into buying rental properties here in southern california. My question is, am I too late?”
Britney, Penn Hills, PA “My husband and I are finishing up our first flip — so exciting! We are having a discussion about interior paint colors. Our property is in an area that has a lot of investor activity with trendy styles and colors. I want a bold color scheme, but my husband wants builder’s beige. Can you settle the debate?”

Motivational Thoughts for the day

“Dreams will get you nowhere, a good kick in the pants will take you a long way…” Baltasar Gracian

Transcript

[0:00] Music.

[0:28] Time for flipping America the show that teaches you how to make money in real estate wherever you are whatever your situation there is an opportunity for you.

Flipping America is brought to you today by Braswell Capital Solutions commercial lending made easy

on the web at Braswell Capital solutions.com.

And now here’s that flipping America guy Rodger Blankenship.

I am the flipping America guy and I am here to help you make money in real estate.

No we don’t encourage everyone to drop what you’re doing and start flipping houses like you see on TV

it’s not for everyone but we do encourage everyone to consider real estate as a part of a balanced Investment Portfolio to that end here on this show

we want to give you the best information inspiration and how to stuff that we can find so we’re constantly researching the news the trends

demographics what’s happening in the market strategies different things that you can do and also,

people from whom we can draw inspiration we have one of those people coming up in a few minutes today his name is Ken Arnold Ken bought his first,

property when he was 19 years old.

[1:44] And he’s been at it for many years my friends and he’s flipped hundreds and hundreds of houses and he’s 4 years loaned money on houses he’s a private lender

and I’m bringing him into the show at to make it both the source of inspiration for you and also a kind of a learning experience so I hope you’ll say too and he’ll be in right after the first break and let me get to go ahead and get

to a few things first of all if you’re in the Atlanta area tonight tonight August the 9th of 2018

we have our local affiliate flipping Atlanta meeting.

[2:19] At the Hudson Grille in Sandy Springs and we invite everyone to come out at 6:30 and hang out for a while and then at 7 the program starts and Mike

ventry from Advanta Ira is going to be talking to you about how to set up your self-directed IRA and make money on real estate investing,

tax-deferred or possibly tax-free that’s right and here’s the other side of that coin if you’re looking for money for your deals you want to meet someone.

Who has a self-directed IRA because they’re looking for things to put their money into and I think many if not a majority of people that put their money into self-directed IRA

are looking for Real Estate opportunities.

And so Mike is a good guy to get to know Penelope tonight in Atlanta Georgia from 6:30 to 9 9:30 at the Hudson Grille,

sports bar in Sandy Springs on Roswell Road if you wanted for more information about this and the other meetings of the flipping Atlanta Group Go to meetup.com flipping Atlanta join the group

and you’ll get a few email notifications each month and maybe one each week about the Wednesday meeting and that’s the next announcement every Wednesday we get together for lunch it’s just to hang out time to talk real estate with people who want to talk real estate.

[3:41] I will have maybe some wholesalers there will have in the last meeting we had several people there looking to buy homes and no wholesaler so wholesalers come on bring your deals and we didn’t have one person coming in a little bit late with a few deals.

The group guy gets an email each week from an in everyone’s email is included so you get to pass your deal around you build your buyers list and if you’re a buyer you can come and meet new wholesalers and build your sellers list and we get some deals done.

[4:10] But the main purpose of it is just answer your questions and find ways to put deals together we call it creative dealmakers it’s every Wednesday from 11:30 to 1 at Huey luey’s Mexican restaurant on Roswell Road in Sandy Springs,

not everything in Sandy Springs is on Roswell Road but these two events are.

It is one of the main drag through Sandy Springs all right find.

This show on the internet at flipping America network.com also we’re on facebook.com.

[4:45] Slash flipping America media you just have to add that word media at the end you can also find and follow us on Twitter and Instagram at flipping America and you definitely want to do that because we.

We aren’t our research team pulls up so many news articles week there’s no way we have time to get to all of them here on the show

but if you follow us on social media you will be in touch with what’s going on in the world of real estate the team does a terrific job I’m just

thrilled with the people that are part of this program behind the scenes and here’s a shout out of thank you to all of you

also we have a YouTube channel

flipping America YouTube lot of the interviews that you hear on the show eventually get posted on YouTube all right now this is where you know we really haven’t staffed up honestly we haven’t done a whole lot with YouTube and it was really never even a strategy

just turns out that we get very good audio quality from our interviews but doing Zoom calls and we had the video so we decided we would just start editing the video and throwing up on YouTube and Lala our YouTube channel was born so.

