Richard Davis - GET THE MOST MONEY FOR YOUR REAL ESTATE INVESTMENT

GET THE MOST MONEY FOR YOUR REAL ESTATE INVESTMENT

GET THE MOST MONEY T MONEY FOR YOUR REAL ESTATE INVESTMENT

Richard Davis

Table Of Contents

Introduction

Where To Buy Location, Location, Condition When To Sell Is All About Timing, It Is The Perfect Time To Sell!

Equestrian Real Estate And Facilities

6 Ways To Avoid Capital Gains Tax When You Sell Your Rental Property

Financing Your Investments Including The Use Of Crowdfunding, Roth & Self Directed IRA's 46

Rentals Are A Great Way To Make A Profit

The Silver Tsunami Fortune In Residential Assisted Living Homes (Use A 1031 TDE)

Property Management In The New Digital World 79

IT IS TIME TO PAY ATTENTION TO FORCLOSURES & AUCTIONS!

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10. Why You Need A Licensed Public Adjuster On Your Team

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11. Some Of My Real Estate History - Stuff I Have Built!

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12. The Incredible Future Of Modular Home Construction - A Stick Built Home Built In A Factory - Modular Vs Manufactured

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13. Due Diligence - Protect Yourself From Flops 155

14. A Guide To Flipping Houses And The Benefits And Risks Of Wholesaling

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15. Investing In Airbnb Rentals Without Owning The Property 187

16. Tax Benefits Of Owing Real Estate - Warning! 100% Bonus Depreciation Deduction For Real Estate Ends In 2023

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17. Why You Can’t Afford To Invest Alone, How Agents Help Investors

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Testimonials & Reviews for Rick Davis

Thanks for the book! It is so insightful and covered all the necessary topics for successful real estate investing. All of this information was delivered in a manner that even the novice investor can readily understand. Pat Messett, Associate Broker at RE/MAX R t RE/MAX Realty, Top Listing Agent for Montgomery County Maryland Offices I have given the book a good look through. Congratulations on the effort. The book is a very comprehensive and informative piece of work. As a tax attorney and Certified Financial Planner I realize that people do not understand how a few subtle shifts in their tax plans can lead to tremendous tax savings over their lifetime. I specialize in real estate investing and the selling of property in such a way that you can defer and avoid taxes. I like the way you explain it in your book. On a related note, you pack a lot of information into your publication. I would like to invite you to be a guest on my national radio show “Your Financial Advocate” to talk about it? If so, I am booking my guests for August and would like to get you on the program. Greg DuPont, JD, CFP Rick, your books, your real estate experience and your construction expertise combine to make working with you a very profitable pleasure. As you know my family designed and built the Saxony Hotel back in 1948. It was one of the first luxury resorts on Miami Beach. Following the success of the Saxony, other hotels emerged on the opulent beach front. Over the years working together, you have helped me sell properties iii

and projects such as the Fort Lauderdale Marina, Palm Beach estates and many others. You have always been very attentive to my concerns, details, and negotiations. Ed Sax, Saxony Hotel, Wondertech Industries As a commercial real estate investor and a rancher with two farms I believe the information that you have packed into your books will help anyone who wants to purchase or sell multi family commercial properties, bovine or equestrian ranches. It has been a pleasure working together over the years. Rick, with your help my real estate holdings grew and I thank you for all of Together we were subdivision developers, commercial office builders, investors in multi family apartments and real estate brokers for many, many commercial and residential projects. Your books will be helpful to anyone who wants to better their opportunities in today's real estate market. Bob Grimes, Real Estate Broker Dan Ryan and I met when he was just out of college and was starting out at the Ryland Modular Homes Plant. We joined forces and together we very successfully built and sold many residential modular homes. Dan is one of the most successful builders in the residential construction business. Dan’s father, Jim Ryan was the founder and owner of Ryland Homes. Jim was my personal mentor. We spent many hours together on his beautiful equestrian estate in Mount Airy, Maryland. Both Dan and his father are the ultimate gentlemen. Visit DanRyanBuilders.com your help, your guidance and friendship. Ed Snook, Rancher and Real Estate Investor Rick Davis worked hard to sell our farm at just the right time for the highest possible price and just before the market collapsed in 2008. He and his team worked with us through the entire process and kept us calm when we got anxious. Rick always

made himself available to answer questions. We were 100 percent satisfied!! Melvin Meyers, Newberry, Florida

Rick helped me get started in the financial services industry and real estate investing. Rick helped us put together the perfect investment portfolio. More importantly he helped us stay in tune with the market trends and helped us to know when to hold and when to sell. I am extremely grateful for his help and guidance. Rick Stevens, Real Estate Investor, Financial Planner You will find that Rick has the experience and expertise to get your property sold quickly, for top dollar and with the least amount of disruption to your tenants. Rick has spent many hours with me, he taught me how to get into the investment real estate game, I am forever thankful! His video system minimizes the disturbance of my tenants, it was creative and very professional. Excellent experience all around, not only knowledgeable but Rick and his team have a very professional touch. He always took his time, guided us through the entire process, he covers all the bases to streamline the settlement process. I truly appreciate that and would recommend Rick and his team to my fellow investors. Jake Johnson, Investor

A Bit Of My Real Estate History

I did the estimating and Project Management for Renovations to the White House in March of 2001

IT'S TIME TO PAY ATTENTI TENTION TO FORCLOSURES & AUCTIONS!

