Investment Services
Our investment services can be summed up in three core areas.
- Client awareness, education, and personal coaching.
- Constant research for real estate deals and tax strategies.
- Putting clients together into good real estate investments.
Our goal is to help you, our clients, become financially independent. We believe we can best serve you by taking care of the details because your time is better spent living your life.
Client Awareness, Education, and Personal Coaching
Everyone we've ever met would like to be financially independent and never have to worry about money in retirement. The challenge is that most people don't know how to get there, and don't realize where they are going wrong. We've found the CashFlow game, by Robert Kyosaki, author of Rich Dad, Poor Dad, to be an excellent format to help open peoples eyes to ways they treat their money. It also provides the useful tagline that financial independence means earning more money in passive income than is spent every month - i.e., you can officially claim retirement.
"Playing CashFlow with you guys has dramatically changed our lives!"- Tom Caruso
We hold monthly CashFlow games for our clients and their families. Please come join us.
After the typical "ah ha!" from playing CashFlow, our clients are either ready to get started investing or to seek help resolving their consumer credit debt and other bad money habits. In either case, we are here to help discuss strategies and provide personalized coaching.
Constant Research and Analysis
San Diego real estate prices eliminate most kinds of investing and requires that we look farther afield to find investments. However, most people are too busy living their daily lives and just don't have the time, experience, or interest to scour the country looking for good investment opportunities. Luckily, this is our area of expertise and our day job - we sweat the research and analysis so you don't have to.
We subscribe to a variety of services at a cost of over $10,000 per year that give us valuable insights to emerging markets; let us examine properties nationwide, and let us evaluate neighborhoods and appreciation rates nationwide. New listings are evaluated daily as they are posted.
We personally visit promising growth areas to inspect for ourselves the claims. In just the past eight months we have met with heads of prominent builders in the southeast and have traveled to Arizona, Nevada, Louisiana, Mississippi, Alabama, Florida, Nebraska, Iowa, and Ohio.
In addition to the real estate basics, we have explored the boundaries of the IRS codes and how they relate to you. A few simple examples are:
- You can use certain retirement monies to purchase real estate
- The 1031 exchange program allows you to defer taxes - effectively indefinitely.
- Through use of depreciation, the cash flow from most properties can be shielded from taxes. Cash flow can be maximized by mixing property types with accelerated depreciation schedules (15 years) with longer schedules (39 years).
- The "tenant in common" (TIC) allows multiple parties to own a larger real estate transaction and thereby achieve greater returns through economies of scale, yet still be able to gain the tax benefits of regular ownership.
Disclaimer: everyone's tax situation is unique and you should consult your CPA or accountant to verify the right course of action for you.
The analysis runs in three parts. In the first part, we look at the general use of money. Depending on when or where you grew up, many people have often believed "debt is bad" and that owning property free and clear was better than having a mortgage. Even if we completely ignore the value of leveraged money, we have shown that with today's interest rates, a person can earn far more with mortgages than by having a property completely paid off.
In the second part, we evaluate specific potential real estate investments. This usually starts with considerations of an exit strategy (e.g. future resale), followed by the economic growth of an area its supply and demand for real estate as a coarse estimate of potential appreciation. We then look at the current cash flow. In most cases, we aim for a cash on cash return of at least 8%. Then calculating one's total return includes principle paid down, taxable income or savings, and appreciation.
In the third part, we constantly evaluate properties owned. A critical point here matches back to the point about owning property free and clear. Sometimes properties appreciate to the point where the equity trapped in the property is not adequately utilized. That is, we are not earning a useful return on the amount of equity in a property. In such cases, we identify the need to sell or refinance the property to free up that capital for other uses.
Finally, we have the loans. Because we are also a mortgage broker, we keep current with all the new loan offerings. The most recent is the interest only loan. For our clients who are already retired and looking to maximize their cash flow, this is the best bet. For our younger clients, sometimes it is best to not see the money - then it can't be spent, in which case we will look at an adjustable or even fixed interest rate loan.
Brokering Real Estate Investments
It is not enough to have the knowledge or even to identify great deals if you can't gather the capital to make it happen.
With a 1° of separation between any of our clients, we can bring people together and enable them to purchase larger, more profitable investments than they would be able to achieve independently. Our clients with more assets can also use the TIC as a means to diversify their holdings. Additionally, because each person's investment is considered independent, we can help find a replacement investor when you decide you want to liquidate your equity or move it into another investment.
A good set of investment articles may be found at REIClub |
