Atlanta Real Estate Investors Alliance Blog

It is the goal of this column to answer questions about QuickBooks and how it is used in the REI arena. Know how to record transactions in the proper way and have your set of books in good shape when it comes time for taxes. It is our intention to do this by you, the members, submitting questions to Karen@smallbusinessadvisor.biz, and getting answers here in this column.

QuickBooks® Pro 2014

If you have QuickBooks® 2012 or older and are thinking about purchasing 2014 version – you are in for a surprise on how the program looks and some new areas that have been added. I will point out just a couple here but there are many more.

QuickBooks Pro® 2014 has a “What’s New” yellow bar on the side of many of the windows that have new features.  When you click on the bar an overlay feature will pop up to indicate where the new features are. Most of these are in your shortcut windows.  Once you have viewed them and are comfortable that you know the features you can turn off the yellow bar under the “Help” drop down list.  You can always turn it back on if you need to refresh your memory about a feature. Read More→

Stocks, bonds and mutual funds are all well and good – for those seeking ordinary returns. But if you have a particular expertise, or access to a lucrative market for just about any good or service, you have the potential to earn much more by going into business for yourself than you stand to gain by investing in the broad market.

Fortunately, your Self-Directed IRA doesn’t limit you to the mundane investments you read about in the papers all the time. In fact, IRA rules only restrict you from investing in a few things: life insurance, jewelry, gemstones, art and other collectables, alcoholic beverages, and some forms of gold and precious metals of insufficient purity or standardization. Other than that, the sky’s the limit on what you can own!

Owning a Business in Your Self-Directed IRA

By using your Self-Directed IRA to start or acquire a business, you are in control. Rather than hoping against hope the market will be kind to you this year, you can make things happen yourself. Want your business to grow? You can invest in advertising, new equipment, a new truck, more staff – whatever it takes to react to the current economic environment. Many of our clients find that investments like these often pay off far better than anything the same investment reasonably earns in the stock market, at least at an acceptable level of risk. This must be an arm’s length business, you can’t operate the business, and you can’t draw a salary from it. Read More→

You’ve heard her at the monthly meetings, “I’m Karen Bershad and I am the Small Business Advisor!” Karen’s firm has been a business member with Atlanta REIA since it started and has been helping small businesses and their owners for almost 20 years.  The past eight years however have been tailored to the specialized services for the Real Estate Investment industry.  With 40 years of business experience in the area of ownership, management and a wide variety of other lessons learned, Karen Bershad provides a unique outlook on how businesses need to have their “back office” running smoothly.

Most entrepreneurs don’t give it much thought, but as your business grows, it faces issues unrelated to producing the goods and services it sells. This inevitable trilogy of headaches includes legal, accounting and marketing decisions. Certainly life would be simpler if you could call in your accountant, your lawyer or whoever handles the marketing whenever the need arises.

But if your small business is like most, you probably cannot afford to call on expensive professionals whenever you would like. You would like to be able to handle many of these issues as possible on your own. You went into business to provide a product or service to your clientele and are good at what you do. It is the paperwork, bookkeeping, proposals, etc. that bog you down. Read More→

A few weeks ago I attended a weekend training put on by, who I believe is the most creative and knowledgeable real estate investor and teacher in this country. The training was put on by Peter Fortunato. Peter spent two days with his class explaining how dozens and dozens of deals he had helped structure without the need for institutional financing or credit. It truly amazed me how he never completed any of the deals he spoke about in the same way twice. Each and every one of the deals was structured in a way to achieve a specific objective. In other words, each deal was structured to come up with exactly what his or the seller’s goal was at that time.  

