Responsibly in Real Estate

is unusual, but it does happen, and it may cause you serious complications if you are active- ly using a line when it matures. For example, you might be asked to pay the balance in full all at once. Always remain in close contact with your lender and have a clear game plan for handling surprises. It’s clear that using a line of credit can dramatically improve your rate of wealth creation and your ability to invest effectively in real estate. Savvy investors not only use credit effectively but also build out their credit options. After all, there is no such thing as having too much access to capital. • > Continued from :: PG 47 The Best Legacy- But since the IRA left was a tax-free Roth rather than a taxable Traditional IRA, Sam avoided that huge expense and still had $60,000 remain- ing. Naturally, he used that money to continue investing. Frank never knewwhen he formed that little Roth IRA all those years ago that the profits from it would pay the bill for his granddaughter’s wedding long after he’d passed on. But the wonderful opportunity presented by the combination of self-directed inherited Roth IRA’s with some solid real estate in- vesting expertise resulted in just such a beautiful legacy for Frank and for his daughter as well. Be sure to give your loved ones the gift of leaving behind an inherited Roth IRA for them. The multi-generational impact such an account – even if the account starts out Building Tools for Real Estate Investors

minimally funded – can have is exponentially more valuable than the small cost of creating the Roth IRA to begin with. • > Continued from :: PG 87 5 Bookkeeping Mistakes Real Estate Investors Must Avoid delegate. Your time has value, so use it where it is put to best use. Odds are, that best use is creating fantastic returns in real estate, not keeping up with the books. Give yourself permission to let the minutia go. You should always be fully aware of how your finances look, but it’s okay to let some- one else organize them. MAKE A PLAN AND STICK TO IT As soon as you decide to go into business for yourself, you should make a decision about how you will handle bookkeep- ing. Whether you plan to track your own expenses to start and hire a bookkeeper later or would prefer to never fill that role at all, you must have a plan in place. If you have been com- mitting one or more of these common mistakes already, don’t worry. Bookkeepers can actually go back and recreate legitimate, professional records where you failed to keep them! The most important thing is to have a plan for your business books and stick to it. • > Continued from :: PG 97 Local Lending Gains an Edge from Fintech borrowers and writing high quality loans. As more services proliferate to support local lenders, our hope is that local

lenders will expand the type of loans they can offer so that lending can increasingly return to its community-based roots without sacrificing quali- ty or optionality. • > Continued from :: PG 101 3 Common Kitchen Secrets Most Investors Miss materials that you use from market to market while sticking with the popular layout that you know is attractive across the board. In that rural West Virginia market, youmight only need to spend about $1,500 to create an attractive, competitive design. In Chicago, on the other hand, that could be a $20,000 investment. In both cases, if the other numbers work, you would have made a solid, strategic renovation decision. Don’t make the remodeling process harder than it has to be. If you can use the same layout in multiple markets effectively, that reduces the number of market-specific decisions you must make on each project. In this case, as in most cases, working with a local design pro- fessional or a contractor with local market insight will help you determine what parts of your renovation process can be scaled across markets and what parts need to be customized by location. I suspect you will find that more often than not, there are fewer moving parts than you might think! • > Continued from :: PG 109 Life Lessons from a Proud Private

in turn if it looks like you need help. For example, if you don’t finish your application, we call you. We never miss a closing. We follow up on title issues. We talk to our borrow- ers and that customer-centric focus is in the company DNA. TRM Okay, it’s time to get into the family side of things. Tell us about your grandchil- dren and your book! BG Well, my family and my book go hand-in-hand. I am really proud of my book. It might have been the biggest keepsake for my children and grandchildren after my dad was diagnosed with Alzhei- mer’s. One day, I started thinking, “What if I get Alzheimer’s? No one will thing for me in 2017. I started writing it as a

ever know my whole story, and I happen to think it’s a pretty great one.” I have been married for 33 years to the same person, have three adult children, and am the proud grandfather of three grandchildren. That part may be mostly exciting to me, but I wanted to make sure that if something happened, my family would get to know the rest of my story, so to speak. I just started writing the thing as a keepsake and sent it to an editor to get it cleaned up. That editor told me I had actually written a really great book! We published it, and it’s done really, really well. I donated all my royalties to the Alzheimer’s Foundation because that was the catalyst that got me started and I am a big believer in giving back. •

> Continued from :: PG 37 Nashville's Real Estate Market has Plenty of Room to Grow fordable. Then, simply identify the best route for your invest- ments. Ask yourself questions like these: • Is there enough space to build a multifamily property? • Should you be rehabbing or tearing down and building new? • Is the neighborhood right for renters or homeowners? Perhaps most importantly, ask yourself if the area is ripe for appreciation and im- provement. Because of that massive, ongoing population influx we mentioned earlier, most of the metro area will add value quickly if the housing is attractive to new residents. When investors are successful at upgrad- ing housing and providing sufficient housing, then bars, restaurants, retail, and other development will follow, and prices will rise. That is good for investors, residents, and the local economy. However, without the people living there, that will not happen, so it is up to real estate inves- tors to identify places where they can create, expand, and improve housing opportu- nities so that the associated economic growth can follow. When it does, returns follow with it. •

BG Some people certainly do just want to send in their information and get everything done electronically, but most people want to talk to somebody. With us, a borrower can go online during and after the approval process and upload documents from anywhere, at any time. That continues throughout the investment relationship. For example, an investor might upload images of a finished kitchen so that they can get another draw on the loan, and if they want to do all of that without speaking to a person, they can. However, I find that most people want to speak to someone from time to time. I have a philosophy about this: We didn’t invent anything. We have lots of competitors who do the same thing we do with more or less the same concep- tual technology, although I would say that there are very few with technology operat- ing as well as ours. The most effective way to differentiate ourselves is with superior ser- vice, because I’m not willing to compete on price. That’s not to say we’re not competitive, but I don’t feel the need to be the lowest price on every deal! Price-cutting competitions are a dead-end because cutting costs eventually cuts into the user experience. The experience is what people are paying for. Price is a dead-end as far as I’m concerned because cutting costs eventually cuts into the experience. The experience is what people are paying for. Part of that experi- ence is being able to reach someone in person if you want to, and being reached

attempted to sell the property for at least what I owed on the card. None of these alternatives would have been my ideal, but I had several options and was prepared to exercise them. For- tunately, I correctly evaluated the situation and was able to go with my preferred strategy. Planning is everything. Second, access to quick cash can cloud your judgment. Sometimes, “easy money” causes investors to over-in- vest, or put more money into a property than they should. Always be judicious with your spending even if the money is a line of credit rather than your cold, hard cash. Third, the more credit you use, the less quick capital you will have in the future. This is the definition of opportunity cost. This is not necessarily a disadvantage since it only em- phasizes how important it is to use your credit wisely, but it is important to note since the more debt you have (real estate-related or not), the harder it becomes to borrow. Fourth, using credit requires serious discipline. Since most lenders only require borrowers to pay interest on the line of credit during the term of the loan, it requires unusual discipline to pay down principal on the line of credit before it is due. This can limit an investor’s ability to build up additional equity in a property from principal pay down. Finally, using credit can get complicated. Although it is unlikely, there is always the chance that a lender will not renew a line of credit when it reaches the end of its term. This


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> Continued from :: PG 45 Using Credit Creatively and

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