Boulder Real Estate Investing & Real Estate Financial Planning™ Podcast

Warning - Risks of Loan Called Due When Investing in Real Estate

Investing in real estate adds some risk to an already risk-filled life.

However, certain activities and strategies when investing in real estate create additional risks that other strategies and activities do not have.

For example, choosing to utilize strategies where the lender has the right to call a loan due—like many types of creative financing, using home equity lines of credit, and many commercial loans—adds the additional risk of possibly having loans on your properties called due and payable in full.

Add in the fact that these often coincide with the most extreme market conditions, and it can be a recipe for disaster for you as a real estate investor... a perfect storm of sorts... extreme market conditions where refinancing or selling can be near impossible or at least impractical, and the lender forcing you to do just that very thing at the same time.

In this mini-class, James will discuss the risk of loans being called due, what we can do about it, and how to mitigate or eliminate that risk completely.

In this class, James discusses:

• A George S Patton quote about fear, risks and making decisions.
• When are loans called due?
• Balloons on mortgages
• Breach of agreement on mortgages
• Buying properties subject-to the existing financing, lease-options, and lease-purchases
• Lender's option to terminate loan agreement
• The perfect storm: extreme market conditions and lenders calling loans due
• How to avoid having a loan called due
• Options when a loan is called due
• Plus much more...

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Boulder real estate investor podcast? Book a free consultation to discuss.

Tax Deductibility of PMI Payments

Are you an owner-occupant puzzled by the ever-changing rules around PMI (Private Mortgage Insurance) deductibility? Or perhaps an ambitious real estate investor, hungry to maximize your deductions and supercharge your profits? Then this class is your golden ticket to the world of tax wisdom!

Join us for an exhilarating journey through the labyrinth of PMI tax laws, where we'll explore:

• Two Distinct Worlds: Owner-occupant properties and investment/rental properties. What's the difference, and why should you care? We'll tease you with the answers!
• The Owner-Occupant Odyssey: Living in the property? You might think PMI is no longer deductible for you, but is that the whole truth? And what's this about NomadsTM?
• Investor's Paradise: House Hackers, Rental Property Business owners, and more! Discover the secrets that could make PMI an exciting part of your financial strategy. No income limitations? Intrigued?
• The Grand Conclusion: We'll tie it all together, leaving you with tantalizing insights and a thirst for more. Whether you're an owner-occupant or an investor, we'll reveal just enough to make you crave the full story.

This class is more than just a tax lesson; it's a thrilling adventure, a treasure hunt, and a financial empowerment session all rolled into one! Whether you're a seasoned pro or just dipping your toes into the real estate waters, we've got surprises and insights that will leave you hungry for more.

So grab your financial compass and join us on this thrilling expedition. The path to PMI tax wisdom awaits, and it's a journey you won't want to miss!

In this class, James discusses:

• What is Private Mortgage Insurance (PMI)?
• Is PMI deductible for home-owners?
• Is PMI deductible for NomadsTM?
• Is PMI deductible for house hackers?
• Can you eve have PMI as a real estate investor?
• Is PMI deductible for real estate investors?
• Plus much more...

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Boulder real estate investor podcast? Book a free consultation to discuss.

How prepared are you for a drop in rent in Boulder, Colorado? How prepared are you for a drop in property values (price) in Boulder, Colorado? Rent ResiliencyTM measures how much rent can drop before you have negative cash flow. Price ResiliencyTM measures how much property values (price) can drop before you're upside down, underwater or have negative equity. Learn how to measure and evaluate your individual properties, entire portfolio or entire real estate investing strategy in terms of these measures of risk in this class recording.

Topics discussed include:

