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AUGUST 2017

RE N E W S INVESTMENT
NEWSLETTER OF MID-AMERICA ASSOCIATION
OF REAL ESTATE INVESTORS

THIS MONTH AT MAREI


Common Issues.that real estate investors face
when buying property at the Meeting. Real
World Real Estate Investment Transactions:
From Standard Closings to Advanced

CONTRACT
Strategies. find out how to put them together.

REAL ESTATE NEWS

TO CLOSE Service Animals, Seller Finance Call to Action,


Interior Inspections & Terrorism

A CHECK LIST

MAREI.ORG
PROTECT YOUR TENANTS AT
BEDBUGTRAPS.COM
MAREI Members receive 10% off through October 1st, then our
discount goes to 5%. Log into MAREImember.com for details.
MAREI.ORG/CALENDAR

THE CALENDAR
Many Thanks
AUGUST MTG COMMON CLOSING ISSUES
MAREI would like to thank We are all out there buying houses, but it's not always as simple as finding the
deal, writing the contract and then showing up a closing. When you send that
all the attendees and contract off to the title company, there are a lot of issues behind the scenes that
sponsors at MAREI's 3rd get resolved. At the August MAREI meeting we will be taking a look at common
Annual All Star Networking issues that come up at closing that if you know about in advance can make your
closings go smoothly. (New to closings, see our webinar at MAREI.org/Closings)
Event.. Because of your
generosity and suppor we Join us as we welcome Mary Kellogg from Alpha Title and Christine Ellis from
were able to provide a little Accurate Title for this interview style presentation. Meeting is Tuesday August 8th.
Networking and Vendor Hall is from 6 to 7:00 and presenation is at 7pm.
over 8,000 meals to
Harvesters and with the Monthly meetings are held at the Holiday Inn at 8787 Reeder Road, Overland
corporate match we Park, KS. MAREI Members & First TimeGuests who Pre-Register at MAREI.org
attend free - all others py $25 at the door or $15 online.
recieved, that brought us to
just over 16,000 meals. WORKSHOP
REAL WORLD TRANSACTIONS
MAREI Founder & 17 Year Veteran Real Estate Investor Kim Tucker is spending
the day and opening up her transaction book to share the top items she has
learned with it comes to buying houses from motivated sellers, from banks
and from deceased people. Come find out how the deas were put together
and the tools you need in your tool box to invest in real estateSee full day
in Kansas City
now. workshop
page 5
Mailing Address: Experts joining Kim include Mary Kellog from Alpha Title and Attorney Julie
6709 W 119th #332 Anderson to touch on Legal Issues.Lunch is included & seating limited to 60
Overland Park, KS 66209 people. Super Early pricing $39 for MAREI Members till the 8th, then price
goes to $59 till the 16th. Regular Price if space is left is $79. At Johnson County
Phone: 913-815-0111
Community College
Web: MAREI.org

SHARK TANK
Web: MAREIMember.com
SEPTEMBER MTG
Email: Kim@MAREI.org

Views and advertising expressed in the MAREI has quite the line up of sharks who have either the know how to put
RE Investment News are not necessarily together your deal or the funding or both. We are inviting in several of our sharks to
endorsed by Mid-America Association of sit in our tank to evaluate your deals. If you have a real estate investment deal or
Real Estate Investors. The information business that you need help to put together, please call 913-815-0111 or email
contained within should not be
Kim@MAREI.org to get your deal approved to be presented on Tuesday
construed as a recommendation for any
September 12th at the MAREI Meeting.
course of action regarding financial,
legal, or accounting maters by Mid-
America Association of REal Estate FROM OTHER GROUPS>
Investors.
You will find a list of other groups complete with links to details that
Email to inquire about advertising meet through out the Kansas City Metro area listed at
oportunties or membership. MAREI.org/Calendar/Other-Groups

RE INVESTMENT NEWS 03
real
estate
news

SELLER FINANCE The Independece Housing Authority issued a letter


in July to all participating landlords informing them
The Seller Finance Coalition and National REIA are that to use their Housing Quality Standard with the
working hard to change parts of the Dodd Frank law city the county or for any other purpose than for
to make it easier for real estate investors to ofer Housing Authority purposes. That to use the HQS
seller financing and contract for deed options to Inspection otherwise would be a violation of the
owner ocupant buyers. tenants 4th Amendment Rights.