[5:54] Unfortunately it’s not the highest priority because after the show our next priority comes you know the actual buying and selling of homes and that’s how we got to pay the bills so the YouTube channel

it gets posted from time-to-time in but it there maybe a week or two lag between hearing the audio here and seeing the video there but they will eventually show up and I’ll tell you if you need to check out

some of the videos are particularly down to Rosa on the Smart Home

oh that’s just one I can plug right now but lot of interesting guests and a lot of informative stuff happening there.

Also when we had Pat Dornan just recently talking about the Old Mill rehab estimator he demonstrated it he took over my screen and we have all of that on the YouTube channel as well.

[6:41] Now the CEO LinkedIn we’re on LinkedIn we’re on house.com we’re on Pinterest too we’re just about everywhere you could want on social media and we know also social media is not for everyone.

[6:55] You know there are some people who collectively referred to social media as instaface are snapgram,

and it just don’t have anything to do with it I get it that’s fine you can always email your questions to us,

questions at flipping America network.com we answer every question that comes into the show and we always have and we plan to always do it in the future some of the questions we reserved and and

answer on the show and we’ll have some of those after I talk with Ken Arnold coming up in a few minutes

oh and even that is a little too high tech for some people and that’s fine almost everyone out there

has a phone and can dial a number so if you have a question or comment for us just call the national comment line 404-369-1018 extension 1 and leave your message or your questions

all right hey folks we’ve got a couple of apps in the App Store the flipping America app and also the property grade app

the property grade app you do have to know a little bit about your property in including you need to know your numbers,

you can check them out there completely free and you can listen to this show as a podcast anytime you want and get the show notes including all of those news articles and links write to them from the app.

[8:11] Music.

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[10:12] Music.

[10:32] Ken Arnold welcome to the show.

Thank you Rodger man it’s a delight to have you here I’ve I’ve known you or as we say in Georgia I’ve been knowing you for

what what is about 3 years now since we first met over at the Haves and wants meeting,

that would that would make sense it’s been a solid 3 years now yeah I think so and what kind of watch you from afar and keep track of your business but you know I don’t really know that much about what you do except you’re an investor

in Virginia and you’re an investor in Georgia and you loan money I guess in both States so tell me a little bit you know he was a little snapshot of what you do.

[11:07] Well let’s see the end result in a in a career that’s lasted 43 years now of owning real estate.

Is that you get out of the hardware part of it as much as you can.

And get into that aspect of funding property flippers is what I like to fun because that’s what I did for for so long,

search for to become a natural just to stay in the industry

okay but I know that just recently you were in Georgia taking a peek at that what was going on at foreclosure auction in one of the Metro Atlanta counties so you would be there with an intent to buy something right.

Well not really that’s where I find a lot of the guys who who need funding for their Acquisitions so unlike before when I was looking at multiple property acquisitions.

It’s it’s meeting a property flippers.

And letting them know that when they’re ready for for for funding of their existing portfolio.

Okay that’s cool well I’m I’m going to just go out on a limb and guess that you have a competitive rate and terms with all the other money providers that are out there right.

[12:24] As far as the hard money lenders is a term is quite often used.

I think I’m up I’m very attractive compared to okay now days.

Right right well as you could see with the step-and-repeat banner behind me in those of you that are listening on the show you’ll have to visualize this but you just heard that as a show came on brought to you by Braswell Capital Solutions

that’s a hard money lender based right here in Atlanta Georgia and we are thrilled with our relationship with them,

but also a happy to talk with you a little bit about what it’s like mildew,

Braswell is an institution and let you know it’s it’s a good size company in and they have a lot going on but you are an individual owning your own money.

That’s correct I I started doing this actually back in the Jimmy Carter era now they were sitting in.

Great state of Georgia when interest rates went sky-high back in the early 80s I found that the iproperties I wanted to resell after fixing up.

[13:30] And back in the time frame when when both the crime rate and the mortgage rates for so so outrageous.

I can still sell property by funding the ones that I was looking to resell.

Now that’s my starting point of being a one-man business out of key financial.

So you been in the real estate business really for a long time.

In Fairfax County which was my my stomping grounds forever.

And I just just kept buying on a one-time basis every video has stand on his own two feet.

And the beauty of it is about ways been a 1-1 man coming with all of your.

Contractors weather white collar or blue collar interesting so.

[14:22] I want you even had for a long time and you’ve been you’ve been basically playing a game with your own money and running your own shop there but you started in Virginia what brought you to Georgia.