What’s going on in the Real Estate Market today? Some who’ve kept an eye on the recent real estate housing market are hesitant to take the plunge into homeownership. One key reason for this has been the surge in mortgage rates. In early October 2023, the typical 30-year fixed mortgage rate stood at 7.49%, as reported by Freddie Mac. These interest rates are higher than what we’ve seen in over twenty years. Check your home buying options. Start here (Nov 16th, 2023) Despite the Federal Reserve’s decision to hold off on raising the federal funds rate in September, some experts anticipate that mortgage rates will likely remain above 6% for the rest of 2023.

In addition to increasing mortgage rates, home prices are also on the rise. The Case-Shiller U.S. National Home Price NSA Index indicates that real estate prices have been climbing over the past several months. August 2023 marked a milestone with the median existing-home sale price hitting a record high of $407,700, as reported by the National Association of Realtors (NAR). New construction homes commanded even higher prices, with a median sale price of $430,000 in August 2023, according to the National Association of Homebuilders (NAHB). I specialize in Investment Real Estate. I have been licensed and actively investing for over 40 years. I was the co-founder and broker of Investment Realty, Inc and I was a Commercial Realtor with Real Estate World of Florida, selling businesses, multi-family and commercial real estate. Work that we did for Danto Builders was awarded the Ft Lauderdale Historic Renovation Award, see just below. I have found Danto Builders to be the best contractor I have ever worked with in Florida.

Howard University Law Library

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We earned the Historic Renovations Award by the Ft Lauderdale Historic Society for this building near the beach I have always been passionate about the real estate business. I took the Maryland Real Estate Sales class and got my license while in college at the age of 19. My first sales position was with Robert L. Gruen who was the President of the Montgomery County Board of Realtors. Gruen provided an incredible place to work with multiple offices and around 75 agents. He was a seasoned broker and a great mentor to me! At the age of 22 I was a senior at the University of Maryland. I landed the Financial Planning job with an "Estate Planning" company. I got my insurance licenses, my Series 7 Stock Brokers license, my General Contractors license and eventually my Mortgage license. Pretty much covered all of the Financial Services. As soon as I was eligible, I studied for and passed the licensing test to become a Broker and I teamed up with Bob Grimes, one of the top brokers in central Maryland. Together we started Investment Realty, Inc., located in the historic district of

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Frederick, MD on W. Patrick St.

We specialized in the sales and property management of single family and multi-family dwellings as well as Equestrian Estates. We also founded a licensed construction company, Davco Industries, Inc., where we did land development. We laid in utilities and built county roads. Once the county roads were in, we built and sold custom houses and office buildings. I have always enjoyed being a student of investments and especially investing in the real estate business. I have studied and become licensed in many of the trades that are affiliated with investments and retirement. I have held licenses as a Mortgage Broker, a Real Estate Broker, an Insurance Broker and a Public Adjuster. I was also a Stock Broker which allowed me to put together Real Estate Syndication Limited Partnerships. I held my Certified Roofing Contractor license and I still hold the highest Certified General Contractor license available in the state of Florida and I’m licensed in Pennsylvania. My licenses have given me the knowledge and background to fully understand investing and to participate in all phases of the investment real estate arena. I have bought and sold hundreds of properties. I have renovated hundreds more including work that we did in The White House in March of 2001. I di f 2001. I did the project estimating and project management for renovation work that we did at Reagan National Airport, Howard University’s Law Library. We built The Six Flags Wild Adventure Park in NJ from scratch in less than 4 months, an all union labor job.

We helped build the new Loudoun County Court House

By having experience as a Real Estate Broker and Certified General Contractor I bring the knowledge and experience to the table that helps you get an accurate measure of a properties value and what it would both require and cost to fix anything that needs fixing. That helps close the deal because fear of the unknown causes paralysis of action. If you need a new roof and I tell you what it will cost you can factor it in to the negotiations immediately instead of negotiations being frozen because you don't know what the new roof will cost. I partner up with associates who specialize in their specific area of expertise. For Residential Real Estate I work with Dave Monsour and Pat Messett, both are number one in their areas! Brecknock Builders are specialist in steel frame buildings. Conestoga Buildings specialize in wood frame barns. Danto Builders can build out your project. Crexi, Marcus Millchap for Multi-family, Hamilton Zanze for 250+ unit apartment buildings. The list goes on and on. I work with people and companies who are experts in their field. Read the book, go to my website. Meet me for an in person or x

virtual cup of coffee to discuss the best way to expand your real estate horizons. You’ll be glad you did!

My best regards, Richard Davis

Foreword

Our Hyper Real Estate Market is slowing down. Or is it, check out the stats!

30 Year Fixed Mortgage rates have jumped to 8% for the first time in 20 years. Mortgage demand falls to the lowest level in 22 xii

years amid rising rates and slowing home sales.

As the saying goes, you make money when you buy . You don’t have to like the building, just the numbers!