• What is resiliency?
• What is Price ResiliencyTM? What is Rent ResiliencyTM?
• The two flavors of resiliency: dollars and percent.
• Measuring resiliency on the individual property basis or the entire portfolio
• Measuring resiliency as a snapshot in time or over time
• Examples using over-simplified math:
• What happens when rents go up 10%, down 10% in two different portfolios?
• What happens when prices go up 10%, down 10% in two different portfolios?
• Resiliency is largely about leverage
• Thought experiment: what is more risky... 0% or 10% down payment?
• The 7 Ways to Measure Risk in Real Estate Investments
• How much riskier is it... a discussion of offsetting risk measures
• Examples of interpreting Price ResiliencyTM (charts)
• Examples of interpreting Rent ResiliencyTM (more charts)
• Comparing putting 5%, 20%, 25% or 100% down - how risky are they compared to each other?
• Evaluating risk: why 20% resiliency is not twice as good as 10% resiliency
• Diversification and the role of resilience based on various levels of diversification
• The counterintuitive nature of risk and reward in real estate investing
• A brief overview of rent and price resiliency from various Scenarios we discussed in previous classes on:
• Buy and Hold Real Estate Investing
• NomadTM Real Estate Investing Strategy
• House Hacking Real Estate Investing Strategy and
• BRRRR Real Estate Investing Strategy
• An introduction to True Price ResiliencyTM and True Rent ResiliencyTM and how they differ from their non-"True" counterparts.
• How Cash Flow from DepreciationTM acts when discussing Rent ResiliencyTM
• An introduction to Vacancy ResilienceTM, Property Insurance ResilienceTM, Property Taxes ResilienceTM, Maintenance ResilienceTM, Maintenance ResilienceTM and Capital Expenses ResilienceTM
• The Price ResilienceTM and Rent ResilienceTM of James' personal real estate portfolio.
• Plus much more

This class was recorded to help real estate investors better understand how risky the real estate investing strategy they are considering is and how to compare strategies they're considering using 2 (of 7) ways to measure risk: Price ResiliencyTM and Rent ResiliencyTM.

Watch the video version of this class:
https://realestatefinancialplanner.com/rent-and-price-resiliency-for-real-estate-investors/

Additional Resources

• Rent ResiliencyTM - Learn about Rent ResiliencyTM and how it is used to measure risk.
• Price ResiliencyTM - Learn about Price ResiliencyTM and how it, too, is used to measure risk.
• Cash Flow Power MeterTM - Learn how to visually see how powerful the cash flow from a property is.
• Real Estate Partnerships - Learn about the real estate investing strategy of forming real estate partnerships in this special class.
• Buy and Hold Real Estate Investing - Learn about the buy and hold real estate investing strategy.
• NomadTM Re...

Warning - Risks of Rental Demand Declining When Investing in Real Estate

Risk, risk, risk... Life is full of risks.

To a limited degree, we get to choose which risks we voluntarily take on.

For example, if you choose to invest in real estate, you choose to take on some additional risks that you might not—directly—face if you opt to invest in something else with its own set of risks.

One risk when investing in real estate is the risk that the property you buy as a rental experiences a decline in rental demand, which often leads to a reduction in the rent you are getting.

What are some things we can do to eliminate or mitigate this risk in advance of seeing possible rental market demand declining, and what are some things we can do after demand softens?

That’s what James will cover in this mini-class.

In this class, James discusses:

• A George S Patton quote about fear, risks and making decisions.
• More/Less speculative returns and why cash flow is more speculative than most people believe
• Buying properties that have mass appeal
• Buying better quality properties
• Modifying Warren Buffett's quote: Buying wonderful properties at fair prices versus buying fair properties at wonderful prices.
• Two opposing thoughts: discount for protection or quality to avoid selling
• Lower rent, hold on and absorb lower income
• Reserves and cumulative negative cash flow
• Change use
• Improve cash flow
• Sell
• Give property back
• Refi and/or recast
• Bring in partner
• Plus much more...

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Boulder real estate investor podcast? Book a free consultation to discuss.

Deal AlchemyTM - Residential vs Commercial Property

Deal AlchemyTM is all about manipulating the returns you're earning on your investments. Often, this is done through the choices we make when selecting the investment property and the strategies we choose to implement.

For example, you could choose to invest in residential properties where your tenants would live in the property. Alternatively, you could choose to invest in commercial properties where your tenants do not live in the property.

Often, these investments would have different numbers and characteristics, such as who pays taxes, insurance, and maintenance on the property. However, for the sake of today's mini-class, we will look at just the difference in the tax benefits of depreciation in two identical investments, except one is residential and the other is commercial, to see how that impacts your overall returns.

In this class, James discusses:

• The definition of alchemy
• What is Deal AlchemyTM
• How to manipulate returns and move them between quadrants
• An example by purchasing a commercial property with 39-year depreciation schedule instead of a residential property with a 27.5-year depreciation schedule
• Plus much more...

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Boulder real estate investor podcast? Book a free consultation to discuss.