They have introduced HR 1360 and they need your


help. They need everyone in the real estate industry, JOIN MISSOURI POA
across the country, to reach out to your Legislators
and ask them to support HR 1360. On July 24th the Missouri Property Owner
Association became an official not for profit in the
National REIA has set up an online form to allow you state of Missouri. Their mission is to bring together
to send this letter with just a few mouse clicks. Go all real estate investors, property owners, landlords,
to www.MAREI.org/Action property managers and others to protect our industry
from undue and illegal legislation at the state level.
INDEPENDENCE HOUSING
Their next step is to build their membership through
AUTHORITY & RENTAL READY local associations like MAREI, individual members
The City of Indpendence, recently started their and business members. Membership dues will go to
Rental Ready program that requires periodic pay for lobby efforts and attorney fees. We need to
inspection of rental properties as a condition of the entire state of Missouri to take part, not only with
lawfullly renting rental properties. They had made membership dues but with donations of your time.
the statement that landlords could use a Section 8
Inspection from the housing authority in place of Please visit MissouriPOA.org to learn more and be
paying for an additional inspection. sure to follow on Facebook and Meetup.

04 RE INVESTMENT NEWS WWW.MAREI.ORG


SERVICE ANIMALS IN OUR
RENTAL PROPERTIES
Assistance animals that work, provide assistance,
or provide emotional support to the benefit of a
person with disabilities must allowed, without
extra fees or rent. However you as the landlord can
verify the need by requesting a doctors order or
prescritpion. You can also expect the animal to be COLUMBIA MISSOURI
well contained when not "working" and be on a
leash or harness when in public. And you can TENANTS & LANDLORDS
require the resident to pick up after the animal in COULD CHALLENCE CITY
the yard and in the home and to keep the home or
rental unit clean. Rental Residents and Landlords in Columbia
Missouri have been living with mandatory rental
We have a lengthy article on the MAREI Blog at ispections since 1978. Inspections with out tenant
www.MAREI.org/Articles consent, with out a warrant and often requiring the
inspector to turn over anything they might learn in
that inspection to law enforcement.
TERRORISM AWARENESS
Over the past 5 years, the fees associated with
National REIA recently released a white paper these inspections have gone up between 70% and
discussing the need for landlords to be vigilent and 370% depending on the fee.
to report things out of the ordinary to the
authorities and let them decide if your tenant is After seeing numerous law suits challening similar
dangerous. ordinances across the country, most finding that
the mandatory interior rental inspections are
Examples include lots of people coming and going unconsitutional and a violation of the 4th
at odd hours, tenants work hard to avoid contact, Amendent, Landlords and Proeprty Owers are
keeping the rent paid with no obious means of consider a class action suit against their city.
suport, checks or credit card payments of rents and
fees from odd sources. people that never seem to If they go to court, all property owners and rental
move in, but continue to pay rent and more. tenants in the state need to support the case as
this could set precedent in other cities in Missouri
Please visit MAREI.org/Articles to read more. and across the Country.

RE INVESTMENT NEWS 05
As a real estate investor buyer or
seller there are some extra things you
may or may not think about. Let's
take a look at some of the issues that
have came up in my own transactions
over the past 17 years or so.

Investor Friendly Title Company

The very first transaction I was ever a


by Kim Tucker part of, we were sitting at the closing
table talking to the closer and going
over the fees on the Settlement
Statement. One fee caught my eye
and the closer explained that because
we were buying without the benefit
of a real estate agent in the
transaction, we were being charged
an extra $250. Title companies or
closing agents that work with you as a
real estate investor on a regular basis
are not going to charge you extra
because you dont have a real estate
agent.

At one closing we were going to


Assign the Contract to a new buyer.
We found that while our investor
friendly title company that we closed
with all the time had no problem with
assignments, that the Title Company
on that transaction didnt know what
an Assignment was so we were told
that they were illegal by the person
we were working with. At the same
time, I had just closed an assignment
transaction at a different office with
the same company the week before.

Before you every go to contract, it


helps to interview title companies to
find ones that know what real estate
investors do and know how to close
their transactions.