Some deals were designed to minimize taxes, some were designed to maximize cash-flow, while others were designed to overcome some type of problem the sellers were facing and thought they had no solution to their problem until they talked to Peter. Peter, who is considered the master of “Doing Things on Purpose” would create deal structures that solved the problem at hand. His work has amazed me for years and when I take one of his classes I become even more amazed how anyone could create the deal structures he does. Read More→

“I have a thing for tools.” ~ Tim Allen 

So, here it is: January. You’ve gotten most of the pine needles and tinsel out of the carpet so the dog won’t eat it. Aunt Flora and Uncle Ruben have gone back to Miami. Your kids are back in school. And you? You’ve had a minute or two to breathe and enjoy the satisfaction of a holiday season well spent. Time is precious, isn’t it?

But now, it’s time to get moving again. The warmth of the holidays has become the chill of winter, and with that comes heating bills and college tuition and credit card bills. It’s time to make some serious money.

I realize it’s not easy to get in gear again after the New Year. But if you’re like me, you can’t afford to sit on your laurels for too long. Lost opportunities are very expensive.

That doesn’t mean, though, that you can’t have a little fun while you’re at it. So go get that new smartphone Santa brought you, and let’s get cracking. You know you want to!

There was a time when owning a smartphone was a luxury. Not anymore! It’s probably the most useful single gadget you own. I know people who take a lot of pride in having a very basic cellphone. That’s a valid choice, of course, but now I wonder how I ever got along without this amazing device. Read More→

When you begin to learn about real estate investing you normally hear about the big picture of how to find and sell real estate. Obviously, this is important because without a piece of real estate to buy or sell there are no profits. However, let’s assume you have the acquisition and disposition of real estate down to a science. Now it’s time to pay more attention to the details because as the saying goes, “the devil is in the details.” I like to say, “Profit is in the details.” In this case I am referring to fully understanding the true cost of closing a property.

Beginning with the contract, it must specify and make it clear who is responsible for each and every penny at the closing table. When you send over a HUD to the buyer/seller there should be no misunderstanding of who should be paying what. After nearly a decade of investing in real estate, I continue to see investors and wholesalers run into this problem time and time again. A few costs that are usually debated over are the title services and settlement costs, document prep fee, courier fee, tax certificate fee, government recording fee, HOA transfer fee, title policy, and even though its only $2, the state guaranty fee.  Individually all these fees are relatively small compared to overall purchase price but together can add up to be a few thousand dollars. Now imagine if you close multiple deals per month, these small costs can really impact your bottom line. So how do you overcome having to pay these fees? Read More→

If the courts rule against the banks in the homeowners’ favor, but no news outlets report it, does it really happen?  That’s the situation we’re in now.  If you’ve been digging deep, you might have seen that the estimate of bank losses from mortgage related lawsuits has increased to $100 BILLION in future payouts.  This number includes settlements and judgments as well as legal fees for defending all of the lawsuits.   How many stories about this have you heard on the major news outlets?  Zero.

Over the last 15 years, the banks concocted a scheme to defraud their investors and borrowers that resulted in over 15 million people being displaced from their homes, and you have not seen a single story detailing the fraud the banks perpetrated and the damage it caused.  You would think this is the type of story that would be all over the news, but the media remains silent.

Despite the lack of coverage from the media, the payouts and estimates of future payouts from the banks keep getting bigger.  The reason for this is simple.  Investors and homeowners are filing valid claims of fraud against the banks and judges and juries keeping awarding bigger and bigger settlements. Read More→

Happy New Year!!  You may be reading this in early January even though I am writing this in December so I figured I’d throw that out.  Hope you had a great Christmas season as well.  It’s always my favorite time of the year.  Our December one year ago I think was still our best month Wholesaling.  We did 12 deals – which was insane.  Don’t let up in the holiday season – it can be a good time to get deals.