However, it's not quite as simple as that? You also need to sell at the right time in order to maximize your profits. YOU NEED TO SELL, WHEN IT IS A S ELL, WHEN IT IS A SELLERS MARKE ELLERS MARKET or BETTER YET A HYPER SELLERS MARKE ELLERS MARKET - LIKE WE H T - LIKE WE HAVE NOW! Another famous saying is "BUY LOW AND S W AND SELL HI ELL HIGH!" Well the real estate market is the highest it has ever been! In addition to maxing out your profit, you also have to minimize your taxes! My new book reviews 6 diff s 6 different ways, to avoid capital gains tax on your rental property.

My tax message is defer, defer, avoid!

We discuss the Delaware Statutory Trust in chapter 4.

We discuss the incredible Cash Flow of the Residential Assisted Living Investments in chapter 7.

Right now, there are 77,000,000 b e 77,000,000 baby boomers… Everyday 10,000 t y 10,000 turn 70 years old…. 4,000 t …. 4,000 turn 85

With 120,000 people a month turning 85, and 70% of them needing help with their activities of daily living, the opportunity in Residential Assisted Living is enormous. 1) Get the HIGHEST RETURN possible for your real estate. 2) Make sure you SELL AT THE RIGHT TIME! 3) Modern digital marketing and video techniques to avoid

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headaches for you and your tenants when we show your units. 4) Defer & avoid paying Capital Gains Tax on your buildings. The pictures in this book are all properties that I have owned, brokered or renovated, including The White House! If, after reading through it the book, you want to speak with us we’d be more than happy to meet with you in person or on the phone to discuss a specific plan to analyze properties you may want to buy or sell.

Current Mortgage Rate Trend is up and up and up!

Rate for a $300,000 l r a $300,000 loan if you have an 700-719 Cr n 700-719 Credit Score with 20% down is averaging 7.11% o g 7.11% on May 14, 2023 y 14, 2023

Richard Davis www.Florida.cc www.InvestmentRealty.US www.facebook.com/InvestmentRealtyRickDavis KeystonePennsylvania@gmail.com RickDavis@Florida.cc Office (844) 227-6700 Cell (717) 778-7309 l (717) 778-7309

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CHAPTER 1 Introduction THE PURPOSE OF THIS BOOK IS TO HELP YOU TO:

BUY AT THE RIGHT TIME

BUY IN THE RIGHT LOCATION, LOCATION, LOCATION

ACHEIVE PERFECTION IN PROPERTY MANAGEMENT

SELL AT THE RIGHT TIME (LIKE RIGHT NOW!)

AVOID PAYING TAXES

I owned this historic 50 unit multi-family building in Hagerstown, Maryland. I packaged it with other properties and sold them to Merrill Lynch to be used in a Limited Partnership Syndication. Now is a perfect time to sell and use a 1031 TDE!

I sold the buildings at the perfect time! Within a month of my sale the market crashed. I made money, Merrill Lynch lost money!

Timing is everything!

This Current Hyper Market is the perfect time to sell.

There’s a lot you need to know in order to actually make things happen in the most efficient and profitable way. This book will help someone exactly like you: hardworking, intelligent, realistic, and ready to improve your financial situation — and your life — through the purchase and sale of real estate investments. In the following pages, you’ll learn about how to expand your real estate investing, including the types of properties to invest in and how to better finance your purchases. If you are already an investor then consider the fact that this is one of those rare times when the sale of your buildings can be maxed out to take advantage of the hyper sellers market of 2023. f 2023. We will also spend time introducing you to the new high tech digital property management that will substantially increase your cash flow and your CAP Rate thus making your property worth more than ever. For example, using an average CAP ra e CAP rate of 6% if y f 6% if you increase your rent or lower your expenses by just $500 per month your property value increases by $100,000. y $100,000. The right property manager can do just that for you. A good Manager will make you way more than they cost!

If you have property and you are not yet ready to sell then allow me review with you the new digital property management tools that streamline management. You can have auto debit of the clients checking account for rent on the first of the month. Instant credit reporting that includes credit scores, foreclosure history and criminal and rent background checks. Instant contact with your selected contractors with pictures in their hands before they go to the job. Also, an up to date structural and mechanical history of every part of your building including photos, serial numbers and type and date of any improvements. This helps your contractors get the right parts and not have to make two trips thus lowering your costs. This book will review with you the different types of real estate investing, which includes resources and tips to succeed in each arena, the real ROI (return on investment). We will look at selling for full price and how to save on commissions or eliminate your paying commissions during this hot market. We will introduce marketing techniques that will make you and your properties stand out, how to build your investing team, and the benefits of working with a Buyers agent. INVENTORY IN THE S Y IN THE SPRING OF 2023 IS LESS TH F 2023 IS LESS THAN 1 MONTH - THAT IS INCREDIBLE!

The Hyper Real Estate Market in t et in the SPRING OF 2023

THE BEST TIME TO SELL FOR TOP DOLLAR!