Entity Documents

This will be dictated by what entity


you might be buying your property in,
it could be your own name. It could
be a corporation or an LLC and it
could be a Self Directed IRA or Solo
401k .
06 RE INVESTMENT NEWS WWW.MAREI.ORG
Before you start making offers make the contract and need no money to do I use this summary and package of
sure you have your entity set up, have a deal. Just be sure you have a few legal documentation to give to the
all the documentation needed to very active, cash buyers lined up. You title company and any lenders and
prove your entity is legal and know may also want to have some short Realtors as they will need all the
how to fill out the contracts and sign term funding lined up so you can close information.
on behalf of the entity. on the deal and then resell it in a few
days or weeks and make a bit more In the electronic world, I would still
If you are buying in an LLC for money out of the deal. fill this out the summary form
example you need to sign in a certain because your seller may not be
way to make sure you dont invalidate Finding & Negotiating the Deal electronically savvy and they will
the asset protection of the LLC and need a lot of the information
you need to have the proper Over the years we have bought in contained. You may find that some
documentation needed to close. This many different types of situations. Title Companies and Realtors will
might just be your Articles of have an online website to summarize
Incorporation and in other cases you Sometimes we used our Real Estate all the details and upload all the
might need to have a certificate of License and went after listed documentation, so be sure to ask.
good standing, which cost me close to properties or bank owned properties.
$300 in the state of Utah to register We have bought on the courthouse Send it all To the Title Company
as a foreign entity and to get a steps and we market and buy directly
certificate. And most title companies from sellers. We talk about many We will usually email the contract
will want you to have a corporate different ways of finding deals, and the summary to the title company
resolution stating that you can, in negotiating them and getting them and mail or hand deliver an earnest
fact, sign for the LLC. upder contract. money check. Your Title Company
may have an easy way to
Line Up Funding Write and Execute the Contract electronically send money to them
that is free through or may want a
This one pretty much goes with out This is fairly simple and straight wire. Do keep in mind that if the
saying. You need to know how you forward. Make sure you have the closing is in less than two weeks that
are going to pay for the property buyer and seller names correct. This they will not be able to accept a
before you write the offer or have is especially important when you are personal or business check, in this
some idea of who might buy it from buying from a bank seller. When you case the earnest money would need
you if you are going to wholesale the write a contract with a bank seller, to be wired or in the form of certified
property. usually they will not let you change funds.
the buyers name if you mess it up or
Here in our office, we have been decide to switch from your personal Be sure to ask for a receipt to
doing this for many years. So while name to your company or your self confirm that they did in fact receive
we dont have a pre-approval, we directed IRA. the summary and the contract via
have a list of about 10 people that we email and the earnest money in what
can take a deal to who will fund us. Contract Summary ever form you sent it.
This ranges from family, to friends, to
private money and hard money Back in the time of paper we had a If you are working with a lender, send
lenders at the MAREI meetings. document that listed out all the details a copy of the summary and entire
of the transaction, all the parties and contract to them as well as they will
When we were new, we were pre- all the contact information. usually want to see it.
approved for a construction loan at
the local bank and you might also If I am buying the home in a legal Some things to think about as you
reach out to the local hard money entity, I assemble all the paperwork send this to the title company . . . you
lenders. that my title company will need, note might want to call and talk to
that if you use the same company over themabout it, just in case their might
When you have a house you are and over, they will keep this on file for be an issue you cant live with and
wholesaling, some of you might assign you. need to get out of the contract during