[14:31] People friends how do you spell a natural migration to come from Northern Virginia that immediate DC suburb.

Down to a more pleasant area called North North Atlanta for me but the Atlanta metro area it’s just a lot of similar.

Physical characteristics I found the people be much more pleasant so I

yeah well as you know I’m not originally from Georgia but I’ve been here longer than ever stayed where I grew up so you know George’s kind of my home as well and it is kind of a nice place to be except right now it’s pretty hot.

Everywhere yeah we have we have those 4 weeks of brutal heat here in Georgia and then it’s just warm the rest of the time,

that’s fine with me alright so you started in this where you’re not when you were 19 have you ever had a real job.

Hi I did coinciding with that initial investing of upholding Metals which was the first part of it.

I had a floor covering business was mostly wall-to-wall carpet back then but Hardwoods and Arc surface Morris.

[15:41] And so that helped me tremendously as I moved into not just holding rental properties but the other the aspect of.

Texan flip which I started doing by age 28 so having background and both bricklaying and floor covering.

Have a good basis for for the fix-up aspect for you working for this company or was it your company we were independent contractors for one gentleman who started it does nuts.

Out of the Floor Covering so I’ve always been self-employed never had a W-2 or that way.

But I had great Direction back then and in the for every business that we did around thing and.

Assault on a carpet to my Builder my Builder friends and some property managers for.

Some of the commercial buildings in the Washington DC area so you got in early is this something that you saw yourself doing at a very early age.

I think I do fairly early on back in elementary school I recall.

[16:45] Not just playing with Lincoln Logs which were all familiar with but having the little brick sets in building houses and putting roofs on them from there and.

Go back to the Erector Sets nuts and bolts to put together Office Buildings in.

Giving away our age if we remember that but yeah yeah.

I was already 6 bored had facial hair so I could condense the construction GM’s that I was ready for it.

And I think I did before cover in business and those things really help me move towards.

Fix and Flip trade okay when we come back in a minute I want to talk to you a little bit more about the what you doing now with the lending and get some specifics okay.

[17:35] Music.

[17:53] So you want to learn how to flip houses I want to show you how to flip houses and there’s probably no one in the country better qualified than me to show you I flipped hundreds and hundreds of them,

and I also have some training and degree and experience and education so I could show you how to do exactly what I’ve done hundreds of times don’t believe me.

Head on over to flip starter event.com but in the meantime Give a listen to Pat caywood.

[18:19] Cleveland Tennessee and I’ve been.

Doing some flipping since about March of this year and had started with a Nationals program that was very expensive I spent today with Roger Blankenship.

Learning about his program and boy do I wish I’d met Rodger.

[18:41] He has a clear concise program and many tools that are going to be very hot.

[18:47] And starting and managing the program and the mentorship and Leadership and coaching that he saw frame are in value.

[18:57] Thank you so much.

[18:59] Music.

[19:52] Right before we went to the break we were talking about.

You know you growing up and getting in this business and being involved as a connected things but I want to Circle back around now to what you’re currently offering because you offer something to investors I know that there are a lot of people listening right now

we’re going to want to connect with you so,

let’s let’s answer this question right off the bat if somebody has a deal they want to begin to you for potential funding what are you looking for and where.

Okay good questions because I am a one-man business and and always have been in in the real estate industry.

I like to Fix and Flip trade but that’s always been nice to me Rarity.

I was good at it and so I look for the shorts short term funding usually within a year of completing the acquisition.

To the fix-up and marketing and get you a Payday at the end.

Fix and Flip trade in North Atlanta or Northern Virginia there’s Mi to Demerara tees

okay we have a lot of listeners in the Atlanta area even though we’re not actually on any broadcast stations in Atlanta at the moment but a lot of people listen through the app

and so it’s if you’re in the Atlanta area and course if your Northern Virginia as well how are they going to get in touch with Ken Arnold.

[21:21] Ken Arnold at outlook.com.

Okay he’s in the old-fashioned cell phone number of 703-268-0335

okay and of course if if you didn’t catch that as you go by you’ve got the number for the flipping America office here in Atlanta 404-369-1018

call us and tell us you want to get into a hold of Ken Arnold and we will be happy to connect you through our switchboard here or in some way we will connect you with Ken don’t worry about,

and is Ken Arnold at outlook.com.

So the next question people are going to ask is what are your what what kind of deal are you looking at what are the numbers need to look like for you to be interested.

[22:08] It’s always important to have some skin in the game but if you bought it if you bought it right I quite often confun 90% of what you paid for it.