On the next page is a sample of our exclusive property analytics program which you can use to give you an accurate estimate of value. It calculates the following formulas:

• Net Operating Income • Gross Rent Multiplier

• Capitalization Rate • Cash on Cash Return • Total Return on Investment

Buyers Calculator to determine CAP/GRM/N e CAP/GRM/NOI/COC

Sellers Calculator to determine Market Value and ROI

CHAPTER 2 Where to Buy Location, Location, Condition

When to Sell Is All About Timing, bout Timing, It is the Perfect Time t ect Time to Sell! o Sell! How do you know which homes or investment properties should you buy and sell? There are plenty of factors you need to consider to ensure the purchase makes sense.

Knowing when to sell is just as important!

Properties that were selling for $500,000.00 in 2007 had lost half on their value and were selling for $250,000.00 just two years later.

Sell when the market is hot!

The Big Change in the Real Estate Market of 2023

Hypermarket: Less than one month of inventory; little to no competition. Listings tend to sell above asking price after receiving multiple offers. Seller’s Market: Less than four months of inventory; low competition. You will likely sell for a good price. The electronic version of this book is automatically updated every time you click on my link.

As of this writing, The 2023 market is a HYPER SELLERS MARKE ELLERS MARKET!

There is a huge demand and a very limited supply. The perfect time to be a seller!

What could change that? Higher interest rates!

Interest rates have jumped again this month, as of April 7th, 2023 rates for a 30 year fixed are over 7% up from a low of 3.0% just last year. Federal Reserve Chairman Jerome Powell last week stated that to slow down inflation we may see as many as 6 more increases this year. The Fed has begun it's policy pivot. The inflation rate hit a record high of 14.6% in March and April of 1980. Mortgage interest rates reached their highest point in modern history in 1981 when the annual average was 16.63%, according to the Freddie Mac data. Mortgage rates are going up - Bank America says property prices will still go up but may slow down a little.

THAT MAKES IT THE PERFFECT TIME T ERFFECT TIME TO SELL!!! ELL!!!

THE STATS

According to a 2019 article on Investopedia.com, the average commercial real estate investment returns over 20 years are around 9.5%. Diversified and residential investments average around 10.6%. Both of these are higher than the S&P 500 Index, which has an average annual return of about 8.6% over the last 20 years. By the way, all these figures include the housing price burst in the 2008 recession, during which time real estate investment still did better than the housing market as a whole. These stats alone obviously show a great reason to buy real estate. But what do investors hope to get when they’re buying property? According to the 2017 National Association of REALTORS® (NAR) Investment & Vacation Home Buyers Survey, 37% plan to rent it for income, 16% for the possibility that the price will appreciate, and 15% because it was a good deal.

This all sounds great, but I’m guessing the main stat you’re interested in is how much you can make. (Am I right?) Well, here’s the answer you’ve been waiting for: According to a survey of real estate investors done by ZipRecruiter.com in spring 2019, investors make an average of $123,937 per year, with the low end at $47,000 per year and the high at $261,500. Most make within the range of $100,000 to 150,000 per year. The saying goes, you make money when you buy , not when you sell . “You don’t have to like the house, just the numbers.” However, it's not quite as simple as that. You also need to sell at the right time in order to maximize your profit. For example, in 2007 w , in 2007 we had a Hyper Market but in 2009 t t in 2009 the housing market plunged. In California prices dropped 40.8%, I d 40.8%, In Ft Lauderdale, Florida houses went from $500,000 t m $500,000 to $208,000 o $208,000 according to Zillow.

Eventually they came back but it took a few years.

I don't care how good you do at buying....

YOU NEED TO SELL WHEN IT IS A S ELL WHEN IT IS A SELLERS MARKE ELLERS MARKET OR BETTER YET A HYPER SELLERS MARKE ELLERS MARKET! I am a strategically licensed real estate agent. I have licenses in Florida, Maryland and Pennsylvania.

Florida to cover the growing retirement market.

Maryland to cover the Washington DC suburbs.

Pennsylvania to cover the Harrisburg Capital and the small college towns like Gettysburg.

As a licensed agent, I can access the Multiple Listing Service (MLS), which is a great place to start when searching for investment properties. But, if you only use MLS you will miss about half of the multi family listings.

Keep in mind that agents can only access their regional MLS, so if you’re looking to buy in a broader area or even out of town it's necessary to use a commercial agent like myself. I HAVE ACCESS TO THE NATIONAL MARKE AL MARKETING WEBSITES SPECIALIZING IN MUL G IN MULTI FAMILY PROPERTIES I have my offices located at 369 York St., Gettysburg, PA which covers the Mid-Atlantic region including Washington DC and central Pennsylvania. My Florida office is located at 2419 E. Commercial Blvd. in Ft Lauderdale, Florida. At the center of the Miami, Ft Lauderdale, Palm Beach metropolis that has a population of 6.17 million people, almost twice the size of Los Angeles.

WHERE TO START WHEN L T WHEN LOOKING TO PURCHASE! 10

The first thing you have to do is choose your market. If you’re flipping, consider looking for the location closest to you that has a population of at least 100,000 people. (Bigger market = more opportunity.) This is considered your local market . Another option is remote investing , which could theoretically be anywhere. However, be sure to choose someplace that’s not only familiar to you, but also a place to which you feel emotionally attached. This might surprise you, as most people have been told that emotions should stay out of these kinds of decisions. I don’t disagree when it comes down to the details, like which specific property to buy, what to fix up, etc. Ask your accountant if your travel expenses are tax deductible if you have to head to Ft Lauderdale to check on and work on your apartment buildings.

