Hard Money or is it Private Money

Recently we conducted a webinar discussing how to get and how to loan hard money.

Since most folks would be borrowing from someone that’s not officially in the lending business, it should be called Private Lending.

Anyhow, we got scads of questions after the webinar.
Then we presented at the local investors group.

Scads of questions there too.

We’ve got a home study course coming out in about 10 days.
It’s set up for both borrowers of private funds and lenders of private funds.

You see, the ‘baby boomers’ are entering retirement age…so they have money to lend…but they don’t know how to package a deal.

And investors are being deluged with bank owned properties that can be purchased for 20 to 50% Loan to Value…great deals…but the investors don’t know how to package themselves of the deal.

Our materials cover both…and they cover some exciting new ways to finance these deals…like no payments for 36 months!

Stay tuned.  We’ll keep you posted.

Bob

Repeal of the Excessive 1099s

In case you haven’t already heard, last week a repeal of the
health care reform law’s 1099 tax reporting requirements was
finalized.

This has been an underhanded  issue ever since it was originally enacted.

 The cost and time-consuming new reporting requirements would have been a
significant burden on real estate investors.

If not for the repeal, real estate owners would have to file a 1099 form with the IRS for every vendor to whom they paid more than $600 in a year.

After the repeal, only non-corporate vendors will need to be sent a 1099…same as old
law requires.

Note that LLCs are NOT considered corporations. 

1099s Ugh!

I’ve heard that there’s some new reporting that’s being required…something about 1099s.
What’s up?

A 1099 is a form that’s supposed to be sent to the feds and to anyone that you paid over $600 to during the previous calendar year.  There are some exclusions:
For example, you don’t have to send them to Corporations…like Lowes, Home Depot, Sears, etc.
Also, you don’t have to send them where you purchased less than $600 worth of labor or services, like buying $1000 worth of salt but the delivery charge was only $100.
(It’s all snow and ice when I’m writing this!!).

The reason this issue was coming up was that under the ‘Obamacare’ law, everyone was going to have to comply with this reporting.  It was thought that the amount of revenue that wasn’t being reported was quite high and that this 1099 reporting would bring in substantial revenues to help pay for the increased health care costs.  So the increased 1099 reporting was included in the law.
Somehow, small businesses were able to squeal loud enough that the old 1099 reporting rules remained in effect and the newer, expanded rules were squashed.
We heard of a gold dealer that made over 10,000 transactions per week!  It would have been a reporting nightmare.

So in summary, you will issue a 1099 to anyone who provided you with a service $600 and over (and is not an S or C Corporation) at the end of each year.
To get the correct info for the 1099, have the service provider fill out a W-9.
They are available on-line at:
http://www.irs.gov/pub/irs-pdf/fw9.pdf

Insurance for Land Trust properties

The insurance company has the trust listed as the owner and policy holder.  I do not have the actual trustee listed anywhere. Is this correct and should the trustee be listed as additional insured. 

If a claim is filed, it would be wise to have the trustee listed as the additional insured.  However, the trustee could endorse a check made out to the ABC Trust, by signing ‘Susie Smith, Trustee for the ABC Trust.

I wouldn’t make a big deal out of it, but I would try to have the additional insured listed as the trustee on future policies.

AutoForms and AutoLease-Working on XP, Vista and Windows 7

Yes, the Get The Deed system software has been modified to work on the newest Microsoft operating systems.  Seems that it only takes running a simple program to install 3 entries into a graphic library.
If you’re interested in purchasing the software, it now includes those library entries.
If you’ve already purchased the software, visit the following site for the simple update software:

http://www.getthedeed.com/AF-AL_SoftwareUpdate.htm

PS…AutoProfit has always worked with Vista and Windows 7

Just finished College…what investing system should I use?

I just got out of college and want to try investing in Real Estate.
What system would you recommend?  And Why??

Congratulations on your graduation.
There sure are a lot of different techniques to become involved in Real Estate Investing.
I’d recommend something that doesn’t consume your time (like 8 to 10 hours per day).
We like the technique of using ‘seller financing’ because we don’t have to invest our own money into the system .
Likewise, we wanted a system that built up ‘momentum’.  You know, work for a little while and continue to reap the benefits for years and years.
We also wanted involvement that let us take off time from our investments and still have a substantial income.
Finally, we didn’t like the idea of dealing with run down properties or homes where there wasn’t any ‘pride in ownership’.
Take a look at our home study course…Profits While We Sleep…it measures up to the goals described above.
Lots of folks have proven that ‘subject to’ is the way to go, especially when dealing with motivated sellers that have pretty homes.

Why use a Land Trust and LLC?

What advantages would a Trust holding LLCs for Fix and Hold real estate investing have over getting a commercial umbrella policy and be done with it.
How would a Trust protect when an umbrella policy wouldn’t.
How many properties do you put in one LLC?
How much paperwork is involved in setting up a trust with LLC’s and what are the tax advantages?
If I set up a trust that holds LLCs, will I be spending loads of time and money on lawyers and accountants in order to avoid paying taxes and avoiding low probability chances of getting sued?

Some pretty good questions.
Here’s the structure that we propose:
For long term holds…set up an LLC.
Then when your LLC is going to purchase a property, set up a land trust for each property and have the seller as the initial beneficiary.  Then the seller assigns his beneficial interest to your LLC.
The deed will identify the name of the trust…one trust per deed and the deed is recorded.
The trust agreement will identify the seller and the assignment will identify your LLC.
The trust agreement isn’t recorded so no one knows that your LLC owns and controls the property. 

The purpose for doing this is to shield the ownership from public view.  Properties in a Land Trust can also avoid probate.

We’re not trying to avoid using insurance or having an umbrella policy, we’re keeping our name out of public view so that no one wants to ‘hassle us’ or ‘shake us down’ because they discover that we’re the owners of many properties.

For example, your 16 year old child gets involved in an car accident. An attorney does a search on you and your LLCs.  He puts a freeze on your checking accounts pending a settlement from you insurance agent.  Woops! That’s a problem.

How about a tenant slips and falls.  Tenant hires one of those attorneys on the back of the magazine that says, “If you’ve been harmed, we’re here to help!”  Same hassle, same freeze on accounts, same shake down.

The effort needed to establish an LLC is minor.  The cost in most states is less than $100 per year (Indiana is $30 per year).  Creating a Land Trust is simple and included in several of our courses…no attorney needed.  Creating an Assignment of Beneficial Interest is a one page document, also included in our materials.
So the effort is minimal.  The advantage is substantial.  The cost is virtually zero.