Shirley mini deals also have needed draw involvement when some fix-ups are complete to reimburse.

For those funds.

Okay so it’s your said if you bought it right you can find 90% of the purchase so basically if we have a deal that conforms to your guidelines we have come up with 10% of the purchase price.

[22:51] Yes that’s usually a minimum for that and then the nice thing is about being a one-man company is that there’s there’s not a lot of.

Peas and ball for underwriter fees or loan origination fees and and those basic.

March Visa quite often come with obtaining financing so it’s a matter of the attorneys doing the title work.

Obtaining a title policy.

Attritional closing for so you underwrite the project yourself and I’ll go out and take a look at it.

That’s important and I have found that the reason why I’m very good at this this occupation is that.

I have done so many.

Fix and flips in my career that the younger generation coming up doing their Acquisitions for the purpose of resale.

Ask questions about the picture or I mean.

Do you have a hard and fast rule about what percentage of the arv is your limit for Lending.

[24:11] I don’t necessarily you guys going to be that traditional 70% area.

Do you like the property it’s all collateral based you know you can be more lenient with the funds you can you can fun for that.

There’s someone that I walk away from what I see distinct problems I don’t see a flipper with a success mentality so it’s a pretty old bases okay all right and so.

How many loans a year do you typically try to make how many can we help you make it can be anywhere from 20 to 25 a year okay okay any upper limit on your price range.

[24:57] You know when I was in the business of buying fixing up and reselling I got a side quite often and I didn’t care if it was a simple 2 level townhouse or million dollar home I’ve done quite a few million dollar home. As occupation,

which is more prevalent maybe in the Washington DC area but as far as the funding aspect it makes good sense.

I can come in with the in the few hundred thousand category okay now.

I realize that the vast majority of the people listening this or not in Northern Virginia or the north side of Atlanta that’s okay here is

why I wanted to talk to him and get him on the air because wherever you are my friends there’s somebody like Ken in your area

who is looking to loan maybe they don’t have Kim’s vast experience but they want to do this and they want to put their money out there and I’m just giving you a template for the questions that you need to ask.

The other question that you need to ask of course as you know what are what is the interest rate and what you charge origination fees I’m going to I’m not going to ask Ken to

reveal that on the are you can talk to that that’s a Lil Bit of a moving Target to stay competitive but the when you contact him add that to your list or if you’re looking for someone in your area make sure that’s one of the questions that you asked.

[26:15] Okay when we come back I can I want to talk to you a little bit more about just some general real estate stuff and now your thoughts about the market.

I will be back in just a moment.

[26:37] Music.

[26:48] Are you one of the 70% of Americans living paycheck to paycheck and tired of the stress if so I understand as I used to be in that 78%.

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How to find Freedom through real estate investing using a tactic that doesn’t require credit or tons of cash for a free training on how you too can do this please visit Brad camera.com.

[27:18] Hey flipping America listeners have you ever walked into a property and said I have no idea what it will cost to repair this home so it stays.

[27:25] Music.

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[28:16] Music.

[29:07] And we’re back I’m Rodger Blankenship and I teach people how to make money in real estate and I’ve got with me Ken Arnold out of Fairfax Virginia are you still in Fairfax Virginia Northern Virginia.

I am yes okay and also active in the Atlanta Georgia area and Atlanta is where we met.

But the kids been talking with today he’s a private lender and I’m encouraging you to either give Ken a call.

If your property is not in Northern Virginia or the north side of Atlanta find someone like him and ask him the questions are her and

get them to talk dirty with you and let’s talk about the exact numbers that you need if it’s okay I want to ask you some questions just about.

The real estate market as a whole we all live through or or some of us lived through the crash can you believe it’s been almost 10 years now.

[29:58] I remember that fateful day when I was I was actually with one of my realtors who,

I sold hundreds of houses for me we were together that afternoon when we got the news stock market. Just taking a huge drop

I was in 30 days 200 mortgage companies across the United States and close.

You know Getty with the enthusiasm of what was going on and some of us haven’t been in it that long at that point I’ve been in about 5 years.

We were completely unprepared for this and

it was the first few months after the crash it was devastating to watch what was happening and difficult to see your way through and I talk to people and meet people still everyday who lost everything in the crash now we’re 10 years post

crash and fortunately survived and and

you’re driving and doing great what do you think is happening with the real estate market as a whole just talked about the market as a whole that I want to break down for home buyers and then separately for investors.

What’s going on in the market is where you see its mother Virginia.

