Wealth Without Stocks or Mutual Funds Launches Monday!

Well, if you have not heard yet my new book launches on Monday, Dec. 7th.  I am so excited to have this book available to everyone as there is great information inside.

Want to know more about “Wealth Without Stocks or Mutual Funds“?  We have some pre-launch videos talking about the book that you can view here.  Also, the website is just chocked full of information; each chapter is discussed so you have an idea of what is covered, resources for you to tap into, additional training, and so much more!

And the best thing… there is a special bonus for those who purchase the book (Paperback or Kindle) from Amazon.com during our Launch Promotion.  I will share the link to that Special Bonus on Monday.

We look forward to hearing from you! All of us at Perpetual Wealth Systems is ready to provide you will any follow up support needed to actually implement the strategies and information in the book to help you and your family.

PS: Here is the latest video but you can watch all of them here

Black Friday = Early Retirement?

BlackFriday

Here comes the flood of sale advertising; from black Friday sales (which has now morphed into Thanksgiving day) all the way to Christmas Eve there will be loads of “money saving” opportunities. Then there will be the first of the year “lowest prices of the year” sales on everything from soaps to automobiles.

The question you need to ask yourself is, are you a “saver” or a “wealth builder”? There is a huge difference because most “savers” die broke and “wealth builders” die wealthy and live a wealthier lifestyle, especially in later years. So this holiday season and for 2016 try this little trick to get ahead and be a “wealth builder”.

When you are shopping for bargains this holiday season on gifts, food, wrapping paper, etc. save as much money as you can off of normal retail. Do this by shopping as wisely as time will permit either online or at some of the special sales events by retailers. So let’s assume you would have spent $1,000 on average this holiday season on gifts and holiday extras like meals and wrapping paper. According to the November 2015 Gallup poll the average American spends $830 dollars just on gifts so the $1,000 is very realistic when you factor in food, decorations and wrapping paper.

Now assume you are a good shopper and you are able to save $300.00 off of your total retail bill of $1,000. That is fantastic but what happened to the $300.00 you saved or did not spend? For most of us it stayed in our checking account and we spent it on other items that were “non holiday” items. So the goal is not just to save money but to use those savings to create wealth. We only will accomplish this goal by focusing cash flow and getting it out of the spending account once it is saved. If you don’t do this the money is not “saved” contrary to popular belief but it’s just spent on something else.

Let’s use technology to our advantage when it comes to cash flow. First of all make sure you have a checking and a savings account at the same bank. Then pay for your items and run your life out of your checking account. Get set up for online banking and if possible mobile banking on your smart phone. Now you just have to do a little fourth grade math twice per week. Keep track of every item you buy on sale or use a coupon for and make a note of its retail or close to retail price. Then add up what you actually paid versus what you would have paid without the discount. The difference goes into your “wealth account” which is your savings account. This whole process will take no more than 10 to 15 minutes twice per week and does not even require a trip to the bank. So during the week you were going to spend $500.00 anyway on different items but you got discounts or used coupons and got that bill down to $400.00. Now take the wealth step and go on your mobile banking application and move that $100.00 savings over to your “savings account” and have it start to build wealth for your future. You pull out your smart phone and do a 15 second transfer from your checking to your savings account and without breaking a sweat or missing the money you are taking the first steps on creating more wealth.

In the Christmas example above that $300.00 savings is put away and generates even a 6% compounded rate of return will turn into almost $1,000 in 20 years if it is first put away and then put somewhere where it will grow. So if this is done for one year faithfully and you are able to “save” $5,000 and move it over to your savings and then invest it at the 6% rate of return you will have an extra $16,500 in 20 years for your retirement savings. Now do this every year and get better at it and you will have saved hundreds of thousands of dollars for your retirement years because you focused your savings. You’re not just a “saver” like every other shopper out there you are a “Wealth Creator”!