RE INVESTMENT NEWS PAGE 07


inspection period. and then the lender would review all During this period be sure to stay in
the paperwork, possibly want to contact with your lender or your end
1. Rehabbing to Sell? review the inspection and ask you a buyer to make sure everything is on
2. Notice of Intent to Sell? few more questions in order to get the track. And you want to see the title to
3. Seller Deed Restrictions? final clear to close. review it as soon as possible as often
4. Self Directed IRA Buyer? their are minor issues that you would
5. Wholesaling? If you are a wholesaler, during the need to coordinate with the seller
waiting period and possibly during and the title company to resolve:
The Waiting Game your inspection period you Finding the divorced or estranged
wouldwant to seek out and secure spouse andgetting them to sign off,
After the contract is sent to the title your end buyer. Write and execute finding other heirs or proving there
company, it becomes a waiting period your Assignment Contract and are no other heirs, getting the
for the title company to get title back. collect the assignment fee or write probate court or bankruptcy court to
Let them know if you think there and execute a sale contract and approve, getting loan payoffs, and
might be problems that need collect their earnest money deposit other things that get a lot more
addressed on the title so they and send a summary of this contract, complicated very quickly.
research it now, this week, rather the contract and earnest money to
than 3 days before closing. If you your title company. If you are unable Just Before Closing
anticipate closing early or plan on to secure a buyer, your inspection
wholesaling it, they need to know period is the time to back out of the Usually the week before closing you
that in advance. contract. want to review the preliminary title
one more time and check with the
During this waiting period, you will If you are not wholesaling, the last title company to be sure all
typically perform your inspections on projects for you would be to secure problemsare resolved, if they are not,
the house and renegotiate the insurance on the property, schedule you may want to negotiate an
contract or negotiate repairs. Then if utilities to be turned on, and to start extension on the closing with your
you are getting a loan that requires lining up contractors if the home will seller and / or your end buyer.
an appraisal, that would be done next be renovated.

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06
08 RE INVESTMENT NEWS WWW.MAREI.ORG
Next check with your lender or end If you are wholesaling, you want to sure all parties have signed, all loans
buyer and make sure they are ready double check your end buyer is ready are funded and the closing is
to close, if not, go back and negotiate to close and fund. recorded. We have heard stories of
extensions. buyers who went to closing and got
If you are buying yourself you need to keys, went to the house and started
If everyone is ready to proceed, make makes sure you are schedule to close. work, only to find out that the seller
sure everyone is set up to sign closing If you are paying cash, you may be never closed. So always double
documents. Sometimes that might able to the money and close via fax or check.
mean they have an appointment at email as nothing you are signing needs
the title company and other times it to be notarized as the buyer. And if And if you are wholesaling, you would
mightmean that the title company is you are paying cash or have a down then go pick up your profit from the
going tosend them documents and payment to send in, schedule your assignment or resale or you might
they need to go sign where ever they wire a couple of days in advance so have it mailed or wired.
live in front of a local notary. In at you have time to get all the double
least three transactions, our title checks against fraud completed. Problems do come up at closing
company had to email documents to through out the entire process. We
the seller, who had to get them Closing are going to be talking about the most
printed and take them to a US common problems that come up at
consulate to be signed an notarized Ask for a copy of the Settlement closing at the August 8th MAREI
as they were not in the continental Statement the day before closing and Meeting. We have invited in the
US. review. Errors can be fixed at closing, teams from Accurate and Alpha Titles
but catching them a day or two in to share what they are seeing in real
You want to make sure your lender advance makes things much easier. estate investor transactions.
has all their documentation set up
and has their money ready to go and At closing, you may get keys if you are I am also teaching a workshop on real
knows how to wire it to the title buying it. Before you go take wordl transactions on August 19th to
company. Not a hard proposition if possession of the home and BEORE walk you through some common
you are using a traditional lender. YOU DO ANY WORK ON IT, double transaction scenarios.
But if you are working with a private check with the titlecompany to make
individual, you may need assist them