[31:09] What the economy itself is cyclist it’s certainly a degree and real estate industry follows that.

And I feel we’re certainly at the top of a cycle now.

It’s hard to make Acquisitions of residential real estate what are you doing at the traditional way or even on the courthouse steps.

She happy patient then and I I personally feel that whether it’s 6 months or or 15 months from now.

Call Outlaw Croce I’m a bottom again of a market which is a great time too to make acquisitions.

Stock market,

will win the win real estate dips again what do you think that dip is going to look like you see another crash coming or what do you see happening.

1012 even as much as 15% that would be.

[32:11] Easy to live with when you hold long-term properties.

[32:16] Answer key to get through what we’ve been through the last 10 years old long-term rentals in are you talking about 10 to 12 to 15% dip in value.

Alright so if you have a home that’s worth $200,000 it might be worth 20000 less when the next Market bottoms out.

[32:33] That’s a good example because the lower part of the market will lose Less in percentage than the upper upper end.

[32:39] Okay the big changes usually during the end of a cycle do you see a difference between the markets in Virginia and Atlanta.

[32:49] There are differences certainly Atlanta’s unique with private-equity coming in and purchasing so many.

Existing houses and taking them off of the resale Market Macon Reynolds so there is a supply and demand problem very cute in Atlanta.

United States has it as well but Lannister cute I would have measured in Virginia but you’re the cost of the dirt is more so your housing cost her a lot more there.

There’s truth to that yes okay well when you gaze into your crystal ball,

what what kind of things should investors okay where I said we will talk about homeowners just for regular homeowners trying to find properties to buy what would you recommend.

You know how mothers out there struggling right now they’re tense they need to buy a house interest rates are are starting to e cup.

What recommendation would you have for a homeowner needs to buy something you feel like they need to get in now before they lose out.

[33:50] I think it remains patience as the most important characteristic take to maintain right now.

Because it’s not Realtors will retailers that certainly will get your enthusiasm going about.

Making multiple offers in escalators in your purchase offer.

What’s something that really live with in hindsight I think you have to be patient and if if you’re if you have to continue to rent for 12 months.

I can be your best long-term results.

Okay what about Investors right now who are trying to find something I you know,

I am I have three meetup groups here in the Metro Atlanta area between the three of them have over 5000 members these are people who either are investors or wannabe Justin Atlanta 5000 people.

Are the hurt enough deals to go around it certainly doesn’t seem like it some days so what is your word to the investors out there in this market where your properties are hard to come by.

[34:55] I think now it is added value it is hard to make the steel acquisition because there are so many people interested in doing it.

That the added value which means more close in may be inside the perimeter.

Where are you going to pop a top to a 1960s Rambler Edition potentially finishing basements but,

shortly upgrading at 2 to meet its maximum potential is the way you’re going to succeed right now and we got to go to a break right now but when we come back from this break

I want to play a little game and I’m going to call the game helping or not you game to play.

[35:35] All right all right so we’ll be right back and we’ll play a little game.

[35:42] Music.

[35:54] Not too long ago we did a one-day flip starter in Chattanooga Tennessee and low and behold one of my old College friends came out to the event his name is Peter Faulkner and here’s what he had to say about the event.

[36:07] Peter Falkner here I tended a one-day flip starter training session led by Rodger black.

And I was amazed to see what has happened in Rogers Live from the last.

Plus years flipping over 800 houses and then this one day training he told how he did it and what the pitfalls the blessings the benefits.

And how to do it and I was so impressed with how well organized and how smooth the training Wednesday you’re tempted or in courage to go when you get a chance dude even just a considerate.

[36:47] But I just want to thank Rodger for a great day today.

[36:50] Music.

[37:08] All right.

We’re going to play the game helping or not and you have three possible answers can for every situation that I throw out there I’ll give this situation in your answer can be in your own opinion of course there’s not a real right or wrong you’re the expert but in your own opinion is this thing helping

no effect or hurting.

Helping Noah Factor hurting the first thing big box stores doing weekend do-it-yourself seminars.

[37:39] But I would think it’s helping very much your sink many products that you’ll need for your rehab,

okay in my experience we spend some money fixing the stuff that people thought they could do after going to a one-hour seminar at the big-box store to meet contractors there that’s the plus then

yeah well actually you know what day it could be.

I could maybe say helping because it gives us something to do when we buy the house you got fix that big mistake that they made.

Helping no effect or detrimental.

[38:20] The traveling circus of gurus crisscrossing the country teaching people how to flip houses.

Are they still do that do they yes because those were very much into Z Astic and would get you ready to go burn some ideas and.