So next time you get a discount on something make sure you pay yourself the difference and you will very quickly establish a savings account and fund your retirement savings with tens or hundreds of thousands of extra dollars for you and your family. Now make this a truly Happy Thanksgiving, Merry Christmas and Wonderful Holiday Season!

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Give Yourself a Raise, Part 3

This article is the last in a series of pieces on how to dramatically reduce your income taxes legally and ethically. If you missed the first two you can review them before moving on to this article; Giving Yourself a Pay Raise – Beating the Biggest Wealth Drain and Give Yourself A Raise. These other two articles discuss the hundreds of deductions you qualify for when you own a business as opposed to being an employee. First we show you how everyone can have a small business even if they’re a current employee working for someone else. Specifically we talked about 4 strategies out of those many hundred of deductions that you can start to use immediately to increase your net take home pay. Now let’s talk about the 5th and a special discussion on a superior business structure for successful businesses to lower their taxes by 50% or more.

CarIcon smpixels

 

TAX DEDUCTION 5 $25,000 Vehicle Deduction

 

Per Section 179, you may be able to expense some or all of your business use of your vehicle. Basically, if your vehicle weighs more than 6,000 pounds, you can expense up to $25,000 the first year the vehicle is used in your business. You also must use the vehicle at least 50% for business in order to qualify. The $25,000 deduction assumes 100% business use. If you use your vehicle 75% for business, you would get 75% of the $25,000 or $18,750.

Car Used Less Than 50% for Business

If the business use of your car drops to 50% or less, there are certain rules that apply. These include:

  1. You cannot take a Section 179 deduction for your heavy vehicle.
  2. You must use the straight-line method of depreciating your vehicle. While the five-year period still applies, this will result in a lower depreciation deduction in the earlier years.These 5 strategies are just the tip of the iceberg that I mention here and in the other two articles.

These 5 strategies are just the tip of the iceberg that I mention here and in the other two articles.

If you are already a successful business owner and feel like you are implementing every legitimate tax deduction, but are still paying $150,000 or more in annual income taxes there is a different specific strategy for you.   There is a little known company structure that may help you save 50% or more on your income taxes every year. We call this our income efficiency strategy and work in conjunction with a very high level attorney to structure these programs. It is very unlikely your current tax professional will be aware of this business structure but this attorney has been utilizing them for clients since 1998. However, the attorney who sets these up will be happy to have conference calls with your tax professionals to explain the program in depth. This attorney is not trying to replace your current professional but rather work with them to implement this plan for your business.

You will utilize structures that have been around for decades and most tax professionals mistakenly believe are only good for public corporations. These are structures that Lowes®, Southwest Airlines®, and Home Depot® use just to name a few. Now the successful small business owner can utilize the same structures as the big boys thereby dramatically lowering your tax liability.

I don’t want to bore you with details here but if you are in that small group who are paying those kinds of taxes we have a real solution that has been looked at by the IRS several times since 1998 and every time there were no changes required for the client. In other words this is not some kind of a scam or loophole but rather a very specific company structure that will fit into your existing business model to dramatically reduce your income taxes. Send us an email at info@perpetualwealthsystems.com with the subject line “income efficiency strategy” and we will have one of our professional teammates reach back out to you to see if we can help.

New Article in Florida Realtor Magazine

My new article published in the Florida Association of Realtors® state magazine. Got a cover mention and 4 pages in the magazine itself. Great read for investors, entrepreneurs, as well as real estate agents and brokers.

FLRealtorMag Aug2015

401k’s – The Good, the Bad and the Ugly

I want to share with you items to consider before investing in a 401k.  Some of those items are the tax ramifications and the control over your money you will be forfeiting.  Uncle Sam makes the decisions on when you can access your money without penalty, what the penalty is for early withdrawals, the taxes you pay, the required minimum distribution (RMD) amount, when you must begin to take the RMD and more… Watch my short presentation for more information.

Giving Yourself a Pay Raise

The way to get a substantial pay raise in 2015 is to focus on your net income — not your gross income — by reducing your income tax liability.