(The above 20 Unit Apartment Building in Lauderdale, Florida is available as of this update on March 15, 2022) Once you’ve decided on a market, it’s time to look at inventory levels . This means finding out how many homes are for sale. Keep in mind that low levels (e.g., few houses for sale) can be a good thing, because it means it’s a seller’s market. Ideally, you want your market to have less than four months of inventory. The following are the different types of markets to look for: • Hypermarket: Less than one month of inventory; little to no competition. Listings tend to sell above asking price after receiving multiple offers. • Seller’s Market: Less than four months of inventory; low competition. You will likely sell for a good price. • Stable Market: Four to six months of inventory. Properties might take longer to sell, and could sell at or below asking (if they sell above, it probably won’t be by much). • Buyer’s Market: More than six months of inventory; lots of competition. Properties take a while to sell, and often sell below asking. I suggest that SELLERS a ELLERS and FLIPPERS focus their efforts on hypermarkets and seller’s markets, as these will bring in the most

profits. It might be hard to find that initial right property, but it’ll be worth it in the end. In addition to looking at the overall inventory, you will want to look at the average Days on Market (DOM) , so you’ll be able to make an educated guess about how long it will take a property to sell. This is something I can help with by researching similar types of properties that have sold in the previous 30 days.

MAKING THE NUMBERS WORK

The most important thing you can do is to conduct your research about the structure, the land, and the surrounding areas. This includes seeing if there are any new roads or construction planned, ensuring there aren’t any liens on the property, looking at comparable properties, and researching anything else that could affect the value of the property. If you’re just buying land, go over the deed with a fine-toothed comb. After you’ve accumulated sufficient information on all applicable factors, it’s time to decide whether it’s a wise investment. That said, remember that even with the most detailed research, things can change. Maybe the up-and-coming neighborhood takes an unexpected downward spiral, or maybe it up-and-comes more quickly than expected. Unless you’re psychic, there’s just no way to predict what will happen, so making the most well-educated decision you can is the best way to mitigate — but not eliminate — the risk. The most important part of running the numbers is calculating your Return on Investment (ROI) . Here’s how to do that: • Figure out the investment gain . This is the amount of money you’ll make before expenses. So, if you make $500

per month on your rental property, multiply it by 12 months a year, and your investment gain will be $6,000.

• Add up all your operating expenses. This should include taxes, insurance, repair costs, and any other expenses you know or think you might have. If you pay $1,200 in taxes, $450 for insurance, and $900 in repairs, your total expenses would be $2,550.

• Subtract your expenses from your investment gain: $6,000 - $2,550 = $3,450.

• Divide the figure from step three by the price of your investment. So, if you bought the property for $75,000, then $3,450 ÷ $75,000 = .046 • Finally, turn the figure from step four into a percentage. In this case, 4.5%. This number is your ROI. You need to know what your bottom line is, i.e., how much you want to spend and what your ROI should be. If the price of buying and/or fixing up the property is too high and/or the ROI is too low, it’s time to move on and find another property that better fits your goals. BUY IN A MARKET THAT IS STABLE AND IS GO LE AND IS GOING TO GROW! What markets are safe and will probably grow? How about a town with a steel mill or a coal mine - NO WAY!

How about a college town - YES! n - YES! Like Gettysburg or College Park MD How about Washington DC - YES! C - YES! Like the Montgomery County suburbs How about warmer climates - YES! s - YES! Like Ft Lauderdale or Miami, FL The map to the right shows the 39 multi- family buildings for sale in Ft Lauderdale as of this printing, March 15, 2023 h 15, 2023

I HAVE ACCESS TO THE NATIONAL MARKE AL MARKETING WEBSITES SPECIALIZING IN MUL G IN MULTI FAMILY PROPERTIES

(13 Unit Apartment Building Offered at $1,499,900 at a 5.66% Cap Rate in Dania Beach, Florida) The list goes on but the point is that you need to buy your investments in the right market, the right location! 15

Single Family Home Investors

While some investors might look at For Sale By Owner (FSBO) properties, many others focus mostly or completely on purchasing bank-owned properties. Some go to sheriff ’s sales or other auctions. But what type of properties should you be looking for? 1) Distressed properties; 2) foreclosures; 3) short sales; 4) and REO/Bank-Owned properties. Let’s take a look at each of these options in more detail.

Distressed Properties

Owners of distressed properties tend to be pretty desperate to sell, which means investors can often get them for less than market value. For these types of buildings, a popular option for investors is to wholesale them. This means the investors get the home under contract, then market it to other buyers for a higher price than their contract, and ultimately assign the contract to another buyer. The investor ends up with the difference between the new contract with the new buyer and their contract with the seller. For example, if an investor gets a home under contract for $60,000, then finds new buyers who agree to pay $70,000, the investor will make $10,000. A major advantage of wholesaling is that you don’t have to have a lot of capital, and there are many cheap — or even free — options to find them. They can use auction websites, including Hubzu.com, Hudsonandmarshall.com, Auction.com, and Zone.com.

Because I have access to MLS (Multiple Listing Service) , I can

help locate properties, as well. In addition to my own MLS, I can look through others in the area, which helps to expand your search.