Call Mark for Your Next


PROJECT!
Mark Yanda
MarkYanda.Houzz.com
(913) 980-4260

RE INVESTMENT NEWS PAGE 09


Question: Ive made offers on over 250 properties, and MAO formula and then subtract profit unless you are
most of my offers find the circular file. Im very focused wholesaling the house.
on the distressed market offering a price calculated as
such: List Price: $100,000 After 30% ARV deduction: Scenario with more details:
$70,000 Repair Escrow $5,000 Profit $5,000 So Im
offering $60,000 for a $100,000 list price. Am I doing Subject house that is listed for $100,000, the average
something wrong? Is my ARV allowance too high? Are house in the subdivision is selling for about $140,000.
certain markets say, Leavenworth Rd KCK, permitting There are a few totally renovated homes that are similar
for margin than others? Id love some advice! in size and shape that have sold for $155,000. You
determine the house needs the following updates and
So the magic formula is repairs to bring it to the $150,000 value: roof ($8,000),
painted inside ($3,000), painted outside ($3,500),
MAO = (70% *ARV) Repairs carpet replaced ($3,000), hardwoods refinished in the
MAO = Maximum Allowable Offer kitchen, living and dining ($2,000), install granite in the
ARV = After Repair Value kitchen ($4,000), new appliances ($2,000), new light
Repairs = Costs to repair to ARV Value fixtures ($1,000) and new faucets ($1,000). It should
take you about 6 weeks to get the renovations
In your scenario, I would need to know more. complete, 4 weeks to market and get it under contract
and 5 weeks to get it closed. Total of almost 4 months
While we know the list price is $100,000, the list price is holding time. And you will need to pay a Realtor 6% to
totally irrelevant to figuring your offer other than the fact sell it.
that if your offer is way below the list price, the seller is
less likely to talk to you. Plus axes are $1800 per year or $150 a month.
Insurance is $150 a month and Utilities are 150 a
Repair Costs in your scenario is $5,000 and in 17 years I month.
have never seen a house that only needed $5,000, but I
guess it is possible. List Price: $100,000 / ARV: $155,000
Repair Costs: $27,500 in hard numbers plus $2,500 for
Profit listed was $5,000. NEVER do any rehab with an what iffs, brings repairs to $30,000
expected profit of $5,000. Usually, you dont use the Holding Time: 4 months Costs: $450 a month

06
10 RE INVESTMENT NEWS WWW.MAREI.ORG
Maximum Allowable Offer for Full Rehab This is the same problem we are facing at the KCInvest
office, offers are not getting accepted. Yet I get email
MAO = (ARV x 70%) Repairs after email from wholesalers with deals what gives?
MAO = ($155,000 x 70%) $30,000
MAO = $108,500 $30,000 Not Many Deals To Begin With
MAO = $78,500
The number one reason why OUR offers in my office are
And if you are wholesaling it, the MAO would then say not getting accepted, is that we are dealing in nicer
you need to buy it for about $73,000 areas. Take a look at the average house the area
wholesalers are shipping out and they are mainly in the
Maximum Allowable offer for Average Resale under $50,000 range, in my office we are looking for
$80,000 and up.The Wholesalers can get the deals
Next look at the repairs needed. Is the house really nasty because there are more low end houses for sale and less
and does it really need all those repairs? Or is it totally retail buyers in those markets. The average home buyer
livable as it sits, just needs cleaned. Maybe you could under $50,000 is going to be a real estate investor and
replace the roof, paint the outside and call it good for an not an owner occupant buyer. Plus there is less
average resale. competition to buy the lower end houses, more
motivated sellers, more deals. But less profit.
If its livable, with a good cleaning, a new roof and
exteior paint, then you need to go back to comps and Owner Occupant Buyers
see that the average house is selling for $140,000. Run
your repairs again taking into account only the roof, the The next reason our offers are not getting accepted is
exterior paint, and cleaning and the fact that that would that we are competing with owner occupant buyers who
take you 2 weeks to make repairs instead of 6. That are going to pay more than an investor. Wwe are looking
gives us new numbers for the really bad house in a really nice neighborhood or
a seller who has a really HUGE motivating factor to sell
After Repair Value: $140,000 their home. The really bad house needs more repair that
Repair Costs: $12,000 the average owner occupant buyer can do. Or they
have some huge problem that the owner occupant can't
MAO = ($140,000 x 70%) $12,000 solve.
MAO = $86,000
Newbies Offering Too Much
Subtract wholesale profit if $5,000, and offer $80,000.
The third reason why our offers are not getting accepted
What a Realtor would list it for: is that there are a lot of new investors who are willing to
put the property under contract for too much money
Speaking as a Realtor, If it was livable and just needing and then try to wholesale it. The seller gets excited and
a roof and a exterior paint job, I would suggest to then gets mad when the wholesaler who cant sell it
the home owners clean it from top to bottom and then does not buy. This makes the investor look bad to those
list it for about $95,000. Then market the heck out of it, sellers and they will not look at another investor offer
sell it for about $92,000. I would split about a 6 percent and end up listing it with a Realtor who is going to net a
real estate commission with the buyers agent of $5,700 higher sale price for their seller, usually.
and if I had an extensive real estate investor buyers list,
maybe sell it to one of my landlord buyers pocket the If you are new, PLEASE learn your numbers and dont
whole $5,700. offer too much just to get it under contract only to back
out. Doing so t makes the rest of us look bad. If the
If you talk to a lot of investor across the metro, you will numbers dont work, let the seller marinate a bit, their
find that many have pused the MAO up to between 75% price will eventually come down and it will come down
and 80 % of Maximum Allowable offer. I dont suggest way faster if we all are offering about the same amount.
that as you could end up with no profit. If you go in and offer 20% more and cant close the deal,
you just wasted 2 to 3 months of your sellers time and
Why are none of my offers getting accepted? you give investors a bad connotation.