Small Business
The first step is to understand how the tax system works. The current system is set up to benefit business owners at the expense of salaried or hourly employees. The only d eductions the average family receives are for having children and interest and other expenses incurred for home-ownership.

On the other hand, small business owners receives dozens of legal deductions, with many personal expenses recategorized as a business purpose. For example, automobiles used for personal use are not deductible in any way (except for moving, medical and charity miles) — but the part of the automobile use for your small business becomes a legitimate deduction. Say you drive 30,000 miles a way (yes, that’s a lot), and 15,000 were used for business. You could write off half of the expenses on the car. Most people use the government’s mileage calculation — in 2014, 56 cents per mile — meaning $8,400 of expenses deducted off of the business gross income.

What If I Don’t Have a Small Business?

Start one immediately and have the intent to make a profit. Many things then may be deductible, such as:

  • Automobiles.
  • Meals and entertainment.
  • Business trips and travel.
  • Catering.
  • Salaries paid to qualifying children.
  • Medical expenses.
  • Small business equipment.
  • Utilities used in conjunction with running a business even if using your home as place of business.

Be warned: If your intent is just to create tax deductions — and you have no real intent to transact business or try to make a profit — then you are creating fraud.

You don’t need to rent office space and incur thousands of dollars of expenses for your new venture. Your venture could be started at your kitchen table on a shoestring. Think of all the legendary businesses that started out this way.

Be Like Dell or Gates

Michael Dell started Dell computers out of his dorm room, and Bill Gates started Microsoft (MSFT) from his parents’ garage. Millions of other businesses started this way, creating billions of dollars in salaries and benefits for employees and profits for the business owners. This is why the tax system is set up to benefit small business — which can create jobs and wealth. Some sample businesses that could be launched on a shoestring:

  • Consulting on an area where you have expertise.
  • Internet sales and marketing. You can have an Internet store running in a few hours.
  • Network marketing companies. Gone are the days of ordering loads of stuff and trying to resell to friends and family members. Most companies handle all the shipping and order taking themselves and ship directly (assuming there is a physical product for sale) to your customer.
  • Being a referral agent for an existing business. Many businesses will be happy to pay you a referral commission if you send them business. Depending on the type of business, some licensing may be required.

Nobody will ever care more about your money than you so find a tax preparer/ accountant who understands these concepts who you can work with for years to come.

The Secret IRA

Types of IRA's

Do you know which kind of IRA you have?

Most investors mistakenly believe they have a “self-directed IRA” when in fact they have one that limits their choices to a few investment types. Within your plan, you can choose stocks, mutual funds or bonds. And while you may have hundreds and even thousands of choices of where to put your money inside that account, chances are you won’t be able to invest in nontraditional retirement assets — especially if your IRA or 401(k) rollover is with a traditional brokerage house.

So just what is a true self-directed IRA? It’s an account allows you to invest in many other options with your IRA, including:

  • Rental real estate.
  • Fixer uppers to resell at a profit (flip).
  • Private loans made at higher interest rates to other investors.
  • Discounted private notes.
  • Tax liens or tax deeds.
  • Privately held companies and startups.
  • Precious metals.
  • Leases and lease options.
  • Straight options (real estate options, not stock options).
  • Partnerships.

Such investments receive the same tax treatment as more traditional IRA assets. Any tax due is deferred until withdrawal, typically at age 70½, when your are required to start drawing down your savings, or possibly sooner.

This is an account for hands-on active investors with unique knowledge of some of the asset classes in the approved list, not for a “set it and forget it” investor.

By using this type of account it is possible to make some sizable returns from a relatively small amount of money. Here’s an example:

You have an opportunity to buy a rundown house from an estate that would like a quick sale. You determine the house is worth $200,000 — after you have spent $40,000 in upgrades. You contract to purchase the property for $120,000. But lacking the $160,000 to proceed with the sale, you enlist a partner who agrees to provide the full amount, provided you handle all the details, including closing, rehabbing and reselling the home.