Foreclosures

According to the 2017 NAR® Investment & Vacation Home Buyers Survey, 18% of investors buy foreclosed homes. In order to purchase these properties, investors must go through auctions. If they’re the highest bidder, they have to pay the full amount at that time. They will then get the trustee’s deed once the sale is complete. Foreclosed properties’ prices are determined differently from other properties. Instead of using what the home is worth, the starting bid includes the following:

• How much is still unpaid on the loan • Interest owed from attorney’s fees • Any costs stemming from the foreclosure process

Sometimes, properties don’t even get that starting bid. When this happens, it becomes bank-owned, or Real Estate Owned (REO) property. The loan lender owns the home and will use a real estate agent to try to get it sold. One thing to note is that these properties are sold as-is, so if you’re looking to buy one, that’s something to keep in mind. There are three main ways to find pre-foreclosed homes. The first is to check with the County Clerk at the County Recorder’s Office. There, you can look up Notice of Default (NOD), lis pendens (“an official notice to the public that a lawsuit involving a claim on a property has been filed,” as defined on Investopedia), or Notice of Sale public records. There’s also a good possibility that you’ll find properties that aren’t yet online.

Speaking of online, that’s another good way to find properties. There are national and regional listing services. Most have a weekly fee but offer a free trial so you can get a “feel” for them and how they work. I suggest taking them for a trial run so you can see which site or sites best fit your needs. You’ll likely find out all the important details, including name, address, amount owed, and outstanding loans. Sometimes you’ll even find contact phone numbers. These listing services may also have REO properties, but don’t let that be a factor in deciding which sites to use, as most of these properties will already be listed on their lender’s (e.g., bank’s) website, which you can access for free. The third option is to look through newspapers and business journals. This is because when a foreclosure is filed, the Notice of Sale has to be published. You can look in the Public Notice section for trustee sales to find these notices.

REO/Bank-Owned Properties

The main advantages of buying REO properties is that you can get them at below market value without having to worry about unpaid taxes or liens. The downside is that it can be an intense process to buy one of these properties, but the ultimate profit is usually worth the effort. Earlier, I mentioned these homes tend to be sold as-is. However, buyers are allowed to have an appraisal and inspection done. The bank won’t make any changes to the property itself, but they will likely negotiate the price down so you can use that money to make the repairs yourself. If you want to buy an REO property, you have to have your financials ready. Lenders set the prices low so properties will sell

quickly, and if your finances aren’t in place, you could miss out on a great deal. To prepare, you need to make sure you’re pre-approved and have a letter from your lender. The letter must include the pre- approval total, how much you’ll pay for the down payment, and how to reach the loan officer. If you’re paying cash, you’ll still need a letter from the bank. This will state that you have enough money to cover what you’ve offered. One step that’s different in making an offer on REO properties is that you include an earnest money deposit . Essentially, this is a show of good faith that you’re truly interested in purchasing the property. The deposit will stay in an escrow account, then go toward your down payment and closing cost. These deposits tend to be 1-2% of the full offer, and may or may not be refundable. For example, if you decide not to buy after all, you likely won’t get the money back. However, if the bank backs out of the deal, you will probably get a refund. There are a few ways to find REO properties. A good place to start is by enlisting the help of a real estate brokerage that can search lists the general public can’t access. Sometimes the brokerage has one or more realtors that focus solely on REO properties; sometimes, they have an entire department dedicated to REO. Second, you can look online at websites like Foreclosure.com, Auction.com, and RealtyTrac.com. Just be aware that you might have to become a paid member in order to search these sites. In addition, you can look at government and bank loan sites, which often list relevant properties. You can search national and regional banks and the government-run sites HomePath.com (Fannie Mae) and HomeSteps.com (Freddie Mac).

Short Sales

The 2017 NAR® Investment & Vacation Home Buyers Survey also looked at how many investors bought properties through short sales: 17%. A short sale occurs when the buyer purchases a property for less than what’s still owed on the mortgage. The lender must approve of the transaction. They usually do this when the seller is going through a hardship (divorce, health problems, job loss, etc.), and the home doesn’t have enough equity to cover the balance of the mortgage, especially when factoring in sale costs. Part of the process of short sales is that sellers must give the bank their financials. What exactly this entails varies between banks, but the process tends to be comparable. Why would lenders be okay with getting less than they’re owed? Because the loss they take in short sales can be less than the loss they’d take if the home went into foreclosure. Plus, they won’t have to deal with marketing and selling the property. Just so it’s clear, this doesn’t mean you’ll get the deal of the century on a short sale. Lenders still want to get the most they can! (Wouldn’t you?) Overall, short sales are good for everyone. Investors get a good deal, lenders get a significant amount of money without having to deal with the foreclosure/REO process, and homeowners don’t get foreclosed on, which can tank their credit score.