So this month I want to talk about Focus.  Real Estate investing in general has got to be the most distracting business out there.  I’ve never been in a business where you can be going in 10 different directions.  Using 10 different exit strategies and 10 different marketing techniques.  I am/was one of those people.  I thought I could be a “wholesaler/lease option/seller finance/subject to/fix and flip/short sale/REO/vacant land/note trader” Real Estate Investor.  Now I still think I “can” be this, it will take time.  I think there are some bad asses out there that are this Investor, but they are 10-20 years into the business.  Don’t try to be an expert in 10 different types of deals right out of the gate.  Perfect one – which means you are consistently making money from it – THEN move on to the next strategy.  Then have 2 strategies going for a while until both are making money – THEN add a 3^rd.  And so on. Read More→

I am frequently asked, “If you had it to do over again what would you do differently?” Well, I’d like to answer that question for you. There are several things you can do to help your business grow and several things you can do to kill the dream before it ever has a chance to become a reality. Let’s talk about the “ten deadly mistakes” that can kill your dream.

1. Listening to people who make less money than you do. There are a lot of folks out there who don’t understand this business at all, yet they will want to give you advice faster than anyone else. They basically want to keep you where they are, which is broke. Surround yourself with people who can guide you in a positive way and a forward direction. Get involved with your local real estate club or a mentoring program like Ron LeGrand provides for you. Read all you can on the subject of Real Estate Investing and educate yourself to move forward with your business. Don’t let a “naysayer” kill your dream. Read More→

Often I have investors ask me what entity should hold their personal residences. Many want to use at least the land trust or Family Limited Partnership. But by using any of these, you could be losing tax and financial benefits. So, how do you protect it?

Your personal residence is protected by being mortgaged 100%. Don’t worry, I am not suggesting that you have loans out totaling the full value of your residence, but have a home equity line up to 90-100% of the value. If you get the line from a first tier lender, the mortgage document at the court house will typically not specify that it is an equity line. It will appear that that amount is a loan on the property. Of course, you don’t have to draw on the line if you don’t want or need to, but having it available will provide you financial comfort as well.

Why not move the personal residence into an entity? Well, there are three reasons: Read More→

Many of my students repeatedly ask me, “Do I need both the Wife and the ex-Husband’s financial documents when negotiating a short sale?”  I let them know that there are several variables that I need in order to give them an answer.  In order to have a clear understanding of whose financials I need to collect, I need the following information:  Property Appraiser sheet (whose name is listed as owner?), a copy of the last recorded Deed (whose name is on there?), a copy of the Property Settlement and Judgment of Divorce (who was awarded the property and does it contain verbiage stating that a certified copy of the Judgment of Divorce and/or Property Settlement can be recorded in lieu of a Quit Claim Deed).  

FOR EXAMPLE:  Husband and Wife bought the house together with a Mortgage and Note from Wells Fargo.  They then get a divorce and the Wife is awarded the house with no interest from the ex-Husband.

When Sellers get a divorce, typically one party will say they want the house and that person will be solely responsible for the debt on the house.  A good attorney will ensure that there is specific verbiage in the Judgment of Divorce and/or Property Settlement which states that the Wife is going to be responsible for the debt on the home and that the ex-Husband will Quit Claim his interest by Deed over to the Wife so that he is no longer on the property.  In addition, a good attorney will add verbiage in the Judgment of Divorce and/or Property Settlement which states that should the Husband not sign a Quit Claim Deed to transfer the property over to the Wife, then a certified copy of this Document (Judgment of Divorce and/or Property Settlement) may be filed with the Recorder’s Department in lieu of (instead of) a Quit Claim Deed to transfer the property. Read More→

Lease options have made a big comeback in today’s market. They are great ways to take control of real estate without using banks or lenders. They are also a great way to fix up a distressed asset that a bank won’t lend on. Once you have the property up and running, you can then sell for quick cash or refinance for a long term hold.

A master lease option is a set of two contracts that give us the right to control the operations and the sale of a property. The term “master” is typically given when you are doing this in multifamily and is just a lease option when doing single family deals. The master lease gives us the right to “rent” an entire property with the right to sublet the units. By implementing the master lease we can effectively take control of the property and all of its operations. We can also control the cash flow!

The master lease side of the agreement is what will allow you to fix any problems the deal may have before you sell it or refinance with a lender. You essentially become the new owner without having to actually purchase the property. This will allow you to hire new management to take control of the deal and to implement your plan of action. Read More→