You further determine that you would like your share of the profits to go inside of your IRA for the obvious tax benefits. You only have $10,000 inside your IRA with which to invest. The proper play given these set of circumstances is to have your partner buy the property in his name or an entity he controls, such as a limited liability company. You enter into an option agreement to purchase half ownership in this property. You pay $100 from your self-directed IRA and fill out option paperwork and give all the papers to your plan administrator.

This deal now moves forward, and the property is rehabbed and ready for sale in 60 days and sells and closes quickly for $200,000. You have $10,000 worth of sales and holding expenses, netting a $30,000 profit on this deal in five months. The actual title owner to the property agrees to pay you $15,000 for you to close out your option. This $15,000 is a return on the $100 option investment and is deposited back inside your IRA tax-deferred or tax-free (for a Roth IRA).

Your investor put up $160,000 and received $15,000 for a five-month investment. This represents more than a 20 percent annualized return on his money, which is pleasing to almost every investor. If he used his IRA money for this investment, then his profit would be tax-deferred as well.

Rental Income

Here’s another example: An investor from New York became aware of the self-directed IRA and used some of his IRA to acquire four rental homes in Metro Detroit. Each home was purchased for around $55,000 and rents for about $900, and the cash flow goes back to the IRA on a tax-deferred basis. If he sells these for big gains years from now, that profit will also be tax-deferred.

Be warned: There are also some prohibited investments with your IRA (see IRS Publication 590):

  • No loaning of money to yourself, your spouse or any family member in your direct linear family chain.
  • No investing in collectibles.
  • Your IRA can’t personally guarantee any loans in which it borrows money. This means that any money borrowed by your IRA must be “non-recourse” funds, which means that only the asset can be put up for collateral and may be foreclosed upon for nonpayment. The creditor may not file suit against the IRA for any shortfall in the loan goes delinquent.

All Profit comes from 5% of the Sellers

 MonopolyHouses

This is a follow up article from the last 3 weeks on real estate investment. Please read the first in the series and the latest article from last week. To get killer deals on real estate you must understand one simple fact:

At any given time across America there are really two real estate markets. The first is the regular or retail marketplace. This is usually about 95% of the market and this world is inhabited mainly by Realtors™, builders, banks, mortgage brokers, home owners, home inspectors, mortgage originators, and any other group of people that focuses on helping “normal buyers and sellers” buy and sell properties.

There is also a secret sub culture of the real estate market. This second market is usually around 5% to 10% of where the total marketplace falls. This world is inhabited by investors, REO brokers and agents (bank foreclosure brokers and agents), private money lenders, hard money lenders, foreclosures, probate properties, highly motivated sellers, contractors, subprime buyers, and anyone else that’s geared toward the investor buyer/seller and subprime buyer.

The profit for the savvy investor is dealing only with the 5 to 10% of the marketplace that will allow you to make the profits you require for your business. So many beginning investors will waste the bulk of their time dealing in the 95% world and wonder why they don’t buy any properties or the properties that they buy are subpar deals.

Make a decision right now to only deal in the 5 to 10% world and your life and business will be far more enjoyable and profitable. You need to become an expert in dealing with the 5% world and all its players. There are great deals all around you but you must be the prospector and focus only on the gold and not the dust.

In my over two decades in real estate I have been through every kind of market imaginable from red hot multiple offers in hours kind of market to a free falling value market where it seemed you could not give properties away. I have found that unsuccessful investors will always find reasons why they are not doing well or finding good deals. See if any of these sound familiar:

“The market is too hot here to find any good deals”

“This market is so bad that nobody is buying”

“You can’t do those kinds of deals in this market”

None of these are true and I don’t care what cycle your target real estate market is currently experiencing. During red hot markets I bought properties and got great deals. During dead dog slow collapsing markets both I and my clients have bought killer properties at rock bottom pricing. During a red hot market you really need to stay tuned to the 5 to 10% of the market. When you buy in these markets most of the houses are never “officially on the market” but rather the properties were found by you or your ant farm using the marketing strategies above. They also might have been on the open market and did not sell. They had some kind of problem that the agent and owner did not know how to solve.   If the property hits the MLS and is a super bargain it will always be hard not to overpay for the property. The rule of thumb is the more people that know the property is for sale the more money you can expect to pay to acquire the property.