RE INVESTMENT NEWS PAGE 11


THE LAW OFFICES OF

Anderson &
Associates
Landlord Services Foreclosure

Collections Bankruptcy

Real Estate Law Civil Litigation

The Law Offices of Anderson & Associates is a

Kansas City based law firm dedicated to providing

high quality services to our clients centered on

experience, accessibility, and cost effective legal

counsel. We handle cases in the greater Kansas City

metropolitan area including all counties in Central

Missouri and Kansas.

Landlords, please visit our website at MOKSLaw.com

to find a wealth of special reports and forms to help

you better manage tenant and collect your rent.

Julie Anderson
Owner and Managing Partner

web: MOKSLaw.com

phone ks: (913) 262-2207

phone mo: (816) 931-2207

06
12 RE INVESTMENT NEWS WWW.MAREI.ORG
MARKET UPDTATE June 2017
New & Existing Combined

4,264 $12k 4,104


homes sold $12,408 average
pending sales
sale price
3.2% Decrease from 2016 increase from 11.7% Increase over 2016
same time
last year (5.4%)

average: $241,567

49 7,446
median: $210,00
Data from

average days on houses for sale


22.2% decrease
market
14.0 % Decrease from 2016 2.3 month supply

There has been a general slowdown in sales across the country, and this cannot be blamed

98.3
on negative economic news. Unemployment remains low and wage growth, though nothing
to overly celebrate, has held steady or increased for several years in a row. There is strong
demand for home buying, emphasized by higher prices and multiple offers on homes for sale
in many submarkets. As has been the case for month after month and now year after
year low inventory is the primary culprit for any sales malaise rather than lack of offers.

With job creation increasing and mortgage rates remaining low, the pull toward
% of asking price homeownership is expected to continue. Yet housing starts have been drifting lower, and
some are beginning to worry that a more serious housing shortage could be in the cards if
0.6% Increase over 2016 new construction and building permit applications continue to come in lower in year-over-year
comparisons while demand remains high. Homebuilder confidence suggests otherwise, so
predictions of a gloomy future should be curbed for the time being.

For further detail see http://www.kcrar.com/statistics


"What's Your Financial
Independence Number?"

Coach Carson is a member of Metroline REIA in Charlotte North Carolina. Learn


more about him on his website at www.CoachCarson.com. Reprinted from the
Real Estate Journal a publication from National REIA.

BYCHAD CARSON
A fiancial independencenumber tells you whenyoure free Whatever your personal ideals are, I bet theyre bigger
from the need to work. Its basically a math equation, as than money. But as I realized soon aftr I graduated from
youll see later in this article. But discovering your college, simply trading my time for dollars wouldnt lead to
personal fiancial independence number is about much my ideals.
more than money or math. Its about your life and what
matters to you. And its about whether money supports Its not that working a job or running a business were bad
your ideal life or simply suppresses your potential. things. Serving others with your time, energy, and skills can
be incredibly fulfiling. But even a great job can become a
While I dont believe money is the most important thing in drag when you know you must do it to earn money.
life, I do agree with Zig Ziglar that money is reasonably
close to oxygen on the gotta have it scale in todays Instead of happiness and growth, a less than ideal job
economic-centered world. A fiancial independence situation traps you like a rat running on a wheel. While most
number is useful because it tells you exactly how much people call it making a living, youre really on a long path
money you really need. called making a dying.