CHAPTER 3 Equestrian Real Estat eal Estate and Facilities acilities I would like to start this chapter by inviting you to receive a copy of another book that I have written. It's title is:

Special Barns For the Special Horses of Heaven’s Special Children

The book shows you how to build your own barn and it also shows you how to hire the right company to build your barn for you if you don't want to build it by yourself. My love of Equestrian Estates goes back many years. I have been building barns for most of my life. Wooden structures and large steel framed buildings and covered riding arenas. About 15 years ago I co-founded Heaven's Special Children, an equine facility for Special Needs Children. On our ranch, located in Florida, ten miles west of the University of Florida we provided what they call Hippotherapy. I hear it is a Latin or Greek word for horse therapy. The actual definition of Hippotherapy is "the use of horseback riding as a therapeutic or rehabilitative treatment, especially as a means of improving coordination, balance, and strength." We had as many as 12 horses at one time but only a few very special horses were calm enough to be used for the young special needs children that rode at our ranch. Our best horses were 14 hand, Quarter Horses.

We had 3 volunteers and one licensed therapist with each of the horses as the children took their ride. One volunteer on each side of the horse to steady and protect the child. One person up front who knew how to read the horse, his eyes, his ears, etc. They would lead the therapy horse. Then the licensed therapist would help the child do different exercises to develop muscular and sensitivity skills. The hardest part of the therapy session was literally trying to get the kids off of the horses, they didn't want to stop. My Veterinarian wife and I adopted a very special baby who suffered from cerebral palsy and who was a quadriplegic. He is now 16 years old and is still confined to his wheelchair. Mikey goes to a public school and has what I call a "magic" dot glued between his eyebrows. The dot is a computer mouse that he uses to work his computer. Wherever he looks the cursor goes! He has learned to read, write, do math and even writes poetry. Not bad for a quadriplegic that has to eat through a feeding tube and can't talk. Mikey is my hero!

Mikey and I at the Equine Day of the Special Olympics.

I have built and brokered some incredible houses and barns and farms. The most expensive home that I ever built was a six million dollar mansion in Southern Florida.

This 634 acre ranch is currently for sale near Gettysburg, PA

I have built, brokered and owned my own estates and barns. Some of the larger equine facilities were over 20,000 square feet under roof. Several had as many as 20 horse stalls.

I built a large horse barn for a wonderful family who lives on a 500 acre ranch, right on the Chesapeake Bay. It was a 10,000 SF barn that was used for her brood mares and new foals every year in February see below.

100' by 90' Gambrell in Garrett County, Maryland

Steel Framed Riding Arena Chester County Pennsylvania

Another barn that I built and renovated (see pictures below) was a large stone barn and farm house, built in the 1800's. This facility was for a Gold Medal Dressage Champion who can teach your daughter how to make her horse dance. It is quite beautiful, the facility and the dancing.

We found the old 45 acre farm with house and barn with 2' thick stone walls, covered with stucco. We chipped it off, sand blasted, re-grouted and then sealed the beautiful stone to bring the barn and the farm house back to life! The next page is the 1800's f e 1800's farm house that we completely renovated, new everything except the stone!

Call me if you need:

• To buy a farm or ranch • Sell your equine facilities • Build any new buildings (I only work with Amish barn builders, they build all of my barns) • Contact me if you need a price on any of the above • Sometimes if you are buying you need a price on a new barn or house before you buy • I also find that it is easier to sell your farm/ranch if you can tell the prospective buyer what any new buildings will cost • If it is time to develop and subdivide the farm call me. I have done several land developments and have built county roads and installed the infrastructure • I have people that will buy the "paper development" and do all of the work needed to sell the finished lots • Call, text or email me if you want a complete list of available properties

MARION COUNTY NEAR OCALA FLORIDA, LUXURY EQUESTRIAN ESTATE, POOL, 2 MAGNIFICENT BARNS WITH 20 STALLS, LAKE $6,400,000 30.00 ACRES, 7 BEDROOMS 6.5 BATHS, 7456 SQ FT HOME

GAITHERSBURG, MD, VICTORIAN FARM HOME SITTING ON 6.74 ACRES W/ 4/6 STALL BARN, POND! $799,900

$3,800,000 Equestrian Estate in MD. 32 Stalls, 70 Acres, 2 Houses, Indoor Arena, Outdoor Arena, 1/4 Mile Track, Pool

CHAPTER 4 6 Ways to avoid capital g oid capital gains tax when you sell your rental pr ental property

Statutory Trust

A steady stream of rental income, property appreciation over the long-term, and reducing taxable income with business expenses and depreciation are just a few of the advantages of investing in multi-family rental property. When you sell your property the tax man tries to make you pay for those advantages by collecting a tax on the capital gain. Fortunately for you with a proper tax strategy there are several strategies a real estate investor can use to postpone or even entirely avoid ever paying capital gains tax on your investment properties.

Upon the sale of an appreciated real estate investment property that more than likely has had a decreasing cost basis due to depreciation, the investor will pay

1) A federal capital gains tax of as much as 20% 2) The Net Investment Income Tax of 3.8% 3) A 25% Depreciation Recapture and 4) A state capital gains tax.

In many cases, especially in high capital gains tax states, you could end up paying more than a third of your sales proceeds in various taxes. To make matters worse, this isn’t the only tax you will pay. If you’ve been extremely successful in your real estate acquisitions, you will upon your death have to pay an addition federal and potentially a state estate tax.

Remember my tax message is defer, defer, avoid!

In this chapter we discuss the Delaware Statutory Trust.

