Welcome! Disclosure: June Capital City Wealth Builders (CCWB) Peter Fortunato & Dyches Boddiford. CCWealthBuilders.com. So What is CCWB?

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1 CCWealthBuilders.com Welcome! So What is CCWB? We Meet the 1 st Wednesday of Every Month Remember Come Early for Networking Tonight s Meeting Wednesday June 6 th 2012 Self Directed IRA Part 2 Advanced d Strategies t to Grow your IRA Peter Fortunato & Dyches Boddiford No Meeting in July Enjoy the Holiday! God Bless America! Next Meeting: Wednesday Aug 1 st 2012 What to Do Before You Buy That House! Professor & Author Leonard P. Baron (MBA, CPA) Disclosure: We are not Tax Advisors, Attorneys, Legal Professionals or Financial Advisors We are Real Estate Investors! Please review all these documents with your legal and or professional advisors. All figures in all charts or forms are estimates or examples only. No return can be guaranteed! 1

2 This is your club- Invite a friend and help them learn the right way Need Help Putting a Deal Together? ** Feel Free to us with ideas and suggestions*** CCWealthBuilders.com Bring Your Real Estate Questions What are people working on in 2012? Discounted Notes Trustee Sales REO Probate Real Estate Investor Short Sales Pre- Foreclosure Others. Visit, like and Share on the Web! High Equity Farm Non-Owner Occupied Auctions HUD/VA Member s Only Files! meetup.com/sacramentos-real-estate-club- meetup.com/sacramentos-real-estate-club- Capital-City-Wealth-Builders/ 2

3 meetup.com/sacramentos-real-estate-club- Capital-City-Wealth-Builders/ CCWB Library Free To All Annual Members! Check out the list of educational Books, Tapes, CD s and Video s available for check-out Network with us Before/After the Meeting! Come Network & Bring Your Real Estate Questions 3

4 Property Haves & Wants A Glance at the Headlines with Reggie Lal At work again : 4

5 His Replacement The Real Story From: Reggie s Blog (ReggieLal.com) Now The Real Story 5

6 From: Reggie s Blog (ReggieLal.com) 6

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8 Total Student Loan Debt 8

9 Jumping 73% during the month 9

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11 Real Estate Deals & Self Directed IRAs Peter Fortunato & Dyches Boddiford Growth Profit Income Management Amortization Security Tax Benefits Use Case: Just a little bit short Situation: Mark s marketing has brought in an opportunity to buy a house at a discount. 3 bedroom, 2 bath with a 1 car garage: ARV: $85, Acquisition: $45, Fixup: $ 3, Potential Rent: Operating Expenses: $ /mo. < /mo. Copyright Peter F. Fortunato,

12 Problem: Mark is just $48, plus closing costs light of needed cash. Proposed Solution: To: Benefit(s): Assign contract to: User Option (growth) OR User Note (income) OR User Wrap (income & amort) OR User Option (growth & amort) OR User Cash (profit) OR Exchangor Lease (income / mgmt) OR Exchangor Option (growth) OR Investor as above OR Good Credit as above OR??? Required Documents: Assignable Contract Option or Note or Lease, etc Assignment of Contract (Seller to TransactionMaker) (Buyer to TransactionMaker) (TransactionMaker to Buyer) Mortgage/DOT to secure promise (Buyer to TransactionMaker) Sometimes Buyer and Seller deal directly Termination of Contract (New Institutional Financing) (TransactionMaker to Seller) Straight Loan Example: Opportunity: An investor has found a house that when fixed up will be worth at least $150,000. The investor has been able to negotiate an all cash purchase price of $100,000. The house needs $5,000 in fix up for paint, carpet, etc. The investor wants to flip the house and comes to you to borrow the money. You happen to have $105,000 in your self directed IRA. You decide it is a good deal. One of Many Solutions: You offer to loan the investor $105,000 at 15% with 5 points (5% of the loan amount), monthly payments of interest only for 6 months, then full repayment due. Procedure & Documents: 1. Direct IRA Custodian to send $105,000 from your IRA to the closing attorney. 2. Have attorney prepare a mortgage and note according to the terms on which you and the investor have agreed. Monthly payments will be $1, with a balloon at the end of 6 months in the amount of $106, Results: If loan goes full 6 months $5,250 points paid at closing 7,875 monthly payments for 6 months $13, in earnings on the $105, loan Using a financial calculator or amortization program, you will find your yield is 25% annualized. 12

13 WRAP Mortgages Wrap Equity Existing 2 nd Mortgage Existing 1 st Mortgage WRAP Loan Example: Opportunity: An investor has found a house that when fixed up will be worth at least $150,000. The investor has been able to negotiate an all cash purchase price of $100,000. The house needs $5,000 in fix up for paint, carpet, etc. The investor wants to flip the house and comes to you to borrow the money. You only have $2,000 in your self directed IRA. You decide it is a good deal. One of Many Solutions: You know others that have money to lend. You show the deal to a couple and one commits $104,000 at 12% interest only, no points. You then offer to loan the investor the $105,000 total he needs at 15% and 0 points. The investor will make monthly payments of interest only for 6 months, then full repayment due. Results: If loan went full 6 months $7,875 monthly payments for 6 months 6,240 paid to other lender $1,635 in earnings on your $1,000 loan Using a financial calculator or amortization program, you will find your yield on this investment is %. Option Example: Opportunity: You have found a house that when fixed up will be worth at least $150, as a flipper. You have been able to negotiate an all cash purchase price of $100,000. The house needs $5,000 in fix up for paint, carpet, etc. You only have $2,000 in your self directed IRA. One of Many Solutions: You know others that have money to lend. You show the deal to a couple and one commits $104,000 at 12% interest only, no points. The will be no monthly payments for 6 months, then full repayment due. You then get an investor friend to purchase the house in his corporation using your lender s money along with $1,000 from your IRA. This $1,000 will be for an option for your IRA to purchase the house for $110,

14 Results (Your IRA): Friend investor finds a third party buyer who wants to buy the house for $150,000, but your IRA has an option. You agree that your IRA will cancel the option for a return of your option money plus $27,000. Therefore, your IRA invested $1,000 and in 6 months got a return of $28,000, a 5400% annualized return! Happy Hour with us Before/After the Meeting! Come Network & Bring Your Real Estate Questions Q & A 14