That’s the bad news; the good news is because that kind of market is so hot you don’t always need as big a discount to make the deal work. The hotter the market is when you go to resell the quicker sell you will have and less holding costs you will need to pay. When you are dealing with very slow markets, many times you can pick and choose the deals you want to buy right off the MLS and find solid deals that make sense.   You must customize your buying and selling machine based on the market conditions.

The third type of property is pretty homes and those are homes that require a whole different approach than the ugly and semi ugly homes. These will be covered in a future article.

Analyze Deals Quickly

The next step once you have found a deal you think might be a good deal is to run your fast turn numbers.
Here is a simple formula to use every time.

After Repaired Value (what you believe it will sell for after repairs are made based on comps)
Repairs to be made (more on figuring these in a future article)
Holding costs (utilities, taxes, insurance, lawn, snow) (budget 5 months minimum)
Interest on funds (interest paid to outside lenders or your own bank (remember being the bank?)
Buying closing costs such as points on money, insurance, title company fees etc (check with local investors and title companies to get an idea)
Selling costs such as real estate commissions, transfer taxes, title insurance (check with local investors and title companies to get an idea)
Cost over runs and oops factor
Your minimum acceptable profit


Maximum offer allowed by you

Tune in next week when we continue our discussion on finding killer real estate deals!

Sellers Sell for Just Two Reasons

Home-for-Sale-300x225

This is another article in a series of how to invest in solid real estate deals. Please read the previous article before proceeding with this new article. These are more ways to find killer real estate investments in addition to the ones already mentioned in the previous articles:

  1. Put up a website and get a decent domain. Many sites do this but I get my domains and some of my sites through GoDaddy®. The website does not have to be fancy or expensive but make it solid and clean and keep it current. So many sites get put up and forgotten about it blows their credibility. I suggest a 4 minute video every month to post to the site. Keep the site relevant and use the domain in all your marketing
  2. Make up your wedding list. Imagine you are getting married and going to have a huge wedding.   Who would you invite? Get that list together and get all their contact information and let them know periodically (at least every quarter) that you are looking for real estate investments
  3. Find out who in your area handles bank foreclosures (otherwise known as REO’s or real estate owned by a bank) and send those agents a letter introducing yourself. Follow up these letters with calls and ask for a one on one appointment and buy these agents and brokers lunch. If there is a good sized foreclosure market in your area this one strategy can be a gold mine for your business
  4. The internet is loaded with properties but depending on the site the information can be very old so nothing will replace building relationships with real human beings who are in the world of real estate
  5. Estate properties sometimes can offer a great opportunity at a bargain. I have bought dozens of properties from my local probate court lists. When people pass away many times they leave a will that will have to go through probate court. These probates are public information and usually posted in a county legal news and/or website. These notices will have the person who passed away and the person who is the personal representative for the estate. These are the people in charge of opening and closing of probate and the estate. A well placed letter and follow up phone call have provided me with some great deals and large profits. I always got more excited when the personal representative is located out of town because they are sometimes more motivated to get the estate closed as quickly as possible. I would never send letters to spouses who just lost their mate; they have enough on their minds without me seeing if they want to sell. Most of the time you can tell by the address of the decedent and the address of the personal representative. If Ken Jones passed away and Lisa Jones is the personal representative and both live at 1234 Maple Street it means that Lisa is probably Ken’s wife. If the representative lives at a different address they are more than likely a child and that property will more than likely be sold in the next 30 to 90 days. I also got better deals when there were several siblings which meant the money was being split by several people. A $40,000 price reduction might only be $10,000 per person and easier to accept