We got ideas to do my proper so helping okay my location to that question helping hurting or or no effect paying the gurus $50,000 to teach you how to learn how to flip houses.

[38:50] 50000 turning into going to your business.

You have to gain knowledge sure but once you do that the cookie cutter approaches is how you.

Make money so I think yeah you know I had a

III. On some stages and do some events and I was backstage with a one of these major gurus and he told me that you could get into just about anyone for 50,000 that seem to be the top of the market that you should devise your program he told me to devise my

mentoring programs to end up being about 50,000,

let’s do one more helping hurting question you ready yes all right helping or hurting house flipping TV shows.

[39:37] Helping hand hurting.

Bigger of major extent of knocking down walls and over improving but you’re actually seeing it done and so you’re getting great ideas for an end result.

I’ve got to indicate there’s something in hurting there.

Okay good answers I appreciate that well it’s been fun playing your first contestant on The helping or hurting game and for that we’ve got a handsome award waiting next time you’re in Atlanta has and wants I’ll buy your lunch,

thank you for playing all right sir we listening

it’s been great having you on the show today can thanks for your insights in the market in and thanks for what you do and make the world a better place we appreciate you.

Kentucky deer alright I’ll talk soon.

[40:21] Music.

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[42:08] Music.

[42:25] Great guy great interview thank you Ken we appreciate you taking the time out of your busy schedule to visit with us and.

Now I’m going to turn right to some questions we’ve got a bunch of new stories to cover today too I just don’t

no I but we we have left a lot of you with questions hanging so we’re going to do the questions first and we’ll link to the new stories on social media whether we get to him on the show here not Meredith from Pittsburgh Pennsylvania I want to invest in real estate but I don’t want to own rental properties and I don’t want to do flips I want passive investment

good for you Meredith she says I know about roots and I’ve done some checking into crowdfunding sites the reachnow folks that is,

Real Estate Investment Trust.

The reach don’t have a great don’t have great returns but they seem relatively safe the crowdfunding makes me leery I know they’re probably doing just fine but it seems a little dicey to me,

how should be I be thinking about where to put my money Meredith this is a great question and it’s one very similar to the one we receive a lot.

And so this is basically the approach that we take if you don’t want to be actively involved your first

line of action is to get to know some people who are actively involved for your highest returns get to know some people who are actively involved in this business.

[43:48] If you’re okay with moderate to low return relatively low Returns the rates are a good way to turn when it comes to crowdfunding,

yes there are now over 300 crowdfunding sites that are devoted to real estate this is due to a change in the way I in the Securities laws in 2013,

and that’s all I’m going to say about that right now because I’m not a lawyer and I’m not a financial advisor but I do

urge you to pay attention to a funds historic returns and I know this may not seem fair to the new funds because there are some new phones out there that are doing great have great ideas but unless you know the people that are involved

I would stay away from the funds that don’t have a track record okay now when it comes to looking for people who are actively doing it

if you can give this a little bit of your time Meredith and I’m just going to assume that you’re willing to do this because you want to go beyond our eat and you want to maybe go beyond even what you could do in crowdfunding you owe it to yourself

to just.

[44:48] Go to some networking events right there in Pittsburgh where you are there are several there’s a local Ria and there are other groups that are meeting just go.

Attend and if you have to join a group or two and just start paying attention and after you,

regularly attend you don’t have to say a whole lot about what you doing and definitely don’t announce that you have money because then you just going to be hounded by a bunch of people see if you can figure out for yourself who the real players are and let me tell you something about Ria’s at the Real Estate Investors Association clubs

if you have a hundred people in the room out of that 100 people you were going to have about 10 people who are actually,

seriously doing fix and flips in today’s.

Market you’re going to have about 15 people or maybe 20 who are wholesaling properties and you may have,

another 20 or so who want to be wholesalers but they don’t have a method they don’t have any money they don’t have credit.

And they’re just there to try to figure out a way to get in this business and to that I say God bless you go for it you know.

[45:58] You can’t change what has already happened but I give them credit for trying to change what’s about to be in the future as long as we conduct ourselves honorably and we do the right thing and we definitely don’t break any laws,

then regardless of your past in your credit in your history and that’s or think if you want to turn things around this is a good way to do it so

congrats and all that but really what you’re going to have in that room is maybe 10% of the people in the room are actually seriously doing investing

and just watch and listen and learn and talk to people and find out who’s doing what and who is kicking it it won’t take you long maybe two or three meetings at the most to find the people that are there,

who conducted themselves with integrity and who know what they’re doing and get it done.