In Chapter 7 we discuss the incredible Cash Flow opportunity of a Residential Assisted Living Investment. What is a capital gains tax? A capital gain is the net profit made when a capital asset is sold. According to the IRS, almost everything owned and used for investment purposes is a capital asset. When the asset is sold, the capital gain (or loss) is calculated by subtracting the realized sale price from the adjusted basis.

There are four important terms to understand when determining a capital gain:

• Capital asset: stocks and bonds, equipment and

machinery, furniture and fixtures, and real estate. • Adjusted basis: original price paid for the capital asset, including fees paid for buying the property such as legal and recording fees, surveys and transfer taxes, title insurance and sales commissions. • Short-term capital gain: capital assets held for one year or less before being disposed of. • Long-term capital gain: capital assets held for more than one year before being disposed of. How capital gains are taxed Holding an asset for more than one year before disposing of or selling it has a significant impact on the amount of tax potentially owed to the IRS. That’s because short-term gains are taxed as ordinary income at the normal 2021 tax bracket ranges of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. On the other hand, long-term capital gains tax rates are much lower, ranging between: • 0% for personal incomes of up to $40,400 • 15% for personal incomes of between $40,401 to $445,850 • 20% for personal incomes of $445,850 or higher Short-term vs. long-term capital gains tax liability Let’s look at how capital gains are taxed based on a short-term and long-term holding period. For the purposes of this example, we’ve excluded any additional individual state income tax due. • Adjusted basis = $200,000 • Net sales price = $250,000 • Taxable gain = $50,000 • Capital gains tax due (24% ordinary bracket) = $12,000 Short-term

Long-term

• Adjusted basis = $200,000 • Net sales price = $250,000 • Depreciation recapture = $7,200 • Taxable gain = $50,000 + $7,200 depreciation recapture = $57,200 • Capital gains tax due (15% at mid-range capital gains tax rate) = $8,580 In this example, the real estate investor with a short-term investment strategy pays nearly 40% more in capital gains tax ($12,000 - $8,580 = $3,420) than an investor with a longer-term investment plan. How depreciation recapture works The IRS requires real estate investors holding property over the long term to recapture – or give back – the annual non-cash depreciation deduction made to reduce taxable net income. For depreciation tax purposes, residential rental property is assumed to have a useful life of 27.5 years. In the “Long-term” section above, roughly one year of depreciation was recaptured. The most recent IRS Publication 527 tells investors everything they need to know about residential rental real estate depreciation. Ways to avoid capital gains tax on a rental property When it comes to paying capital gains tax, many real estate investors believe they only have two choices: paying a short- term capital gains tax now or paying later at a lower, long-term capital gains tax rate. Of course, some taxpayers may feel that it’s their civic duty to pay as much tax as possible. However, simply because other people believe the best use of their money is to give it to the government, it doesn’t mean that you have to, too.

Here are four strategies you can use to avoid, reduce, and defer

paying any capital gains tax at all.

1. Purchase properties using your retirement account

Tax-deferred retirement accounts such as an IRA, Roth IRA, or 401(k) plan allow investors to buy rental properties with their retirement savings while also allowing rental income and capital gains to accumulate tax-free until an investor begins to make withdrawals. IRA contributions are also a tax return deduction, capital accumulates tax-free, and money can be withdrawn when the investor retires at a lower tax bracket.

2. Convert the property to a primary residence

Converting a rental property into a primary residence allows real estate investors to exclude up to $500,000 in taxable capital gains, or $250,000 for taxpayers who are single. Let’s use the $200,000 rental property we discussed earlier as an example. Assume that over the last ten years the property has consistently appreciated and now has a net sales price of $300,000. If an investor sells, the capital gain would be $100,000 and the potential capital gains tax due would be $15,000 (assuming the mid-range capital gains income bracket and ignoring depreciation recapture). By making the rental property the primary residence, Section 121 of the Internal Revenue Code allows an investor to reduce paying capital gains tax by: • Owning the home for at least two of the preceding five years before selling it • Using the home as the primary residence for at least two

of the same preceding five years • Not excluding capital gains tax from any other sale within the last two years Real estate investors considering converting an investment property into their primary residence should always talk to their trusted tax advisor. That’s because factors such as depreciation recapture, potentially selling for a loss, and qualified vs. non- qualified use can affect the amount of reduced capital gains.

3. Use tax harvesting

Tax harvesting occurs when investors sell one rental property at a loss to offset the gains of another property sold during the same tax year. Tax-loss harvesting is a strategy many investors use with stocks, because they’re easy to sell online just before the year ends. Real estate investors can also use tax harvesting with rental property to match gains with losses from other investments. For example, the $50,000 capital gain from the sale of our rental property above could be offset by selling another rental property with negative equity of $40,000 to reduce the investor’s total taxable capital gain to only $10,000.

4. Use a 1031 t e a 1031 tax deferred exchange

A benefit of the 1031 exchange, which allows you to put off paying capital gains taxes if you use your profit from a real estate sale to buy another property. This makes your income essentially tax-deferred and possibly even tax free if combined with the IRS allowed Step-up basis. You can put all your profits toward the next property, which is called trading up.

A 1031 exchange covers only business or investment properties.

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