When you receive leads from the above and some of the other 100 ways on the downloadable list they will come in 3 basic categories of properties:

  • Ugly
  • Semi Ugly
  • Pretty

When you are looking to buy and sell for a profit most (but certainly not all) of those deals will be ugly (they need a lot of TLC and money to bring them up to snuff) or semi-ugly (needs work for sure but more simple cosmetics than real contractor television stuff)

Before you even go to the next step of analyzing the lead, first pay attention to why the seller is selling the property. What is their true motivation for selling? All sellers sell for only two reasons. The need for cash or the need for debt relief are those two reasons. Yes, there are dozens of sub reasons such as divorce, pending foreclosure, settle estate, relocation, getting non performing loan off the books (REO’s aka bank foreclosures) and many others. All of those sub reasons go back to the two main reasons above.

Is the seller’s reason for selling strong enough that might allow you to buy this property under its current market value? The stronger the reason the bigger the discount on the price you could expect to receive. If a seller wants to sell because they are upgrading their home and need more space will that usually allow you a chance for a deal? No it will not! On the other hand if the seller has inherited the property and lives out of state and has just been informed the property is a beat up old mess does that sound like you might have a better chance at the kind of property we are trying to secure?You have a much higher chance of success based on that need to sell.

Tune in next week for more information on making successful real estate investments.

Earn Extra Money Renting Out Your Stocks

Stocks

Many investors rent out their stocks every month to generate potentially larger returns. Of course, when they do that, they don’t call it renting: The term they use is a “covered call.” That’s when you sell an option to another investor to buy your stock at an agreed-upon figure, called a strike price.

Why would you rent your stock? Let’s consider a hypothetical example: Maybe you bought 1,000 shares of a company some time ago for $18, and the stock has performed nicely, but now seems to be stuck in a range, hovering around its current price of $23. You don’t mind owning the stock. But it’s not doing much.

A bullish investor could pay $23,000 to buy the shares from you on the open market. Or he could buy 10 call options for $2 per share, or $2,000 total investment. Each call option gives the right but not the obligation to buy 100 shares of the stock by a certain date at a specific price. Only some stocks are optionable, via the Chicago Board of Options Exchange.

As Time Goes By

The value of those call options will generally rise and fall with the value of the stock. So if that stock hits $27, the investor can use the option and buy all the stock or can just sell the option without ever owning the stock. So if that investor bought October $25 calls for $2, they could now be worth $3.50 each, or $3,500. That’s a nice profit of $1,500 on a $2,000 investment. (This example excludes commissions and the difference between the bid and the ask price. And yes, the valuation of options is complicated.)

But remember, every day that passes toward the option’s expiration day means these options become worth a little less money. If that stock goes down, the options become worthless, and the total investment of $2,000 could be lost.

If the stock rises to the strike price of $25 or higher, you will probably be called, which means you have to sell your stock at $25, which is not terrible because you bought it for $18 — plus you received $2,000 for the option. If that stock does not make it to $25, then you keep the $2,000 and the stock.

You could sell the next month’s call option at $25 for maybe another $2,000 — or sell a call further into the future for more money. This could be a good strategy if you are long (meaning you already own it). But it might not be optimal. After all, if you bought the stock at $18 and think it’s heading toward $40, then it would not be advisable to sell it at $25.

Some Other Considerations

  • Stocks that are more volatile have higher options pricing.
  • You must be approved to trade covered calls by your broker. With experience, you can also be approved to deal in advanced option trades.
  • A “covered call” means you have covered your option sell by actually owning the stock before you sold the call. Uncovered calls could be riskier.
  • Selling a covered call is no more risky than owning the individual stock, so it is allowed inside of individual retirement accounts. Buying calls and put options (options bought when you are betting that a stock will go down in value) are riskier and are not allowed with retirement funds.

Never buy a stock just to sell the call. Make sure you like the stock on its own merits, because if you buy it to sell a call, and the stock tanks, you could still lose much of your investment, regardless of the extra you could make on renting it out.