And then it’s worth it to just approach them to see if they’re looking for money to do deals now

I you didn’t say how much money you have and that’s going to be an issue as well because if you have enough money to take down an entire project you think a hundred and fifty to two hundred thousand.

[47:03] And we know that’s kind of a starter deal right there you might need more but if you have that kind of money

you may be able to find an investor who will let you put up the money they do all the work and you split the profit but there are things that you need to do to protect yourself and

believe you me you need to protect yourself and make sure that you’re going to get your money back so don’t just.

Dive into it with their paperwork make sure you get an attorney involved in,

you know if that’s really what you want to do Meredith maybe you should get back in touch with us and our talk to this further about our little course on lending money lending how to do it and how to

make sure that you protected yourself okay so,

after you get to know these people this is really going to be your course now so let me let me see if I can come and summarize of kind of rambled a little bit here let me summarize.

If you’re looking if you’re okay with low returns then you can invest in some of these super passive things like reach and crowdfunding sites.

Nothing really wrong with them but not all crowdfunding sites are created equally so do your homework on the site.

[48:14] If you want to move into a little bit more money then you can consider lending money to,

a local people that you have met and vetted yourself personally now I didn’t cover this but if you don’t have enough money to take down an entire deal you may consider a joint venture with someone.

And there are a number of ways to structure a creative joint venture and that’s a little bit beyond the scope of this question that’s really a whole show or whole lesson in itself but.

If that’s what you want to do just get back in touch with this marriage if you can’t find anybody there to help you come up with a creative joint venture we will help you in fact we have creative joint ventures we do all the time we.

We’re putting people in opportunity together all the time here and it’s it’s just a service that we provide alright Sydney from Lancaster Pennsylvania.

[49:05] Says I’m confused about getting my business setup I don’t three rental houses in a duplex all title in my own name.

I just watch the webinar on asset protection and heard that I needed to form a Nevada corporation which they were willing to set up for me for a fee of course since it was a webinar I looked up what it costs and,

it seems that the webinar house was adding about $1,000 to what it would really cost so I passed but the logic seem compelling so I think I need to do something I would like your input Sydney

excellent question thank you for writing in and the logic is compelling.

One of the first things I tell people when you actually get into this business is never ever ever ever ever ever ever.

On an investment property in your own name okay let me back up a little bit with the disclaimer,

if I’d say anything here that sounds like advice I am not in the advice-giving business I am only in the education an illustration business please make sure that you take what I say with a grain of salt,

and consult with someone locally to give you full clarification particularly with regard to the laws and regulations of your state and municipality.

[50:21] Alright so this is not Financial advice and certainly isn’t tax advice but now that I’ve given that disclaimer

please never ever buy another property in your own name and you need to get these out of your name as soon as possible what can happen,

I remember hearing this when I was new in this business what could happen is going to sue me I’m a nice guy I I do well I do I do good things for all people no one is ever going to sue me boy.

Was I wrong as soon as people as the general public gets any idea that you have any money and they think if you own a house you have money.

There will be people out there and there are professional ankle breakers who go out there and will fall and break a bone or do some injury and then next thing you know you got an injury lawsuit

or you’ll have somebody suing you over some other issue in your house and it may not be anything other than a money grab.

[51:13] The lawsuit itself may have no merit no Foundation but their lawyer asks if you want to settle.

[51:21] Because it is cheaper to settle and fight it out alright.

Shouldn’t you have to protect yourself and your first line of defense is a good strong insurance policy you won’t enough.

The properties now I’m assuming that you have fire and dwelling insurance on the property she didn’t say anything about whether or not you have any debt on those properties but.

If you have debt your lender certainly requires you to have fire and dwelling but you need general liability insurance as well.

[51:50] And since you own four properties you probably need to consult with your insurance

advisor about getting an umbrella policy that just covers you in case of anything else now these insurance companies.

Are going to go to work for you,

when you get sued now just keep in mind the insurance companies I have a duty to their own bottom line so they’re going to find ways to,

clue exclude certain perils and you need to make sure you know exactly what it is you’re buying when you buy it and what what is covered and what is not

don’t just assume that you know if since there’s for example of a long section on how they cover mold damage in,

on page 24 to 26 don’t just assume that you’re covered because if you read all the way to page 48 you may find that they specifically exclude mold coverage.