In the rest of this article, Ill show you how to calculate your Luckily, there is a diffrent fiancial path you can take.
fiancial independence number. Plus, Ill also even share my Instead of trapping you, this path creates more freedom and
own number. independence. Which brings us back to the fiancial
independence number.
Money and the Ideal Life
You certainly need money to survive. But you also need The Financial Independence Number Defied Written as a
money for opportunities to live a life that is more fulfiling, formula, your fiancial independence number looks like this:
flxible, and fun. Money buys you food to nourish your
body, but it also buys you the time and flexibility to feed Investment Income > Personal Money Needs
your soul and to share your best self with the world.
Investment income is the money you receive from investment
Becoming your best self. Sharing your gifts with the world assets like real estate, stocks, and bonds. When your
investment income exceeds your personal money needs, you
Thse are the loft ideals that I aspire to. Perhaps you have no longer need to trade hours for dollars in order to survive
your own lofty ideals. fiancially.

14 RE INVESTMENT NEWS WWW.MAREI.ORG


When you reach your fiancial independence number, you go down aftr retirement. If you pay off your home mortgage
break the cycle of working for money. You draw a line in before retirement, that obviously reduces one major
the sand beyond which you will no longer fiancially need expense. And you may be surprised how much you can save
a job. in taxes when you live of of investment income. My
blogging colleague Jeremy at gocurrycracker.com has
Joe Dominguez and Vicki Robin in Your Money or Your legally not paid income taxes for 4 years aftr retiring early.
Life call this line in the sand the crossover point. Robert
Kiyosaki in Rich Dad, Poor Dad calls this leaving the rat For more information to help you estimate your future
race. expenses after retirement, I like the article How
Much Will It Cost You to Live in Retirement by Darrow
In the language of real life, this fiancial independence Kirkpatrick of caniretireyet.com. Darrow retired early himself,
number means you could survive at a certain level only and he writes about the nitty-gritty fiancial
using the production of your investments. For example, details of retirement.
your net income from rental properties would cover your
personal overhead. Or with more traditional investments My own number may or may not be relevant to you, but Ill
like stocks and bonds, the 4% rule for safe withdrawal may share it just to give you another perspective. I have a bottom
allow you to live of of 4% of your total holdings each year line number of $36,000 per year, which is what I
for a long period of time. know our family could live of of based upon current
expenses. And I also have a comfortable number of $60,000
But before you begin hustling to accumulate wealth and per year which would give us plenty of cushion.
income, lets look at how to actually calculate your own
fiancial independence number. But the most important number is yours. And thats
something you can now fiure out for yourself.
How Much Does the Ideal Life Cost?
Th formula for fiancial independence may be simple. But Life After Financial Independence
actually squeezing all of your fiancial hopes, dreams, and Reaching your fiancial independence number does not
insecurities into a math formula is challenging. If youre mean that you cant still work and make more money. It
like me, its a process youll continually tweak and update does not mean you will stop growing fiancially for the rest of
throughout your life. your life. It does not mean you are perfectly safe and secure
forever.
But the fiancial independence number does not have to
be perfect to be useful. Like any other goal, you can benefi Achieving the goal simply means that the pressure is off
from moving towards a goal even if the goal is just a Your assets could support you instead of your job. Ths is an
reasonable guess. incredible place to be. An entire universe of life
possibilities opens up.
So, how do make an educated guess for your fiancial
independence number? How do you fiure out the cost of Th same job that you once hated could be transformed when
your ideal life? you know that youre there by choice. Creativity and energy
that had been dormant for years will suddenly
I like to begin with the present by calculating your current reemerge.
expenses. You can do this a couple of diffrent ways::
New opportunities, new businesses, new questions, and
1) Estimate your expenses using personal fiancial new exciting paths will open themselves to you. And even
spreadsheets. more amazing, these benefis dont just emerge once youve
2) Use softare apps to automatically track your expenses. crossed the fiish line.
You simply enter your credit card and bank account info,
and the softare automatically tracks and categorizes your As I explained in my article Retirement Reimagined: Th
spending. Some of the most popular apps for this are Peaks and the Plateaus, the freedom of fiancial
mint.com (free) or YouNeedaBudget.com (paid). independence can be experienced in many stages along the
way. So, whatever an ideal life means for you, I
Once you have an estimate of what you currently spend highly recommend you fiure out your own fiancial
over a 1 year period, you can make a guess for the future. independence number. It will provide a clear, focused goal
that will help you win with money.
Many people fid that their personal expenses will actually

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