And it made say this supersedes anything else you might have read in this document concerning mold coverage and

if I sound like I’m a little too familiar with mold coverage in the lawsuit associated with that I can say yes that is true but fortunately that case is over and not only did we win we won with a summary judgment and not only did we win the summary judgment we won with

summary judgment with prejudice which you know it’s pretty strong okay but.

It cost me $35,000 to win that lawsuits that what you want now.

[53:20] This that store is not completely over but now that the lawsuit is over and we won and they don’t have any they’ve gone beyond their time. Where they can appeal it’s over

and now it’s just a matter of going back after them for legal fees but it’s just such a pain.

[53:37] Wish I hadn’t gone through it I wish I had read my insurance policy is a little more carefully and actually it’s made me more careful in this business so insurance is first now

your question was about entity you definitely want an entity and talk to your Tax Advisor listen you’re going to get

different advice from your lawyer then you will from your Tax Advisor your lawyer is interested in maximum protection of assets and is going to tell you to create an entity a separate entity for every property

your Tax Advisor is not going to advise you to do that because every entity if you form an LLC for example for every,

rental property each of those LLCs has to do its own tax return at the end of the year and it may not be that much money but that’s another maybe five to seven hundred dollars that you have to pay for that tax return,

the preparation of it and or do it yourself man that’s going to get really confusing and complicated and I don’t think you’re going to want to do that

your Tax Advisor is probably going to tell you to hold your rental properties in an LLC,

no more than about 5 but also if you have different exposure in them group them separately so maybe you have two that are free and clear into that you have dead on put the free and clear ones in a separate LLC from the ones that you have Dead on.

[54:56] Or I did this text by your will make a recommendation but you got to

think about the structure in and sending you over to not only yourself but your family and the people who are depending on you and the income from this now and in the future to setup your into these structures right it’s not too late

you it’s not too late for any of you folks you can always move these properties in once you get the entities set up to hold

title to these properties you can simply quick clean the property to those entities but listen you need to move fast if a lawsuit is already underway.

You cannot legally move the title to those properties into these entities you’re going to have to wait until that gets resolved.

[55:40] Okay again talk with the lawyer about that but

do something now as far as hiring one of these outfits that will set up your Nevada Corporation don’t do it it’s not worth it you don’t need it in fact.

In my opinion and you need to talk to some other people and definitely talk to an attorney about this nobody corporations have their advantages,

what time you know they’re also Wyoming corporations and Montana corporations and they are out there trying to compete with Nevada corporations in terms of the Privacy that it offers the

I owner of the entity I get it and there is a place for that but probably in your case it’s Overkill.

You can have a Pennsylvania LLC but again talk to your attorney I’ve never set up a Pennsylvania LLC it may be harder than I think okay or you can set up a Delaware Corporation too but that’s also Overkill almost certainly.

[56:32] So talk to your attorney but definitely create an entity and get those properties out of your name.

All right do we have time for another one I’m looking at the clock

I’m looking at the team okay let’s see if we can do it Ellen Villages of Ocala Florida we are trying to maximize Returns on her self-directed Ira we started a little late in the game and I don’t really have enough money in there to buy and flip a house any suggestions

well Ellen

yes there are several suggestions one of the first things is do a gap funding agreement with somebody who’s flipping a house baby maybe they need to come out of pocket

$45,000 to do this hard money loan maybe you can jump in there in second position and fun that $45,000 out of your

self-directed Ira in exchange for a piece of the deal with the minimum interest guarantee.

[57:23] You can set up something like that it got funding agreement and the attorneys there can handle that for you just make sure,

I tear your borrower signs a personal guarantee so no matter what happened your money comes back and also make sure that whatever you put into the property.

Is secured by a deed to secure debt you’ll be in second position behind the lender but at least you’ll have a position and that person will never be able to sell that property without

getting that I getting you your money now if they lose it in foreclosure that’s going to be a different story for you but if they get to that point hopefully that you’re communicating and maybe you can take the project over for them.

Okay there are things you can do you can do the options swap,

and you can also maybe buy a tax lien or tax deed or buy some cheap vacant land.

Anything there are several things the option swap is an interesting strategy but you know the music is playing that means we’re running out of time and I don’t have time to explain that,

maybe I’ll make a note in come back to that sometime explain what that’s it that is but.

Look for us on Facebook tonight because it could be that the option swap strategy will come up tonight at our flipping Atlanta meeting that’s it folks will see you later.

[58:37] Music.

[58:49] You know where a good kick in the pants will take you a long way this is from baltasar gracian.

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And as always your gift in any amount is both tax deductible and very much appreciated that’s it for today folks will see you soon.

[59:17] Music.